I dont understand this logic that is bandied around on a daily basis. So if the US economy slows down, then I should turn to foreign markets? My belief was that the foreign markets are linked with the US markets. If the US slows down, then foreign countries slow down... Whatever happened to the old saying if the US economy has a headache the foreign markets have a heart attack? Im a little concerned that so much cash has shifted to the foreign markets. Do you think that this could be a contrarian indicator? When was the last time the US economy slowed down and the foreign markets did not follow?
I agree with you and I believe that now it's time to keep money rather in US equities ( probably large caps ).
The foreign markets have had a good run and there is simply too much cash over there. I can only think that, at some point, the cash will come home when the returns start to trail off. Most folks conduct their research by CNBC and yahoo which is a mistake. In the same way, most of the hedge fund traders use Yahoo and CNBC as their primary form of research as well. Its good to know what your investing in before you hit the "buy" button. For example, most people who buy Ruth Chris have never been to the restaurant. When I go to the restaurant, its never crowded and the products are too expensive to allow for real growth. Where as there is a line always at my local McDonalds. McDonalds is a clear buy over Ruth Chris. When I walk through places in Asia, the Middle East and South America, there is nothing but poverty, prostitution and civil unrest. These places are certainly no place for investments. The best I can say about these places is that there is only one way they can go, up. They are great speculative investments, but Im not entirely sure about the long term investment risk. I have never seen tanks in the streets of New Jersey or New York City. Where as I have seen tanks in the streets of Thailand and many many other countries.