 Good day, fellow investor! I hope you're fine and I'm very glad you're watching. Today we'll discuss Frontier markets. We have developed markets, emerging markets, and then Frontier markets. Frontier markets are markets that are not big enough to be emerging markets, are relatively illiquid, there are different political situations. However, Frontier markets have to 24% of the global population, but their complete market capitalization is 84, around 84 billion. This means there are huge opportunities there, but there are also many, many risks from political risks, liquidity risks, information risks, and many other risks that we are going to shortly discuss, and we're going to see how does it look to invest in Frontier markets. Let me immediately show you what does it mean, the liquidity risk. It can be an opportunity, but also a risk. This is the Croatian stock market index. As you can see, in 2003 the level was around 1000, then Croatia opened to foreign investments, the political environment changed, and everybody was crazy about investing in Croatia. The index went up 5-fold and reached 5000 in 2007. Then the financial crisis came, a recession came, and stocks fell down almost to where they were before. However, the stock market over the long run is a little bit higher. For example, with Croatia, one credit cycle made the stock market explode, and when the credit cycle contracted, the stock market fell terribly. You have to really know and look at from a long-term perspective about what's going on in Frontier markets, like Croatia and other markets. What is very important is not to invest in them when they are hot and everybody is excited about them, because then your late and the risks are too high. When nobody watches Frontier markets, as is the current situation, then you might find interesting investing opportunities that are overlooked by investors. So what are Frontier markets? Well, there are 12 countries in Europe, 11 in Africa, 7 in the Middle East, 6 in the Pacific, Asia, Asia and 3 in the Americas. As you can see here, from Qatar, Argentina, Egypt, Pakistan, Kenya, Vietnam and so on. So very, let's say, questionable countries to invest in. But of course, this also creates opportunities. Going there where other people don't want to go, usually in the long term, brings you to extremely high returns. However, you have to be smart about it, and buy when those investments are extremely cheap and they give you something while you wait. Thus, fat dividends. If we look at the price earnings ratio of some Frontier markets, we can see that they are not that cheap. You see, Croatia has a price earnings ratio of 30, Romania 34. However, Slovenia, Vietnam, Nigeria are all below 15. For me, those price earnings ratio as a market for those markets are a little bit too risky. And that's why I also don't like ETFs, Frontier markets ETFs, because ETFs buy much of the expensive stuff, especially when there is a hot market. Market capitalization goes up and they have to buy more. Then when there is a crash, of course, they sell. So the ETFs buy high and sell low. So let's see how the Frontier market ETF fared in the last six years. You can see that it's very volatile, went up in euphoria in 2013, then crashed in 2015 and now it's slowly recovering. If you want to be exposed, okay, you don't want to think, you don't want to know, to learn to know Frontier markets, then an ETF is good. However, if you want to really limit the risks and increase the returns, then what you have to do is to learn a few Frontier markets and then wait perhaps a decade, but then, okay, now that market is extremely cheap. Now I'm going to find two free stocks that are in a good business sector, that will grow, that pay a nice dividend, that have a good balance sheet, and then you buy. And then you can expect returns of 10-20% per year and when the market enters into bubble, which they always enter sooner or later, you can expect returns of 10-20 times your investment. Let me show you. I have here a table from Croatia. It's a few months old, had to adjust it, but you can see that the price earnings ratio was 40, the average, but there are companies with extremely high price earnings ratios and companies with extremely low price earnings ratio, around 5, 6, 7. So you have to really know a Frontier market to invest in it and then find cheap bargains and then buy them and wait them, if they pay a nice dividend even better. Another example is Kenya. For example, if we look at the price earnings ratios, some price earnings ratios are really crazy. 4.7, 411, 133, 0.44 for Kenya Airways. So really, really crazy stuff. I'm not that familiar with Kenya, but it looks crazy. I will dig deeper into it, because I want to see what's behind these securities. If somebody wants to share something they know about it, please let us know. So what do you need to invest in Frontier markets? You need knowledge about the country. It's very difficult to follow 20 countries. Therefore, if you know a few of them, for example, I'm following Croatia and following Turkey for now and I think I'll be adding another Frontier market. Croatia is extremely expensive now. I'm not invested there, but in 2010 I was heavily invested in tourist companies there. 2003, I was also heavily invested. Now I have some Turkish stocks. So I'm looking and when there is really something cheap I buy. That's what you have to do. Find undiscovered cheap gems that pay you while you wait in dividends or growth or whatever, that you are happy. You know the situation. That's very important. You have to know the political situation, prospects of the country and so on. So that's also given. So investing in Frontier markets requires lots of knowledge, lots of research, lots of understanding what's going on, traveling to that country, opening a specific account, but the rewards are definitely worth the work. So I would really look for stocks that give you dividend yield higher than 5, perhaps towards 10%, that have a primary price earnings ratio below 7, because those are usually great investments that have potential growth in the future. Perhaps there will be acquired where the political environment is safe and those bargains can really be gems that can transform your portfolio in the long term. Thank you for watching. I hope I have given you an idea about Frontier markets. Perhaps you know some. If you want, please share some ideas, something with our investing community. I'm sure everybody will appreciate it. Thank you for watching. Don't forget to subscribe, click like if you like the content and I'll see you in the next video.