Emerging market stock fund weekly outflowsOptimists argue that the sell-off is overdone, and may even offer investors a golden opportunity to buy quality stocks on the cheap. Barry Ritholtz, CEO of online quantitative research firm Fusion IQ and author of the widely read The Big Picture blog, thinks the washout in emerging markets will yield some huge bargains. (He's also bullish on Europe.) In a recent interview, he argued that:
"If Europe is cheap, emerging markets are really cheap. The question is: How much cheaper are they going to get? Is there room for more downside? Definitely. But based on valuation and the fairly overwhelming negative sentiment…we don’t really care about being a few months early."If you agree with his take, Ritholtz recommends the iShares Emerging Markets Dividend ETF ( DVYE). The reason: It is far less exposed to bank stocks, which are really getting hammered, than the iShares MSCI Emerging Markets (EEM). At the same time, the emerging market currency declines against the dollar and euro could eventually have a big upside. The big expansion in world central bank balance sheets after the financial crisis increased the value of emerging market currencies, hurting exports. That money is starting to retreat now, but the export competitiveness of emerging markets has come back.