Jan 11

Theme #4: Non USA stocks starting to run

Three things to note on non-USA stocks:

  1. After a long and painful period of relative underperformance, non-USA equities relative and absolute level of valuation is very attractive.
  2. A weakening US dollar + China better + emerging market equities better + US small caps better is often the path to a broader market recovery. Those trends are developing at present and should not be ignored. Charts don’t lie.
  3. On a relative basis, non-USA stocks are breaking out at a pace not seen since late 2008/early 2009…..at the very darkest moments of the Great Financial Crisis. The chart below captures the recent breakout – it’s underway and should not be ignored.

We continue to believe that what will work coming out of this extended period of market volatility will be very different than what has worked the recent past. We have been adding and will continue to add to non-USA equities in portfolios/strategies. In the US, small cap equities and more value > growth is our best idea.

Data as of January 11, 2023

Richard Barrett
Chief Investment Officer

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