The euro area is again in big trouble through a combination of things - the war in the Ukraine, the Germany economy contracting, the threat of Russia cutting off energy and the debts of the PIIGS:
Euro falls below dollar for first time in 20 years
https://www.bbc.co.uk/news/business-62153251
I’m not too sure that the wealthy northern members will want to continue bailing out the impoverished southern members. They may well dump them out of the eurozone to save themselves and the ECB
And Sri Lanka is an excellent reminder of what can happen in the case of a failing economy and hyperinflation.
Social unrest is the normal outcome when the people find they can no longer feed their families!!!
The Euro is not in trouble because it is depreciating. That is a leap. LOL
The Euro is a bargain! Most currencies are bargains against the US dollar! International stock markets are so much cheaper than the US stock market! The combination of undervalued stocks and undervalued currencies makes international stocks today as much of a bargain as US stocks were in the 1930s and 1940s.
It’s funny how predictions follow prices instead of the other way around. If you want to buy an asset class when it’s cheap, you have to buck many bearish narratives. Remember what Warren Buffett said: You pay a very high price for a cheery consensus.
Is it time to buy international funds or etfs? Which ones?
Rising interest rates push up the value of the US Dollar.
But interest rates are rising in Europe too. Why are they getting behind? Possibly because the Ukraine conflict and energy shortages are a greater threat to their economy.
Paul,
The FED is raising rates faster last I read than the ECB.
The Euro maybe rising against other currencies.
The war longer term will favor the Euro because of how the EU will respond fiscally and monetarily. None of this is really about three month periods.
Is it time to buy international funds or etfs? Which ones?
Paulecker,
Thank you for the reminder that a number of great international companies are easily purchased through ETFs. While I do not presently own any of the following symbols, I have purchased and sold all three in the past at higher price points than they presently trade:
WisdomTree Global ex-U.S. Quality Dividend Growth Fund (DNL) Down -27.63% YTD
WisdomTree International Equity Fund (DWM) Down -15.82% YTD
WisdomTree International High Dividend Fund (DTH) Down -10.37% YTD
I am a sucker for strategic methodologies, including some that Professor Jeremy Siegel helped Wisdomtree develop in the past. For me, Siegel is their “secret sauce.”
Jeremy J. Siegel, WisdomTree’s Senior Investment Strategy Advisor, is the Emeritus Professor of Finance at The Wharton School of the University of Pennsylvania.
https://www.wisdomtree.com/blog/author/jeremy%20j%20%20siege…
However, there are plenty of cap-weighted index ETFs out there from which to choose, including several at Vanguard with lower expense ratios than Wisdomtree charges.
I didn’t check, but I wouldn’t be surprised to find that Vanguard’s comparable international equity funds might outperform the above symbols because of Vanguard’s lower fees.
Is it time to buy international funds or etfs? Which ones?
If we were at a bottom you’d probably have months to go long.
In the meantime who thinks these markets wont go lower?
Is it time to buy international funds or etfs? Which ones?
YES, it is time! Something to watch out for is the narrative that you should wait for a catalyst before buying international stock investments. Unfortunately, there are plenty of others out there doing exactly that. By the time the catalyst becomes visible to you, it will already have been visible to many others, and the bull market will already be underway. You should NOT count on being quicker on the trigger than everyone else.
My picks for international stock ETFs are:
All of the above price/book ratios are from Morningstar. And remember that the undervaluation is even greater after you take the undervaluation of the currencies into account. This means that Japan and emerging markets especially cheap!
But interest rates are rising in Europe too. Why are they getting behind?
The mere suggestion that the ECB was going to raise interest rates caused a minor panic in the EU as Italian 10-year yields rose to over 4% before they were smashed down by the ECB – I think that they sold German bonds and bought Italian bonds to do this. Italy is, in my opinion, at the core of the euro’s problems.
Mario Draghi has now resigned as the Italian Prime Minister. Draghi, a former president of the ECB, was appointed (yes, he really was appointed) as Italian PM by the EU a few years ago and has been trying to rescue the sinking Italian ship for some time, all to no avail.
It’s almost like investors can now see through the smoke and mirrors that the EU and ECB have been spouting for years.
Is it time to buy international funds or etfs? Which ones?
At onetime I considered ETFs. Growth is my favorite investment for long time holding. Why not buy growth ETFs instead of individual positions? When I compared the ETFs with real growth stocks their performance was dismal. The reason is the Pareto or Power Law distribution. 75% of their holdings underperform the average.
If the ETF has 80 positions, 20 outperform and 60 underperform so why not buy just the top 20?
If you buy 20 positions, 5 outperform and 15 underperform so why not buy just the top 5?
If you buy 5 positions… Back to stock picking!
The Captain
Is it time to buy international funds or etfs? Which ones?
YES, it is time! Something to watch out for is the narrative that you should wait for a catalyst before buying international stock investments. Unfortunately, there are plenty of others out there doing exactly that. By the time the catalyst becomes visible to you, it will already have been visible to many others, and the bull market will already be underway. You should NOT count on being quicker on the trigger than everyone else.
You can only see tops and bottoms in hindsight! Catching tops and bottoms is more luck than skill, Mr. Market has a mind of its own, not necessarily rational, which is why so many predictions fail. Still…
The great difficulty of the market is that between corporate and market performance there is an emotional intermediary, “We the Investors” who have many unrelated reasons to buy and sell like dying and getting divorced. At METaR We the Investors try to figure out policy and world affairs. Investors like Warren Buffett concentrate more on corporate performance. Is there a better barometer of We the Investors’ mood?
I believe that long term charts, six months and longer are such a barometer. While studying day trading I discovered that the six month chart was one of their favorite tools. Of course we live on the right edge of the charts and have no guarantee of what comes next but with practice one can hone the prediction instinct.
Some of my favorite growth stocks have been basing for the past two months at levels close previous support levels.
ARKK 5 yr: https://bigcharts.marketwatch.com/advchart/frames/frames.asp…
TSLA 5 yr: https://bigcharts.marketwatch.com/advchart/frames/frames.asp…
RIVN all: https://bigcharts.marketwatch.com/advchart/frames/frames.asp…
A volatile but steady state market is best for selling covered calls and it has been working nicely for me lately.
International markets are different from my growth markets so you need to do the charting for the markets you are interested in. Caveat, odds are not certainties.
The Captain
Mario Draghi has now resigned as the Italian Prime Minister. Draghi, a former president of the ECB, was appointed (yes, he really was appointed) as Italian PM by the EU a few years ago and has been trying to rescue the sinking Italian ship for some time, all to no avail.
The World gave Italy the boot!
The Captain
could not resist!
If you buy 5 positions… Back to stock picking!
I do not call it stock picking.
I call it being aware when there are good opportunities.
The reason is the Pareto or Power Law distribution. 75% of their holdings underperform the average.
The Pareto principle or “80-20 rule” stating that 80% of outcomes are due to 20% of causes was named in honour of Pareto
https://en.wikipedia.org/wiki/Pareto_distribution
Is there a better barometer of We the Investors’ mood?
Well, if you treat technical analysis as statistical mass psychology…
Well, if you treat technical analysis as statistical mass psychology…
There is a lot of voodoo in technical analysis (TA) but the charts themselves are just data, a poll with a very large sample size. I use some simple TA like moving averages (50 & 200 day), support & resistance, and volume on occasion. Mostly I just look at the pretty picture. For what it’s worth, candlestick charts were invented by the Japanese to trade rice. They see markets as a war between buyers and sellers. They don’t use Western TA but have assigned meanings to various candle formations, somehow reminiscent of Polynesian rock charts used for navigation.
The Captain