Emerging markets are the rage these days. Investors, desperate for growth, have been increasing their allocations to developing countries, where GDP is rising at a faster clip than in most mature nations. Although I agree that investors should look outside the U.S. market — especially given that many U.S. stocks are overpriced or fully valued — they don’t need to be “the Indiana Jones of international investing” by diving into countries where the rule of law is still in its infancy, as I wrote in my book on sideways markets. There are plenty of great opportunities in developed nations that have stable political systems, rule of law and proper financial accounting.

Wherever you put your money, it’s important to stick to your investment discipline. As a value investor, I focus on three attributes: quality, growth and valuation. A quality company will have long-term-oriented, shareholder-friendly management; a competitive advantage that will protect its future cash flows from rivals; a high return on capital; and a strong balance sheet. Its business will also have a high recurrence of revenue, which will result in stable cash flows. ....

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