Dear Fellow Investor,

When I’m talking to people about investing in emerging market stocks, I’m always aware that I have two choices. The first is to spout statistics:

* About China’s 1.3 billion people

* The build-out of Internet access

* The rising power of the Chinese consumer

* The country’s decade of double-digit economic growth

* Colossal investment in infrastructure.

There’s no doubt that these are impressive factors, and they certainly point to a national economy that’s in high gear. But I don’t think they tell the whole story.

If a growing economy automatically produced stock market gains, an investor’s job would be very simple. You could just buy an ETF for that country and watch the money roll in.

But stock markets are too complex to reward that strategy, as investors are always looking ahead by six months or so. And just drawing a straight line that extends the current trend is almost sure to miss the mark.

So my second choice for convincing you to try the emerging markets is to lay out the potential benefits and risks and let you make an informed decision. This strategy isn’t likely to sweep you off your feet, but I like to think that people who go into the enterprise with their eyes open are more likely to become long-term subscribers than those who jump in expecting nothing but blue skies and rainbows.

So here goes.

China and the other emerging markets countries are risky places to do business. They’re on the emerging list because their markets haven’t matured to the point that the governments are stable and keep their hands off, capital flows freely, entrepreneurs find supportive conditions and property (both physical and intellectual) is protected.

But as these emerging markets develop, their economies often rocket ahead, lifted by industrialization, urbanization, entrepreneurship and foreign direct investment. China’s phenomenal string of 10% GDP growth years is a great illustration.

And the stocks of the companies doing business in these countries can blast off right along with them. This is what investors in Baidu (BIDU), China Mobile (CHL) and Ctrip.com (CTRP) found out a few years ago.

That’s when Cabot China & Emerging Markets Report beat all investment advisories hands-down, with a compound annual return of 20.5% for the five-year period from 2005 to 2010.

But the Great Recession chilled the global economy and investors ran for the exits, completely spooked by anything riskier than a sockful of Krugerrands under the mattress. I advised my subscribers to be heavily in cash as well, letting them decide if that meant money markets or less liquid investments.

The good news is that now, after two years of trading mostly sideways, Chinese stocks are showing renewed signs of life and Cabot China & Emerging Markets Report is once again steering subscribers into high-potential stocks that are moving up fast.

It’s a good feeling after a long spell in the doldrums. And the really good news is that the stagnation of the past couple of years has created some outstanding values among high-quality growth stocks. These stocks represent companies with exposure to the growth of China, South America and Central America, and our hopes are high.

I strive to give my readers a balanced picture of the emerging markets with a realistic notion of both the opportunities and the risks. The Cabot approach to timing the market has won many awards, and it has proven indispensable in getting my readers out of dangerous markets and back in when conditions improve. I hope this sounds like a valuable proposition, and I look forward to serving you.