Global investing

Content provided by J.J. Schenkelberg

Lately, we have been talking a lot about the attractive relative valuation of international stocks versus the S&P 500.  We can see it in the earnings numbers and valuation reports.  But, I don’t think anything really brings to light the relative opportunity with international stocks like the charts below.  Pictures are worth a thousand words, so they say.

The top chart illustrates the All Country World Index ex-U.S. versus the S&P 500 for the past five years.  Outperformance of the S&P 500 has been nothing short of astounding.  The relative growth trends between the two areas is just not enough to justify this significant gap.

ACWX Weekly Chart

Below is another interesting international versus S&P 500 chart, illustrating performance for the past year.  This is an important chart for clients who started with us in the second half of the year.  Any clients that started closer to the beginning of 2014 have experienced stronger performance than those that started with us in July, or after.  The sharp divergence in international versus the S&P 500 index began sharply in July, with the report of disappointing GPD numbers coming out of Europe and ongoing tension in Russia.

ACWX Daily Chart

This type of strong divergence sets the stage for an international opportunity.