Emerging Markets Under Pressure: How Oil, the Dollar, and Iran Are Hammering Developing Economies

SPEAKER_1 (0:01)

This is InvestTalk from KPP Financial, helping investors make sense of the markets one day at a time. Here's your host, Justin Klein.

Justin Klein (0:17)

Good afternoon, fellow investors, and welcome back to InvestTalk. This is our Monday, October 5th, 2026 edition of InvestTalk. Lots to discuss as we embark on a new week. Excited for this hour with you to answer your finance and investment questions and help you take your next step in your financial journey. There's a lot of pitfalls that you must avoid, but then there are also hundreds, if not thousands of opportunities, good opportunities that you must learn to identify, balance the risks and reward, figure out what is right for you.

And that's what we are here to help with. So I encourage you to give me a call. 888-99-CHART is the number to get through anytime. I'm Justin Klein. And I've been doing this for over 25 years now. So I've seen it a lot and I'm ready to help you take your next step. So give us a call. 888-99-CHART is the number. And a quick heads up, the date is creeping closer, just under three weeks away. Be sure to mark your calendars for October 24th. It's a Saturday. You're invited to join the KPP team and guest experts for our in-person InvestTalk retirement summit. The special event is free of charge, but seating is limited. So you must pre-register now at investtalk.com.

Because I think we are running relatively low. I know we're over half full.

So I think the spots left are numbering a little over a dozen. So if you're going to come, make sure you reach out and pre-register. Now, in just a bit, I'm going to talk about today's market performance, run down the show topics for the hour. But as usual, we'll tackle this first caller question now.

SPEAKER_3 (2:06)

I'm invested heavily in VTI, which is a Vanguard ETF.

Most of my retirement portfolio along with our savings are in VTI, because I'm a true believer that the market does go up over 20 years at about 8 percent per year. Is that a good strategy or should I be looking at other things? Thanks.

Justin Klein (2:24)

Well, you're correct that over time the market goes up. That's just inflation, right?

That's how it works. Prices in the economy go up, so earnings go up, money goes into the market, especially because of 401Ks. That's one of the reasons why indexing has done so well. Question will be is, when does that reverse? You go into recession, people start to take money out of their 401Ks, maybe boomers take money out of their index funds, et cetera. And does that reflexivity of these index funds continue to do well, start to reverse? And I think that is what will happen. It's just a matter of what is the timing of that. And so I think this is a great opportunity to start diversifying your portfolio. VTI has 36% in tech. Financials are 12 That's the next largest sector. Then you have health care, 10 Industrials, 9 Consumer cyclical, 9

Communication services, about 9

So you're kind of huddling into one sector and then four satellite sectors and the rest are sub 4% of exposure. So you don't get great diversity. Does that mean you go and sell all of your VTI or the S&P funds are gonna look very similar as well? Or your S&P? No, not necessarily, but this is a great time. You've seen that since the beginning of last year where foreign markets have started to outperform.

The smaller caps and mid caps are starting to outperform, especially as, over the past couple months, no, but over the medium term now, last couple years, they have been outperforming. Why? Because these hyperscalers are spending so much money on AI and AI infrastructure that the beneficiaries, in most cases, are going to be the mid and small cap companies that provide either the chips or the industrial infrastructure, such as electric grid products.

And then you also have your material companies that provide copper for these products as well. So there's a lot of money flowing from the hyperscalers, cash flow flowing from the hyperscalers to these mid and small cap names. So I think this is a perfect time to start broadening out, diversifying your portfolio. It's okay to say, yes, over time, the market goes up. Yes, that's true. But you are very, very pigeonholed into large cap US equities when you're just buying VTI. I know it sounds like it's broad because it's a total stock market, but it's a total US stock market. And global equity markets are much, much bigger. So I would get foreign exposure. I would look small and mid cap exposure. I would look for hard asset exposure for diversity, because what you're getting there is a broad hedge against inflation, as opposed to a very narrow, potentially flawed, very flawed exposure with just VTI. You know, we had a great show on Friday. We looked into this story. Wall Street is back in charge. What digital money flowing into the markets means for retail investors. We also answered the questions on Halo, which is Halo, Zyme, Therapeutics.