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Meanwhile the U.S. dollar has tumbled sharply against major — and not-so-major — international currencies as well.
The net result is that those who diversified their wealth internationally are… well, winning.
And as mentioned in my post above, since markets outside the US have significantly outperformed US stock, it is hard to give credit to US politicians for the stock market's performance this year. Of course, this could all change but for the time being the US markets are not keeping up with markets elsewhere since the beginning of the year despite stellar performance by some sectors, especially tech.
All this is simplistic. It also chooses time periods quite adroitly to tell the chosen story. Still most of it is not untrue, just misleading.
For the two global stars they have China and Brazil. Both have quite diverse and volatile markets. Both also have much higher real interest rates than does the US. Quite a large pert of currency fluctuations in the short term (i.e. less that a year) is due mostly to changes in real interest rates and shifts in large FX movements. I will offer no charts or even links, they're widely available. The story changes dramatically with quarterly shifts in FX flows, non-domestic borrowing/lending patterns and investment inflows/outflows. Depending on the chosen time periods those markets show massive gains and/or losses that are more a function of FX movements than they are of actual domestic stock market performance.
Personally I have done very well with some investments in several countries when the FX rates moved in my favor despite the domestic value of my investment has declined.
Less pleasantly, I have also had precisely the opposite happen.
On balance I have done far better predicting relative exchange rates than I have specific asset valuations. Bluntly that makes sense to me because I have far more experience in FX markets and the country-specific conditions in which I have been active than I have in any specific asset class.
When I see single graphing of market performance in one country vs another using the most popular indices for each public market I cannot help but laugh a little. There are so many moving parts that such a presentation is worthless.
In fact, it is analogous to evaluating TSLA as a loser because every significant auto maker outsells them and besides, they produce many fewer cars in Fremont than NUMMI did and than GM did before NUMMI. It's obvious that TSLA is a poor investment.
Just think about it:
China has a deeply controlled economy with a gigantic balance of payments surplus. Most major public companies have heavy State involvement. Is there any public Chinese company that is a safe no-brain choice?
Brazil has deep political problems with high corruption and domestic economic disarray. Several of the major public companies have been caught in the corruption scandals. Some of the largest public companies are directly government controlled. The high real interest rates have been steadily declining for the last year and look to drop further.
Next on the list are several countries, each of which have deep economic and political questions.
OK, so does the US. However, how does a single chart with a one line description offer any useful guidance? Answer: it doesn't, but it can make an evocative series of soundbites that might interest people too lazy to find the facts.
Sorry for the rant. Simplistic conclusions really irritate me.
