“Buy me anything but America”

Last year it was US stocks and anything else could GTFO. In December, I rhetorically asked whether investors would take all of the wrong lessons away from 2013 and go on to make the same mistake they always make in the presence of a hot asset class…

Investors are now preparing for the coming Battle of 2014 by exaggerating the posture and behavior that’s worked for 2013. This is called the Recency Effect – believing the environment we’ve just been in is somehow a permanent one, extrapolating the just-was to construct an outlook for the soon-to-be.

They do it every year.

Many will throw away the portfolio playbook that didn’t give them the best of all possible results this year.Diversification is broken. They’ll move their chips into position solely on black, after all the roulette wheel just landed on black the last ten times – it’s practically a can’t-lose proposition.

At this time of year I’m more interested in whatever hasn’t worked.

Now, of course, I say “rhetorically” with a twinkle in my eye, I knew full-well that they definitely were taking the wrong lessons away and acting on them. The outflows from emerging markets to start this year were the only proof I’d needed – more money was yanked away from EM stock funds in the first five weeks of 2014 than during all of 2013!

But a funny thing happens once this process of hindsight investment gets underway – trends can reverse quickly and violently, smacking those of us who endlessly extrapolate them right upside the head.

My friends Justin and Paul at Bespoke Investment Group have picked up on an interesting new counter-trend, something that’s sure to delight contrarians, mean reversionists and the globally-oriented investor should it persist.

Too soon to tell if it will, but worth considering:

The below matrix perfectly illustrates the nature of the change in fortunes for global equity markets since the Fed meeting: US equities slightly down, foreign markets up, and US rates markets rallying in the long end…In global markets, every major country ETF we track outperformed the US this past week, led higher by Brazil, China and India as EM markets have come roaring back.  Commodities have also outperformed, with the exception of precious metals.

bespoke

 

If this is the start of something new, investors who’ve been chasing US stocks higher for the last two years to the exclusion of nearly everything else are going to have to find a new playbook.

Source:

ETF Performance Matrix: Post Fed, Rotation Out Of US (Bespoke Investment Group)

Read Also:

“Why Bother?” Will investors take the wrong lessons from 2013? (TRB)

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Bitcoin Loophole Review commented on Sep 21

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2014/03/31/buy-me-anything-but-america/ […]

  2. mo bi ran can commented on Oct 30

    … [Trackback]

    […] Read More here on that Topic: thereformedbroker.com/2014/03/31/buy-me-anything-but-america/ […]

  3. DevOps commented on Nov 19

    … [Trackback]

    […] Find More here to that Topic: thereformedbroker.com/2014/03/31/buy-me-anything-but-america/ […]

  4. blow up sex doll commented on Dec 08

    … [Trackback]

    […] Info on that Topic: thereformedbroker.com/2014/03/31/buy-me-anything-but-america/ […]

  5. 먹튀검증 commented on Dec 27

    … [Trackback]

    […] Information on that Topic: thereformedbroker.com/2014/03/31/buy-me-anything-but-america/ […]

  6. 안전공원 commented on Dec 28

    … [Trackback]

    […] Find More on that Topic: thereformedbroker.com/2014/03/31/buy-me-anything-but-america/ […]

  7. fake rolex commented on Jan 07

    … [Trackback]

    […] Read More here on that Topic: thereformedbroker.com/2014/03/31/buy-me-anything-but-america/ […]

  8. sexybaccarat commented on Jan 09

    … [Trackback]

    […] Find More Information here on that Topic: thereformedbroker.com/2014/03/31/buy-me-anything-but-america/ […]

  9. Dual XDM6825 manuals commented on Jan 24

    … [Trackback]

    […] Information to that Topic: thereformedbroker.com/2014/03/31/buy-me-anything-but-america/ […]