November 22, 2014

How are foreign stocks doing compared to stocks in the United States? Fall 2012

The United States of America

Stocks in the United States have done very well recently. As of the end of last month (8/31/2012) the S&P 500 is up 18.00% for the past year and 13.51% year to date.

Our minds use trends of a certain length to project forward what the markets are “doing” rather than limiting our statements to what the market “has done.” I’ve chronicled these mental errors in How to Maximize Long-Term Returns and Why We Don’t Rebalance.

Last week I analyzed the three month returns from 5/31/2012 through the end of last month 8/31/2012. Here is what I found:

6.99% Russell 2000 Small cap
7.94% S&P 500
11.13% EAFE Index

8.99% Hong Kong
14.05% Singapore
15.12% Australia
10.83% New Zealand
11.10% Switzerland
9.55% Canada

15.51% Netherlands
13.02% Germany

5.53% Emerging Markets
3.87% Chile

11.85% Natural Resources

It is interesting to see that U.S. stocks under-performed the countries with economic freedom as well as some of the better European countries. Emerging markets, however, did not perform as well as it usually does.

We watch these trends, but we also don’t let short term fluctuations trump a good long term strategy. Rebalancing back to the asset allocation of a diversified portfolio has the best chance of boosting returns and balancing risk and return.

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About David John Marotta

David John Marotta+ is the Founder and President of Marotta Wealth Management, Inc. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. Favorite number: e (2.7182818...)

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