What if the outperformance we’ve seen from the United States stock market for so long is behind us?
Is your portfolio prepared for an environment where US stocks underperform the rest of the world?
What about your peers?
Do you think Financial Advisors across the country have positioned their clients to take advantage of outsized returns outside the United States?
I talk to a lot of people.
And my answer is no. A big fat obnoxious NO.
I don’t think they’re ready at all. And the pain could last a while.
By the time your average financial advisor gets off the golf course and notices how poorly positioned their clients are, it’s usually much later in the cycle.
So we’re no where near that point….
It’s funny how quickly people forget that foreign equities can dominate the investing landscape for years at a time:
Recency bias oozes out of most American Investors. And for good reason. Staying in America and sticking to Growth Stocks has been incredibly rewarding.
Veering away from that has been costly.
These habits will be hard to break.
You see, the reality of the matter is that the United States is NOT “the stock market”.
If you own the S&P500 or the Nasdaq100 you have almost no exposure to natural resources.
So in an inflationary environment where interest rates are going up to chase commodity prices higher, how are US Growth Investors going to perform?
Historically pretty terrible.
We’ve seen it before and we’ll see it again.
Home country bias has hurt investors in almost every country around the world over the past 10-15 years.
Are Americans the next ones to suffer from this bias?
I think there’s a really high likelihood that they do. And in fact, I’m rooting for it. These unwinds can be incredibly violent, presenting generational opportunities for those paying attention.
We’re already seeing some signs. Notice how we’re getting more new highs coming from Emerging Markets than we are from Developed nations….
Has the great rotation already gotten started?
I think it has.
We’ll let price determine if that’s the case or not, but the warning signs are certainly there.
Is that why interest rates are heading higher?
Because US Growth Stocks are about to be designated for the world’s worst portfolios?
I trust the bond market.
So what’s it telling us?
I think it suggests that investors are poorly positioned, particularly in the United States of America.
Americans don’t have any exposure to Natural Resources.
Look at the flows. In a year where Energy was the best performing sector, we actually saw net OUTFLOWS from Commodity ETFs.
All the money went into equities….
I think there’s a rude awakening coming.
And I don’t feel bad for anyone.
This isn’t about people’s feelings.
It’s about recognizing their vulnerability and taking advantage of it as best we can.
I think American investors are vulnerable. The most they’ve been in many years.
And right now, the lack of exposure to natural resources and the more value-oriented sectors of the market has created a tremendous opportunity for those of us who are aware of it.
We’ll be discussing all of this tomorrow night on our LIVE Mid-Month Conference Call.
Premium Members can register here for that, if you haven’t already.
And as always, if you can’t make the live call, the video and slides to download will be archived here along with all the other Live Conference calls going back to 2015.
Download Our Q1 2022 Playbook
At the beginning of every quarter we put a ton of effort towards our Quarterly Playbook which breaks down exactly how we want to be positioned over the coming months. Premium Members can now download our Q1 2022 Playbook to Profit.
Here’s what you’ll find in this 144 page report:
- Stocks (International & U.S.)
- U.S. Sectors & Industries
- Market Breadth & Sentiment
- Intermarket Analysis
- Crypto Currencies
- New Trade Ideas
- Overall Strategy
You can download the PDF in full here.
I think you’re really going to enjoy this one.
Let me know what you think!