Foreign Markets in 2011? Not So Good

Bespoke Investment Group had a post the other day with the YTD returns of all the stock markets in the world. Of the 78 that they track only ten were positive. Of the ten that were positive, only six were up more than 2%. There are still two weeks left in the year so the numbers could of course change.

There were 13 markets that are down less than 10% which to my way of thinking constitutes down a little. There were 30 markets down between 10-20% and 17 markets down 20-30%. By any reasonable account that is a bad year but that goes with the territory.

Relative to the numbers on Bespoke’s table the US had a pretty good year down just a hair. I tend to think the fundamentals are such that the US should not have outperformed quite a few of the countries that it did. Either that assessment is correct in which case 2011 is a good reminder that for a short period of time anything goes regardless of fundamentals.

If I am wrong about the US’ fundamentals in relation to other markets then it raises the need for have some sort of counter strategy in a narrow based portfolio for the times you are wrong.

During the last decade there were stretches where the US was a relative solid performer like in 2011 but that did not change the rather long term result for the decade. Along the lines of the market being a short term voting machine versus a long term weighing machine I think it is important to understand what you’re investing for and so what is consistent with your real objective.

Long time readers will know I tend to think that for most people the real objective is simply to have enough money when you need it. It would be great if everyone could beat the market every year or maybe go up the same 12% every single year but neither is realistic which, to my way of thinking, shifts the orientation to the longer term–again for most people. There are people who have the emotional makeup and skill for short term trading and there is no reason those folks should not pursue trading in that capacity. But if that isn’t you then you need learn that and figure out what type of participant you really are.

About Roger Nusbaum 169 Articles

Roger Nusbaum is an Arizona-based financial advisor who builds and manages client portfolios using a mix of individual stocks and ETFs. Roger writes a popular blog, which focuses on risk management, foreign stocks, exchange traded funds, options etc.

Roger has been recognized by many in the investment management industry for his expertise in portfolio management. Roger has been regularly interviewed by the financial press, trade journals, and television news shows. He has also had numerous technical articles published and has been quoted in a number of professional trade journals, newspapers, and consumer finance magazines. He appears frequently on CNBC Asia as a market commentator.

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