International Markets.

Another excellent post from the Twitter feed of Pension Partner's Charlie Bilello.  This one shows in US dollars the massive outperformance over the past 11 years of the US versus some of the larger economies in the world.  I've been saying for a long time that I thought international markets would do better on a performance basis than the USA.  Last year that worked out pretty well but in 2018 the rest of the world has seen terrible market performance.  Most international markets are down on the year and in many cases are down over 10%, although recently relative performance to the US has been better.  On a money flow basis it currently seems international markets have found a level of support.  Whether that is a point where these markets will bounce and head higher or just a way station for the next level lower is something only time will tell.

At any rate this type of discrepancy in valuation is something  unlikely to last forever.  Longer-term it can be resolved in one of three ways.  International markets grow their markets at a rate faster than the US, the US has a period where it trades flat while the rest of the world catches up to it on a valuation basis or US markets need to trade down.  I'd pick the first two options if I definitely had to choose.  I'd also point out that many international markets are trading at some of their cheapest relative valuations in a very long time.

At some point I'm going to write about this in a bit more detail, particularly in relation to the two best opportunities I see overseas.  My main focus, hopefully next week, will be to finish up the third part of my series on the road ahead.  

Back early next week.

*Long ETFs related to the S&P 500 and many of the countries listed above via regional or international funds in client and personal accounts.  Please note positions can change at any time    We reserve the right to change these investments without notice on this blog or via any other form of verbal, written or electronic communication.

Also in my note of yesterday I forgot to note that I am personally long ETFs related to the S&P 500.  Did a bit of cutting and pasting on that disclosure and obviously cut a bit too much.  Sorry for the error.