I am very positive about the opportunities from emerging economies like India, Latin America and the Far East. However, I am also aware that one must never under-estimate the risks associated with these economies. How do you suggest private investors 'play the market' by taking such an aggressive strategy?

Emerging markets have performed exceptionally well over the last few years. At the same time, it is common for bubbles to form in such economies, and far too often we see private investors jumping on the bandwagon at the top of the cycle, only to see a correction downwards later.

It is important to look for opportunities in emerging economies or sectors early on and to reap the rewards before everyone else joins in. This is easier said than done, which is why, as a private investor, you should rely on professional advice to help you decide what to invest in and when.

In the case of places such as Latin America, I would never suggest investors try to select individual stocks to buy due to the difficulties of doing so, the costs involved and the high risks. There are plenty of excellent fund managers who specialise in these areas and manage funds of more than 100 stocks at any one time. While there will be a management fee involved, I would prefer the security of a portfolio of 100+ stocks than one or two hopefuls.

Secondly, while such countries are seeing phenomenal returns, nothing tends to move in a straight line upwards. Take China as an example. You could have doubled your money over the last year. Along the way though, there were obvious corrections during the year - noticeably in August. It is therefore essential not to adopt a 'buy and hold' strategy in certain emerging markets.

Instead, you should consider taking periodic profits, whereby you pocket profits and buy back into the funds after a correction has taken place. Private investors rarely follow this approach and instead buy a fund for a period of three or more years without considering what happens in between. My advice is to take profits and sit in cash for periods of time of volatility and re-enter the market accordingly.

The difference between this and a 'buy and hold' strategy can be quite incredible. This is assuming that you leave and re-enter at the right times. If you bought your investment funds through a professional adviser then you should rely on him to give you such advice on an ongoing basis, not just when you bought the fund.

This 'profit-taking' approach works better in certain sectors than others, namely those which carry the highest volatility. If you are investing in blue chip UK stocks, for example, then a 'buy and hold' strategy can work just as well.

Mark Hollingsworth is the director of Hollingsworth International Financial Services Ltd, licensed by the MFSA to provide investment services under the Investment Services Act 1994 and enrolled insurance broker under article 13 of the Insurance Intermediaries Act (Registration No. C32457). Tel: 2131-6298; e-mail: mh@hollingsworth-int.com; www.hollingsworth.eu.com.

Past performance is no guide to the future and, except where amounts are guaranteed, the price of investments (and the currency in which it is denominated) may fall as well as rise. Your personal tax situation will depend on residence. Always consult a professional adviser. This article does not intend to give investment advice and its contents should not be construed as such. Readers are encouraged to seek professional advice on their personal financial situation.