Josef Stalin 1949. (Wikimedia commons)
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markets could save you from StalinJeremy Grantham, the Briton who founded GMO, a huge Boston-based fund manager, has come up with some fascinating findings by putting himself to the Stalin test. His question: what would he do if he was working for Stalin, and told to earn a real return of 4.5 per cent per year over the next 10 years? An institutional asset allocator or fund manager need not worry about being shot.Such an approach, Mr Grantham argues, would lead to a conventional allocation between developed market equities (maybe 60 per cent) and bonds (40 per cent) – which would almost certainly lead to a bullet in the head 10 years later under Uncle Joe.So why does Mr Grantham suggest betting on emerging markets and is he right?Vladimir Putin's Russia is unpopular and, in Asia, China's ever-more-powerful Xi Jinping seems intent on reining in a credit bubble while intruding the government into companies' corporate governance.These are reasons to be nervous about emerging markets next year, so those worried about their careers may avoid them.
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