Ken Griffin is used to difficult times. He pulled himself and his company, Citadel LLC, out of the hands of bankruptcy in 2008 when all hell broke loose on Wall Street. Griffin learned how to make money during the rocky times when other hedge fund investors were playing it safe. Griffin is in charge of one of the most successful hedge funds in the world, and his reputation for being an intelligent maverick has given him an advantage over other hedge fund managers. Mr. Griffin is comfortable investing in times like these. Some investors aren’t sure where to put their money, but Griffin doesn’t have that problem. Ken sees opportunity wherever he looks and right now he is looking at emerging markets like Mexico, India and Russia for better than average gains.
That may sound strange to some investors. The International Monetary Fund just released a new report that says world economic growth will be sluggish in 2016. Emerging markets like Mexico, India and Russia may have a difficult time keeping up with their 2015 GDP output percentage. Griffin relies on reports like the IMF report, but he knows nothing is set in concrete when it comes to economic growth. Eighteen months ago Brazil was a grade “A” investment and now the country has been downgraded to a “C” or even a “C-” according to the S&P 500. China was the big dog in the economic world in 2012 and 2013 and now China is struggling to change their economic position.
Even advanced countries like Canada, Norway, Australia and Japan are feeling the effects of the export dilemma. Investors are getting nervous about their assets in those advanced markets, according to Griffin but he credits the energy sector for most of the economic issues that Canada and other countries are facing at the moment. Energy investment will rebound, according to Mr. Griffin and that should happen in the first quarter of 2016. Griffin is concerned with the falling commodity prices in emerging markets because more than half of the world’s GDP is produced by emerging markets around the world.
Commodity prices are a concern in low-income markets but the main concerns are political instability and too much debt and overinvestment in the commodity sector. Some countries have lost their fiscal credibility because of those factors. Countries with little fiscal credibility are facing the most investor turmoil in the coming year, according to Mr. Griffin and other investors.
But Griffin and his staff are still positive when it comes to the opportunities in emerging markets as well as the opportunities in advanced markets. Canada may be having problems now, but Griffin and others think they are short-term issues. Investments in Asia have potential even though China may upset those opportunities if there is another market glitch before things stabilize there. And India, as crazy as it sounds, is a prime target for investors looking for big returns. Mexico is another market that is offering Griffin and other investors a chance to make better than average returns.
As Mr. Griffin likes to say: After every economic storm the sunlight of big returns always shines on the risk takers.”