Low valuations and investor indifference might mean that markets surprise on the upside. This makes us believe that the current rally might have some steam left in it as sentiments are not yet fully upbeat.
Mainstream economics as it is practiced today, does have a lot of loose ends we believe. Little wonder, a lot of experts have begun to call it the dismal science. There are quite a bit of its principles that do not have universal validity. In other words, a principle that may work in one scenario may turn out to be a total disaster in the other.
As long as you keep your mind clear of biases and flawed thinking tendencies, and are able to think without the pressure of what others think and without fearing the loss of your social status, you`re very much on track to becoming a great investor.
The biggest learning in the last year has been for the present generation of investors who would not have seen such a long period of stock market underperformance and for whom the definition of long-term has changed.
If you look at either price-to-book or forward price-to-earnings ratios, emerging markets were relatively inexpensive until about 2007, at which point the gap narrowed, at least in part because investors came to believe in the idea that they could "decouple" from the low growth developed world.