International Indices

This chart representative of international and foreign indices comes to us courtesy of Freestockcharts.com.  It is of the Vanguard Total World Stock ETF {symbol VT}-an index that covers well established and still developing markets.   I am using this as a representation of foreign markets in general because it is a very broad based index.  First of all let me also apologize that this graphic lacks in a certain degree of professionalism.  I'm experimenting with different new chart forms and don't quite have my sea legs yet with these.  

Anyway back on July 15th, 2013 we noted that international markets had basically gone nowhere for years that's represented on the chart above by the horizontal red line from 2009 till last summer.  Back on that date we updated our indicators on international and foreign based ETFs to NET MARKET POSITIVE.  These markets have moved higher since this past summer but to be fair so has almost everything else.  Among the reasons we cited back then to become more interested in these names were the following reasons:

1.  Very out of favor asset class.  {Unloved by most investors today-bashed by the media}

2.  More favorable valuations.

3.  Most of the negatives were known.

4.  High dividend ETFs {Can be paid to wait}.

5.  Very oversold by my work....... 

6.  Finally there's this.  US markets have so significantly outperformed overseas assets that it seems to me that either US markets have to go to sleep at some point or over seas will catch up to us.  Since one of my principle arguments is that things are continuing in the main to get better at home from an economic standpoint, then I think there is a higher probability that markets "over there" may play catch up to us.

Investors have become more favorable on these investments since and they are not as out of favor as they were.  I would note though that from a fundamental standpoint, valuation basis and for the dividends these indices still carry many favorable aspects.  Perhaps you don't need to go out and take a look at these today given that they are overbought like everything else, but probability indicates that these become more attractive on market pullbacks.

*Long VT in certain client accounts.  Long other foreign or international based ETFs in client and personal accounts.