Don't let the headlines fool you, there's lots of money to be made in global investing in 2012.
You're just going to have to be careful - more so than in years past - because right now the line drawn between successful markets and markets that are in danger of collapse is treacherously thin.
Take the fashionable growth markets, the BRICs - Brazil, Russia, India and China - for example.
It's been 10 years since Chairman of Goldman Sachs Group Inc. (NYSE: GS) Asset Management Jim O'Neill coined the BRIC acronym. His recommendation was certainly effective - one of the best of all time, even. But today, all four BRIC countries face problems, and their troubles illustrate the dangers of following investment fashions.
Just take a look:
If the BRIC's prospects are bad, those of much of Europe are even worse.
The Eurozone's debt problem could have been solved early on by throwing Greece out of the euro (a much deserved punishment). However European authorities have now thrown so much money about in such unproductive ways that it's doubtful whether the euro is even salvageable anymore.
A recession in 2012 seems unavoidable, although Germany may benefit from the problems of its trading partners (if it is not forced to bail them out). Well-run European Union (EU) members that are not part of the Eurozone, such as Poland, may also benefit from the chaos, although Poland's current foreign minister Radek Sikorski doesn't seem to think so.
Japan has done so badly for so long that it may be impossible to revive. If public debt were still at the level of a decade ago, Japanese shares would be a screaming buy, as the market is at a quarter of its 1990 peak. However, with debt around 220% of gross domestic product (GDP) and no sign of the country's budget problems being solved, it may be nearing the point of no return and eventual debt default. On the whole, it's best avoided.
Apart from the United States, that leaves one obvious rich-country market,Canada, and some emerging markets of East Asia and Latin America likely to come out on top. (Australia is currently badly run, and looks likely to "kill the goose that laid the golden eggs" by taxes and environmental regulations.)
Canada and Chile are well run and benefit from current high commodity prices. Malaysia does, as well, while South Korea and Taiwan would benefit from a fall in prices. And Singapore does well in all environments except a major world slump, which I don't expect.
The best way to invest in most of these markets is through exchange-traded funds (ETF).
For Canada that's the iShares MSCI Canada Index ETF (NYSE: EWC), with net assets of $5 billion and a price/earnings (P/E) ratio of 14. For Chile, there's no ETF, but the Aberdeen Chile Fund (NYSE: CH) is well run, although small with a market capitalization of $130 million. For Malaysia, the iShares MSCI Malaysia Index ETF (NYSE: EWM) has net assets of $929 million and a P/E of 15. As a hedge against a commodity price crash, look at the iShares MSCI Korea Index ETF (NYSE: EWY) and the iShares MSCI Taiwan Index ETF (NYSE: EWT).
If that's not enough, however, there is one more emerging market that's positioned to do very well in 2012. It is well governed, has ample natural resources, and is currently planning a huge infrastructure build-out. That makes it a prime investment opportunity. However, that recommendation is only available to Money Morning Private Briefing subscribers.
If you're already signed up then you can read all about it in today's issue. If not, then I highly recommend you sign up by clicking here. That way, in addition to today's pick, you'll receive dozens of other top-tier recommendations.
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