Here’s a Tip for Investing After Trump’s 100-day Checkup: Buy Foreign Stocks
The plucky souls who somehow managed to ride U.S. stocks to profits during this so-called Trump rally have been rewarded in a big way, but are they still feeling the love after the first 100 days?
If you’re getting a little squeamish about the near-term fate of your portfolio, now might be an opportune time to shed your home bias and look to diversify abroad.
Nobody would blame you, of course, for sticking with what’s worked. After all, it’s been a long, tough slog for European investors. As Michael Batnick of the Irrelevant Investor blog points out: “If you diversified across the Atlantic — the equivalent of eating your peas and carrots — you would have received zero over the past decade.”
Making that ”zero” feel a whole lot worse is the fact that U.S. stocks have doubled over that same period of time. So why the potential shift?
Here’s a chart that shows the rolling 10-year performance difference between the two regions. The blue line indicates when Europe has shined brighter over the previous 10 years, while the red line shows when the U.S. has outperformed. The green shows when U.S. equities have beaten Europe to the extremes we’re seeing today.
And this is the important point: “In the 44 previous readings when the spreads reached 100%, European stocks went on to outperform for the subsequent 10 years.”
“With the difference in valuations, the recent performance, and investor flows, it might be time to consider investing at least a portion of your portfolio outside the U.S.,” Batnick wrote in a post for the CFA Institute’s Enterprising Investors forum that earns our coveted call of the day honors.
U.S markets are slated to open as usual this morning, but many other exchanges around the world are shuttered for the May 1 holiday.
Key market gauges
Futures for the Dow YMM7 and the S&P ESM7 are leaning higher, while gold GCM7 is in the red. Stocks are coming off a weak Friday, although all three major U.S. equity benchmarks closed the month firmly in positive territory. There’s a lot to keep indexes moving this week, including a huge number of high-profile earnings reports, with updates from Apple AAPL, Tesla TSLA and Facebook FB.
You apparently can stop worrying for now about a U.S. government shutdown.
Elon Musk’s TEDTalk last Friday in Vancouver is still getting lots of attention. One of the presentation’s more compelling nuggets was his bold call that Tesla will have a self-driving car by the end of the year capable of driving from Los Angeles to New York.
Amazon AMZN will likely remain in the spotlight, as will its boss, Jeff Bezos, who briefly saw his net worth rocket over $80 billion for the first time ever last week. He’s getting closer to Bill Gates as the richest man in the world.
Tribune Media TRCO might get a joint buyout bid from 21st Century Fox FOXA and Blackstone BX.
$250 billion — That’s how much stockpiled cash Apple AAPL is expected to report this week when it hands in its quarterly results, according to The Wall Street Journal. Nobody else is even close and, for some perspective, it’s more than the total market value of both Wal-Mart WMT and P&G PG.
The big number everybody will want to chew on arrives at the end of the week in the form of the April jobs report. As for today, readings on personal income, consumer spending and core inflation are due at 8:30 a.m. Eastern, followed by the ISM manufacturing index 90 minutes later. Also on tap this week are the auto sales figures for last month, which get released Tuesday.