Political Uncertainty Portfolio Follow Up

I was in SF a few years ago when they filmed this video, and it is the first thing I thought about when considering an earlier post on how markets bounce back from down years. (Pretty interesting video of how they filmed it here.) If you’re stressing about the markets, this is a nice 5 minute respite.

In an earlier post, I examined the tendency of equity markets to snap back after negative years 2 and 3 years ago. I found that a negative year 2 or 3 years ago increased return by ~ 300 bps, and negative 2 AND 3 years ago increased return about 600 bps. (The rare negative 1, 2, and 3 years ago increased return about 1300 bps!)

Because virtually every equity market has been up the past few years, the only down markets were (all MSCI data, first number is gross in USD, second number is local currency):

Iran (2005)
Peru (2004, just barely)
Thailand (2004, and 2006)
Venezuela (2005)

Here is there YTD performance:

Iran ? (Anyone have this figure?)
Peru 62.75%, 61.89%
Thailand 23.74%, 16.93%
Venezuela 10.75%, -28.87%
Average 32.41%, 16.65%

vs. 13.15%, 12.02% YTD for the Emerging Markets Index.