Posted: 03 Oct 2010 12:02 AM PDT

Posted on Sun, Oct. 3, 2010

Where in the world does an investor make money when 70 percent of the U.S. economy is based on consumers, and many of them, along with Europeans, will be licking their financial wounds instead of spending through much of this decade?

Professional investors are turning to emerging-market stocks and funds that invest in fast-growing areas of Asia, Latin America, and Africa. While emerging stocks historically have crashed more than U.S. stocks during financial stress, recently they've seemed more resilient. Analysts say they will grow faster than the lethargic equities investors will find in the United States, Europe, and Japan.

Emerging countries make up 37 percent of the globe's gross domestic product. Goldman Sachs Group Inc. recently estimated that as countries such as China, India, and Brazil continue their growth spurts, today's emerging economies will make up 49 percent of global GDP by 2020 and 59 percent by 2030.

Although investors have turned their backs on U.S. stocks this year, "the cult of equity appears to be alive and well in emerging markets," said Citigroup Inc. analyst Geoffrey Dennis.

This year's flows into global emerging-market funds have totaled about $40 billion, with gains of about 6 percent, compared with 3 percent in the Standard & Poor's 500 index.

Turnabout from 1999

That is a change from 1999, when investors put $300 billion into U.S. stock funds and just $5 billion into emerging markets after the Asian financial crisis of 1997-98.

Now, the case for emerging markets has been bolstered by analysts such as Goldman Sachs strategist David Kostin, who recently urged professional money managers to invest more outside developed countries. He expects the market value of emerging markets to climb to $80 trillion from $14 trillion over the next 20 years, while developed markets increase to $66 trillion from $30 trillion. By 2030, he said, the market value of China stocks will reach $41 trillion, exceeding the projected $34 trillion in the United States.

GDP growth of emerging-market economies is likely to be twice the 4 percent growth rate in developed countries, he said. Recently, the U.S. economy has been expanding about 1.5 percent. IHS Global Insight Inc. estimates the Asia-Pacific region is expanding at 6.5 percent, though that will likely slow to 4.9 percent next year.

The fate of emerging markets cannot be separated entirely from the United States and Europe because developed countries are big customers for products and natural resources. In 2008, as the United States struggled and stocks plunged 38 percent, emerging markets lost export opportunities, and stocks dropped about 50 percent. Still, UBS AG analyst Jonathan Anderson argues that the growth rate of emerging nations has been and will be about 4 percentage points stronger than that of mature countries.

What to do about it?

The question for investors seeking emerging-market growth is how to partake. Some analysts argue that investing in an emerging-market fund is somewhat counterproductive because large firms depend on the United States and other developed nations to be huge customers. So they argue that buying shares in a large U.S. company that sells a lot in emerging economies can make sense.

"The U.S. is very much in malaise," said Eric Schoenstein, manager of the Jensen Fund. He recently added exposure in his U.S. mutual fund to large firms like Colgate-Palmolive Co. and Coca-Cola Co. that produce consumer goods and equipment for infrastructure construction, seeking companies that do a third to a half of their business in the emerging world.

David Semple, director of international equity for Van Eck Global, suggests the most direct approach: Invest in small companies based in emerging markets that cater to local customers rather than selling to the United States and other developed countries.

Those interested in this approach can pick emerging-market small-company funds. They can examine the funds at www.morningstar.com/.

Gail MarksJarvis is a personal-finance columnist for the Chicago Tribune. E-mail her at gmarksjarvis@tribune.com.

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Posted: 30 Sep 2010 11:29 PM PDT

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Personal Finance: Scrutinize for-profit colleges before enrolling - Los Angeles Times

Posted: 03 Oct 2010 01:28 AM PDT

Krystle Bernal spent three years studying fashion design, and she's got $80,000 in loans to prove it. But you'd never know it by what she does. She's a part-time bank teller.

"I wanted to be a fashion buyer," she said. "They told me I could earn $65,000 a year."

After finishing a three-year program at Westwood College, a for-profit university in Denver, Bernal was rejected for job after job by hiring managers who told her she wasn't qualified.

Westwood wouldn't comment about Bernal, who is a lead plaintiff in a suit against the school, but said in a prepared statement: "We are proud of the hard work by our 40,000 students and graduates, many of whom are working at businesses throughout the U.S."

Roughly 1.8 million — or some 10% — of the nation's college students attend for-profit schools that promise to prepare them for careers in everything from fashion design and culinary arts to criminal justice and medical technology. Advocates say these schools play a pivotal role in educating low-income students, but some experts in the field maintain that the graduates of for-profit campuses are often ill-prepared for work, deeply in debt and unable to transfer their units to not-for-profit universities.

The U.S. Department of Education recently said it was about a month away from announcing a new gainful-employment regulation that colleges will have to meet to maintain their eligibility to participate in federal student aid programs.

"Career colleges play a vital role in training our workforce to be globally competitive, but some of them are saddling students with debt they cannot afford in exchange for degrees and certificates they cannot use," said Education Secretary Arne Duncan in calling for new gainful-employment rules.

The regulation will probably aim to prevent schools from overloading students with debts they're highly unlikely to pay on time, based on the salaries they'll make in a given field.

Another regulation proposed by the agency would require schools to provide prospective students with their programs' job placement rates.

The regulations won't go into effect until at least July 2012.

In the meantime, it's a good idea for students considering for-profit schools to do their homework before signing any commitments, including loans, or paying any money.

• Check graduation rates: Every school must provide the Department of Education with its graduation rates.

This data is available at the College Navigator website (http://nces.ed.gov/collegenavigator).

• Check for more affordable options: Among the many troubling findings in a recent investigation of for-profit colleges by the Government Accountability Office was that many students had far more cost-effective education options.

A student wanting to earn a certificate to do massage therapy or computer-aided drafting could spend $14,000 at a for-profit school, for instance, or could attend community college at a total cost of $520, according to the GAO report. Those who wanted a two-year associate's degree in respiratory therapy could pay more than $38,000 at a for-profit college or pay less than $3,000 for the training at a not-for-profit school.

Had Bernal checked the College Navigator site for other schools providing her major, she would have discovered that she could have studied apparel and textile marketing management at Colorado State University in Fort Collins. There, the graduation rate is 62% (another 9% of students transfer to other colleges prior to graduation), and the $6,318 tuition was less than half the cost of Westwood's $13,958 tuition.

One major obstacle, however, is that not-for-profit schools tend to have much higher admission standards than for-profits. For example, Colorado State University, according to application information on its site, gives "priority consideration" to applicants "who have earned a minimum 3.25 GPA and have successfully completed 18 recommended high school units."

• Look for aid and net cost: The cost of tuition isn't always the cost of education. That's because some schools provide more financial aid than others. As a result, college experts say you've got to check each school's financial aid information to assess your chances of getting help with tuition and living expenses while studying.

• Check transferability: Westwood has revamped its website and practices as the result of the GAO investigation, according to a company spokesman. The school now provides a frank answer to whether its units are transferable.

"Credits you earn at Westwood College in most cases will probably not be transferable to any other college or university," the site says.

Conversely, units earned at Colorado State can be transferred to other schools or used as the basis for a graduate degree.

business@latimes.com

Personal Finance

Sunday, October 3, 2010