NEW YORK (TheStreet) -- You heard me right. Buy emerging market stocks.
Pundits argue that emerging markets are doomed because of the inevitability of rates rising in the U.S. and slowing growth for its largest trading partner, China. These fears are misplaced.
The U.S. credit markets have long been a key access point for emerging market nations' liquidity needs. But rates aren't rising here.
We keep hearing about how rates must go higher as America's economic recovery continues to accelerate, unemployment declines and the Fed draws down its monetary stimulus. But the bond market is already pricing in all of these factors.
Last week, Federal Reserve Chair Janet Yellen announced that the Fed's bond-buying program may be complete by this fall, assuming the Fed will have tapered its Treasury and Mortgage-Backed-Security purchases to zero. She added that six months later, it might make sense to raise the short-term benchmark Fed Funds rate.
The 10-year Treasury was yielding 2.68% the day before Yellen's announcement; it is at 2.67% today. Here is what the iShares Emerging Market Index (EEM) has done versus the S&P 500 since: