To Everything There Is A Season {Part I}

There is a Bible verse from Ecclesiastes that starts with these thoughts, "To everything there is a season and a time to every purpose under heaven".  Here in the north we slip now from winter into the beginning of spring.  The first tentative shoots of warmer days are showing up.  Robins have returned.  Plants are starting to wake up  as everything has a slightly more verdant look to it now.  It hit 70 here Friday and while the weather promptly turned sour, it brought with it the first whiff of better days.  As the ancients marked the seasons and different periods of time in the lives of men just so there are seasons  or trends in  market as well.  I'm beginning to wonder if we're seeing a change on a couple of fronts as it relates to stocks.  Today I want to talk about international stocks.  Tomorrow I will discuss the US markets.  

The first thing I wonder is if we are starting to see a change in relative strength between international and domestic equities.  First US equities have substantially outperformed their international counterparts over the past ten years.  During that time, markets overseas are in essence break even.  If we are beginning to see a pick up in global economic growth then it is possible there might see international stocks start to do better than US markets.  International markets are in general substantially cheaper than the US and many of their ETFs pay nice dividends.  You are in essence paid to wait even if it takes a while for this trend to pan out.  

Also on a relative basis foreign stocks look like they may be ready to start outperforming when you measure them versus the US in regards to their money flows.  I don't have time to put some examples of what I'm seeing this week but I will try and show what I'm talking about regarding this some time in the future.  This is a longer term event we're discussing.  It doesn't usually happen over night and often takes a correction to discern a change of leadership.  If as probability suggests we might be on the verge of such an event, then foreign stocks should hold up better in the next correction than US companies.

Tomorrow I'll discuss the possibility that US equites might be ready to take a breather.  

*Note we are holders of international related ETFs in client and personal accounts.  We have also selectively recently purchased these in certain client and personal accounts.  Holdings may change at any time without notice on this blog or via any other form of communication.