International and Emerging Markets are Due

Over the last five plus years, since December, 2010, the total return for domestic stocks (S&P 500) has been 97.0% while international developed stocks (MSCI EAFE) has returned -2.7% and emerging markets (MSCI Emerging Market) has returned -26.4%. International stocks have been hurt by austerity, Grexit and Brexit while emerging markets have been hurt by deflation and the crash in commodity prices. This may be about to change. When a market outperforms its long term average, its future expected returns go down. Also, when a market underperforms its long term average, its future expected returns increase. The Brexit vote and US election was a warning to the EU and ultimately may signal the end of austerity. Commodity prices appear to be bottoming and inflation is picking up. The cyclical nature of markets is such that I believe international and emerging markets will outperform the US market over the next 5 to 10 years.

 

Disclosure:

The information presented here is the opinion of the author and may quickly become outdated and is subject to change without notice. All material presented in this article are compiled from sources believed to be reliable, however accuracy cannot be guaranteed. No person should make an investment decision in reliance on the information presented here.

The information presented here is distributed for education purposes only and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or participate in any particular trading strategy.

Performance data showing past performance results is no guarantee of future returns.

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