 Good day, fellow investors. Welcome to the stock market news with a long-term fundamental twist. And that long-term perspective will be put today in regards to the most important news, which are tariffs, Trump, of course, emerging markets and the divergence between the emerging markets and the SAP 500, a little bit about the economy and about what the Fed is doing as it is practically 100% sure that they will increase rates another time this September and then later in December. So what does that all mean for your portfolio? What should you do? Where should you buy SAP 500, emerging markets, developed markets? What's going on? Let's discuss it. So on the tariffs, US businesses make less-ditch push to avoid planned tariffs because tariffs are not good in the long term for a lot of people, for a lot of businesses. And in the economy there is no free lunch in the economy. If you push something here, you pull from here. If you give to someone here, you take away from somewhere else. Trump is doing his thing, he's doing good for what he thinks is necessary, but already weakness is being felt all around the world, which will consequently in the long term lower the value for overall people. And businesses are seeing, countries are seeing it, but of course you protect what you have. That's normal, that's logical, so we'll see who will be the winner in the long term. Further, the Federal Reserve will further increase rates because the economic news were very, very good, job rates amazingly well, unemployment rate good, inflation good, tariffs push prices higher, thus inflation looks even better. So higher interest rates, which means that of course things are going to get even more expensive for Americans. Higher interest rates plus tariffs means that you have to buy not the cheapest thing on the market, but a little bit more expensive things, tariffs increase the prices. So inflation will start to hunt Americans coming from higher interest rates and tariffs. That's something in the long term that will have an effect. It's important to see that global trade is already in decline. For the past two quarters we see small declines in global trade, which were very, very positive prior to this trade war starting in higher tariffs. Unsecure economies, insecure investors all lead to slower trade, which is not good for the global development and can lead to global consequences. So nobody will be left out of this. It's not rational to believe that only emerging markets will be hit. They are hit now and hit first, but everybody else will be hit too in the longer term. So be aware of that. Let's see what happened in the stock market. As I'm filming this, the SAP 500 is down for the week, also down on Friday. Perhaps it will recover, but I think it will finish the week negative. However, emerging markets are hit very badly this week down more than 3%, 3.5%. Over the year emerging markets are down 11.44%. The SAP 500 is still up 7%. Now, I hear a lot of comments. I read the comments online everywhere, stick to US stocks, stick to the SAP 500, stick to American debt can only go up. That's always the best investment, stick to debt. And I understand the reason most people are long the SAP 500, most people are long US stocks, which means that you have to protect debt and do whatever you can. Trump is even lowering capital gain taxes, lowering corporate taxes to do whatever he can to keep the stock market high because the stock market fuels confidence and reinforces the circle of growth that is going on now in the States. However, when it comes to investing, you can invest there where everybody else invests or do the opposite, which is something very interesting. And let me show you that you should not write off emerging markets immediately. Of course, in the last nine years, the SAP 500 exploded 210% up while emerging markets have underperformed severely just up 25%. So we can say that the SAP 500 has beaten the emerging markets by 10 times over the last nine years. However, since the emerging market ETF index has been established in 2003, it has actually beaten the SAP 500. So everybody is rushing into the best stocks out there. But emerging markets have beaten the SAP 500 over the past, what is it, 15 years. Don't forget that. Further, if you look at the volatility, emerging markets are much, much more volatile. But that doesn't say anything about long term returns. They are similar when you look at this chart, except the SAP 500 had a much more linear way of coming there. Emerging markets crashed severely 70% in 2009. Then they crashed in 2012. Huge crash commodity crisis in 2016, January 2016, when the SAP 500 practically didn't even feel it, no bear market. And then again, now big crash in 2018. So where to invest now? Everybody is investing SAP 500. I hear a lot of comments, SAP SAP, SAP stick to what you know, stick to domestic or stick to the US dollar. Yes, but I'm going to give you an answer that will make it much more easiest, easier. Over the long term, it's important to be globally diversified. There have been studies, global diversification gives you a better perspective on what might happen in the future. And those emerging market economies are growing no matter what. So the easiest approach to do that is simply to take a value approach. Look at the earnings, look at the business yield for each sector, even better if you look it for the businesses, but let's stick to the sectors now and then see what will deliver the better return in the long term. Just look at the fundamentals. Emerging markets, DTF has now a price earnings ratio of 12.62, price