This week I had a great conversation with Jeremy Schwartz on the Behind The Markets Podcast on SiriusXM Radio.
Jeremy and I have been through a few cycles throughout our careers and probably understand the weightings of Indexes and ETFs better than most investors. Which was a big point I was trying to make: Understand what you own. You need to know what's inside of these things, and more importantly, what's not.
There's a lot going on in today's market but I tried to really focus in on the primary trends and where I think we're going this year.
Last time we did this I got to go down to the studio at the Wharton School at the University of Pennsylvania. But the weather was bad so we recorded remotely. Hopefully I can make it down there soon and we can do it live from the University once again.
Either way, I think we hit on a bunch of key points on this episode.
For most of my career, I've listened to fundamental analysts make the argument that investors should be overweight international stocks because they're "cheaper" than US stocks.
This has been the case for a long time now, and it's merely a function of the fact that there are far more value and cyclical stocks overseas.
But, since value stocks have been out of favor for so long, ex-US stocks have severely underperformed domestic markets.
Growth has been the place to be for the last decade, and for this reason the alpha has been with the tech-heavy US stock market over its global peers.
But now that we're seeing the tide shift in favor of value, we're also seeing early signs of reversals in the US versus the world relative trends.
There's still more work to be done before we have conviction that we want to favor international stocks, but the weight of the evidence continues to move in that direction.
Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs. We’ve also sprinkled in some of the largest ADRs from countries that did not make the market-cap cut.
These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.
It’s got all the big names and more--but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.
The beauty of these scans is really in their simplicity.
We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.
Based on the market environment, we can also flip the scan on its head and filter for weakness.
Let’s dive in and take a look at some of the most important stocks from around the world.
Dividend Aristocrats are easily some of the most desirable investments on Wall Street.
These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.
As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.
Here at All Star Charts, we like to stay ahead of the curve.
That's why we're turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we're curating a list of stocks that have raised their payouts every year for five to nine years.
We call them the Young Aristocrats, and the idea is that these are "stocks that pay you to make money."
Imagine if years of consistent dividend growth and high momentum and relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.
As many of you know, something we've been working on internally is using various bottom-up tools and scans to complement our top-down approach. It's really been working for us!
One way we're doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn't just end there. We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.
We held our February Monthly Strategy Session Tuesday night. Premium Members can access and re-watch it here.
Non-members can get a quick recap of the call simply by reading this post each month.
By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends.
This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big picture” point of view.
With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.
We debuted a new scan recently which goes by the name- All Star Momentum.
All Star Momentum is a brand new scan that guides us towards the very best stocks in the market. This time around, we have incorporated our stock universe of Nifty 500 as the base. Among the 500 stocks that we follow, this scan will pump out names that are most likely to outperform the market.
While we go through our lists of sectors and stocks on a weekly basis, we thought of launching a product that would highlight the strongest performers in our universe. These are the ones that are primed for an explosive move.
Just like The Outperformers scan, this is a list of stocks belonging to the sectors that display relative strength in the market at any given point in time. Since sector rotation is the lifeblood of a bull market, we will be ahead of the curve before the gears keep shifting.
