Emerging Markets: Where to Go, What to Avoid

This year has been something of a roller-coaster ride for the emerging markets, but one of the most renowned investing minds says it’s time to hop on the ride. Burton Malkiel, professor emeritus at Princeton University and author of A Random Walk Down Wall Street, argues that U.S. stocks are pricey, and that emerging markets offer higher long-term returns. He points to the CAPE ratio, popularized by economist Robert Shiller, which averages 10 years’ worth of earnings adjusted for inflation, instead of the more common price/earnings ratio. (CAPE is an acronym for cyclically adjusted PE.)

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