Rubenstein on Emerging Markets

David Rubenstein, a co-founder of The Carlyle Group, was interviewed in the January 17th issue of Buyouts. The interview was insightful, but not nearly as exciting as the Dan Briody book, The Iron Triangle. I highly recommend it, a must read. Carlyle has grown faster than most tech startups I've seen! BuzzFlash also published an interesting interview with Briody. But, I digress.

Emerging markets have an infinite capacity to disappoint. In other words, they always look terrific in the peak years. The always look like a place where you can get greater returns that you can get in mature markets. But because these areas often have boom-or-bust phases, you have to be prepared for the bust. If you're not prepared for this phase of an emerging market, you shouldn't be investing there in the first place. You just do not have the stomach for emerging markets.

For Carlyle, a group that stayed clear of Latin America during the 1990's boom, this is an impressive statement. He's right, you've got to have big cojones & a strong stomach to play in emerging markets.