ETF Expert

Having spent years in Southeast Asia, I learned a thing or three about Mandarin Chinese. For instance, the word for crisis is "wei ji." Although some native speakers deny it, "wei ji" actually comes from combining the word for danger (wei xian) and the word for opportunity (ji huay).

Debate may rage on about the equation… Crisis = Danger + Opportunity. Yet there's little argument that a person's, group's or country's crisis may be another person's, group's or country's risk-worthy chance for advancement.

So the U.S. crisis up until now has included a debt bubble, residential housing collapse, systemic financial breakdown and eventual economic recession. The U.S. will still have to contend with higher-than-normal credit defaults for less worthy issuers, commercial property foreclosures and risks to the U.S. dollar.

All of those home-grown, crisis-level concerns do indeed pose dangers to any type of investment. We did see the world markets, and emerging markets, in particular, fall deeper and further into a black hole in 2008. Why? Other regions weren't ready to quote unquote "decouple" from U.S. business activity or our consumer-based society.

Yet, what about going forward? It does seem that even a modicum of stability in the world's largest economies (i.e., U.S. and Japan) spell dangerously desirable opportunities in emerging market ETFs. Emerging and frontier market success has been well documented here at ETF Expert.

Granted, I anticipated the summertime slumber in "Anatomy of a B— Market Rally." Specifically, emerging markets really haven't made a whole lot of progress since early May. In fact, an argument could be made for the old adage, "Sell in May and go away."

In spite of an 8-week surge that has been followed up by a 7-week slumber, there's every reason to view emerging market ETFs with greater affection than ever before. Pullbacks in equity markets provide risk-taking opportunities, and those opportunities are most evident in the growing middle classes of China and Brazil.

Consider China's commodity binge spending as evidence for housing demand. You can profit from Claymore China Real Estate (TAO).

Think about changes taking place in Latin America's largest economy, Brazil. You can tap Brazilian consumers' increasing purchasing power with a fund that is 40% weighted towards food products, household durables and specialty retail. Get a gander at the Market Vectors Brazil Small Cap Fund (BRF).

Investing in the purchasing power of foreign consumers is not a "sure thing." It's a risky, or… "dangerous" proposition. Still, the rewards are there, particularly if the Brazilian real and the Chinese yuan appreciate against the U.S. dollar.

If you'd like to learn more about ETF investing… then tune into "In the Money With Gary Gordon." You can listen to the show "LIVE", via podcast or on your iPod.

Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.