to book ratio of 1.6 and a dividend yield of 2.22. The SAP 500 has a price earnings ratio of 24.89, double the emerging markets, price earnings ratio. Price to book ratio is also double the emerging markets and the dividend is a little bit lower. So what will deliver better returns? Emerging markets with a PE ratio of 12 or the SAP 500 with a PE ratio of 25. Over the long term, I'm saying tomorrow SAP 500 can go up another 20-30%. Merging markets can fall another 30%. Nobody knows what will happen. But when you deploy your money tomorrow, when you diversify your portfolio, look at, okay, you have emerging markets, you have China, India growing extremely fast, do I want exposure to that? Or do I want to exposure to the already expensive, pretty expensive SAP 500 or more exposure to what I probably am long 90% plus the economy plus everything else. So if we go back to the emerging market SAP 500 chart, we can see here that the best time to buy emerging markets is in panic. Long term returns are still there, risk adjusted, long term returns are equal across asset classes, that's radio or weather perspective. So if you buy when there is pessimism across the world, then over the long term, I think you will outperform every other investment strategy. So if now emerging markets are cheaper than the SAP 500 by emerging markets, when it will be opposite by the SAP 500, cheaper, I mean here in a relative way, if emerging markets have a price earnings ratio of 10, the SAP 500 of 12, of course, by the SAP 500, when the difference is bigger than by emerging markets like it is now over the long term, the businesses, the dividends will give you the returns you want, especially I think higher now from emerging markets than from the SAP 500. But the result of that we will see after 10 years. So the first decade of this century, emerging markets won up till 2007 if you look at the spike up, then the next 10 years, the last 10 years, the SAP 500 has been winning. What will be the winner over the next 10 years? We will see in 10 years. I've got the feeling that a lot of good investments might come from emerging markets. So I'm just diversifying, I'm looking for the best businesses with the best valuations that will lead to the best business returns. As for stock market fluctuation, market sentiment, I cannot predict that. So I'm just sticking to business analysis and what I can do well, analyzing businesses, economies, people management, and finding the best long term investments. So and there is another thing, everybody thinks that the SAP 500, the American economy is detached from the trade war and what goes on. Let me show you something. If we look at the holdings of the emerging market ETF, Tencent, Semiconductor in Taiwan, Samsung, Alibaba, NASPERS, China Construction, Baidu, China Mobile, Reliance Industries in India. So okay, China, Taiwan, South Africa, that's again Tencent, China, India. If we look at the company, the SAP 500, we have Apple, Microsoft, Amazon, Berkshire, Facebook, JP Morgan, Johnson and Johnson. And just show an example, revenue of Apple by country. So 25 billion comes from the Americas, but the rest, even more than 25 billion comes from Europe, greater China, Japan, the rest of Asia Pacific. So if all those emerging markets, Americas means also Latin America, slow down on buying the Apple iPhone, then also Apple's revenues will be lower, profits and everything. So this trade war, if China is hit, also US stocks will be hit because everything is interconnected. And that's extremely important to understand when investing for the long term. Further, if we look at Johnson and Johnson, again 46% United States, 18.8% of sales from Asia Pacific, Europe 21%, 25% and other and other 10%. So everything is interconnected. The price earnings ratio of one sector is 25, of the other is 12.5. With everything being interconnected in this world, there is no way of escaping that in this global business world, especially for businesses. So I leave it up to you to decide whether where you want to invest, be careful, expect much more volatility in emerging markets, but I'm always a friend of volatility. Volatility is my friend because I can simply buy much more value at a lower price, if those stocks drop. Just another look at the kings of the world to finish with Apple, one trillion valuation, Amazon Close, Microsoft Alphabet, Berkshire, Facebook and then only then we have Alibaba, Tencent. And remember that China has 1.3 billion people, those companies are all expanding across Asia at 1.45 billion people in India, Malaysia, Indonesia etc. etc. So a lower valuation for much bigger future growth. The world is not just in the US, whether you like it or not. That's my view on things. I'm not saying invest everything in the emerging markets, I'm just saying start thinking about diversifying over time, buy what's cheaper and that will lead to higher returns in the long term. When something is expensive, emerging markets 2007 were in a bubble, 2012 also pretty much in a bubble, then you sell and then you buy cheaper SAP500 companies because the SAP was relatively cheap in 2012. You balance that out over the long term, you add some commodities, you add something else and you have a great portfolio. Thank you for watching, I thank everybody, we have reached 20,000 subscribers, so thank you, thank you, thank you. Tomorrow tune in because I'll prepare something special that will even add more value as a thank you note for the 20,000 subscribers will begin covering some stocks that you pick, but more about that in tomorrow's video. I'll see you tomorrow.