Based on fundamentals and price history, which nations would you invest in right now if you had to pick 2 or 3 funds?
Or do you think most nation-specific funds are subject to losing money (for the wrong reasons) when the market tanks this year?
US x 3. If that is not an acceptable answer, I would choose US, Germany and Hong Kong. I am not a big believer in emerging markets investing. The rule of law is critical and most emerging markets don’t have enough of it or don’t have it at all.
US, Germany and India (yes, I’m bullish on India)
I’ve been looking at India for a bit now and Indian cash stock market has made me more money than my European derivatives book. And I was given India to trade as a side-by thing.
Germany, Belgium, Netherlands. Buy low. Euro is priced for crap, but Germany is going to export like crazy with the current FX. I’m very Germany bullish. Belgium and Netherlands are two other countries that will absolutely kill it with EURUSD parity. The US will probably have stronger GDP growth but equities there are priced for perfection whereas Euro blue chips are cheap given the shot of heroin QE will give them.
I’m not entirely sold on this argument - if EURUSD trades at parity (abt. -10% from here), assuming that you’d bet on each country’s equity index as opposed to single stocks - this means DAX has to trade atleast over 13000 and AEX over 550 to breakeven on this trade . Ask any guy trading DAX for a while and he’d say 11500 looks expensive to him. Not a view on how good/bad germany is qualitatively but a view on how much it has already been bid up - might be justified but I don’t personally buy it. However, it is possible to look at some very interesting single stocks and put on a decent trade outside of cash markets.
Your choice of Germany, Belgium, Netherlands is very much plausible but if I lived stateside and spent in $$$, I’m not sure I’d do this trade.
Since the trough in March 2009, the S&P500 rallied 215%, the DAX performed 221%, hence the hint with expensive markets seems to be legitimate. But the popular DAX is calculated as a performance index, excluding dividends the performance was inferior to the US markets (160%). I think in terms of valuation, European markets (DAX, EuroStoxx50, and also French CAC40) still offer potential, with €QE as additional tailwind.
As we calculate in Euro, the FX is not important for investing. But EURUSD development is likely to be a headwind for US companies, and European exporters might benefit.
^
Yes you’re absolutely right, dividends exactly the reason why I siad I’m not sure. I
For equities Russia, China and Southern Europe look cheap now. US is expensive.
India and Germany.
I recently shifted my allocation by reducing USA and increasing Europe as a whole (the funds will pick which countries etc are looking good). GMO’s latest quarterly publication discussed Europe investing, if you want to read some analysis on it. http://www.gmo.com/websitecontent/GMO_Quarterly_Letter_4Q14.pdf
What’s the split %?
asia ex-japan has always done well historically.
if you want to split out the better performers, then singapore, australia, korea.
I’d have to check, but its still overweight USA just not as overweight. I think I may be 20-40% Europe now? I do know I was 10% before. I’ve been focusing on almost 100% automating my LendingClub investments lately, so haven’t been thinking much about my equities.
im pretty heavey into HEDJ
lol. very funny to see india. i have read a few positive reports about it as well but i dont know much about it still. i’d say Germany, US, and Mexico. 30/55/15. but yes germany prolly gonna kick some major ass.
I live and spend in CAD, so I figure I’m good to go here on that trade. That said, really everyone lives and spends USD… Life is about to get more expensive for Europeans and other non Americans. But just imagine what western Europe can do with labour that must be getting comparably close to US costs. How can F continue to compete with VW when they just spotted the Germans a 20% advantage compared to a year ago on vehicles sold in the US? Or selling in China. If I was USD functional, I’d do this trade and hedge the FX down to 1.03/1.04. In CAD I’m long EUR no problem. I haven’t actually executed on this yet just due to limited time, but I do have a signficant holding in a German REIT that is pumping out some great returns for me right now. I’ll look to expand on this as the year goes on. Need to free up some capital from my energy portfolio first…
What’s so funny about people mentioning India? The mood there seems to be very positive under the new government. Inflation is falling. Rupee has steadied. Red tape is being cut back. On current trends, GDP growth will exceed that of China in 2016/17.
But the equity market has doubled in the past couple of years, so no longer particularly cheap. China is more of a value play at the moment I think.
The Mexican stock market is a truly frightening place to be. I might replace HK with Korea, that’s a good call. Korea will do well in the long run. It’s an emerging market without all the fraud and garbage.
I’d go Korea, U.S., India. Still not convinced on Europe. I expect a Greek referendum posing the question “Do you want to stay in the EU and accept punishing austerity or leave the EU and give ourselves a chance at progress?”. I’m not sure how that vote will go. The fact they have the vote, not the result, will cause a crisis of confidence in Europe.
^ I’d be more bullish on an EU without Greece.