{The Money is in the East} Why Now Could Be the Ideal Time to Invest in Foreign Stocks

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[Privacy Policy/Disclosures](  The Winning Edge of a Portfolio With Foreign Stock Allocation [Image]  Hello Stock Traders  For years now, the US stock market has been the star of the show, leading the global asset allocation dance with an air of "forever and always." But 2023 seems to have some surprises up its sleeve. The understudies, aka US equities ex-US, are taking center stage, giving American shares a run for their money (literally!). Let's put this in perspective, shall we? It's like watching your favorite TV show, where the secondary characters suddenly steal the limelight. Now, a few months of this role reversal doesn't exactly mean a complete change in the script. But it's like a breath of fresh air, especially after years of non-US markets playing second fiddle. Here's the juicy bit - shares in Europe (VGK), Latin America (ILF), and Japan (EWJ) are all flexing their muscles, outperforming US stocks (SPY) so far in 2023. It's like they've been quietly working out while the US stocks were soaking up the limelight. But, of course, not all foreign markets are on a winning streak. Asia ex-Japan (AAXJ), eastern Europe (CEE), and China (MCHI) seem to be lagging behind a bit. Africa (AFK), too, is nursing a loss of over 5% this year. The million-dollar question is, what's causing this international shake-up? One big reason could be the US dollar, which seems to be a bit under the weather. When the greenback is not feeling its best, assets priced in foreign currencies get a boost after conversion into US dollars. This year, the dollar (UUP) has been pretty flat, and foreign shares have seized the opportunity to rally (VXUS). The next big question is, will the foreign equities keep up their winning streak? Now, let's tread cautiously here. There's a school of thought that believes this strength could just be a temporary high, especially in markets that were oversold. Take Europe, for example. Its stocks have bounced back after a tense period following Russia's invasion of Ukraine in 2022. The economic fallout was less severe than feared, making the initial sell-off seem like an overreaction. Hence, the rebound. But Adam Turnquist, the chief technical strategist at LPL Research, seems to think that the tide is turning towards international stocks. And who are we to argue with him, right? He suggests that investors might want to diversify into developed international markets, citing improving technical backdrops, a weak dollar, attractive valuations, and lower recession probabilities for the Eurozone and Japan. Now, let's take a step back and look at the big picture. The key takeaway here is that completely ignoring non-US markets is usually akin to putting all your eggs in one basket. And we all know how that ends, don't we? The real debate should be about how much foreign assets to hold, and the answer should almost always be a non-zero number. On a tactical level, watching relative performance can give us some pretty valuable insights. The recent strong performance of equities ex-US isn't exactly a surprise when you consider their previous underperformance. But, does this mean the foreign markets will continue to outperform in the near term? Well, it's not a guaranteed home run. However, international diversification still seems like a smart move, partly as a risk-management tool. Let's not forget, US stocks are still a solid bet for the long haul. But this doesn't mean we should ignore the rest of the world. America is strong, no doubt, but it doesn't have a monopoly on value and opportunity. So, as we navigate these interesting times, let's remember to keep our investment portfolios as diverse as the world itself.  Trade safe!  -James  Coming Up Next: Sometimes, we are our own worst enemy. But how can we learn from our mistakes? Find out in the article below!   SPONSORED 🔽 Sponsored [How He Bagged One Of The Top Trading Records…]( A reclusive millionaire has been quietly racking up winning trade after winning trade. Despite avoiding most headlines, he’s become one of the most successful traders around - over the last 8 years, he’s banked a 97% win rate. How does he do it? He sat down for a rare interview where he revealed it all. [Click HERE to see how he’s done it…]( [Privacy Policy/Disclosures]( How to Turn Mistakes into Opportunities: Thriving in the Next Bull Market You know, we all have those moments where we think we're smarter than we are. Maybe you've convinced yourself that you could totally beat Serena Williams at tennis if you just "had the right racket," or maybe you're certain that you could out-dance Beyonce with "just a few more lessons." Well, let me tell you, investing can bring out similar bouts of overconfidence. No matter how many times we're told to stay disciplined, there's always a siren song tempting us to steer our ship towards the rocky cliffs of instinct. This tune is especially enchanting in a bear market, when we sit, wait, and hope for just a tiny bit more dip before we buy. And in a bull market? Oh boy, it's like being at a party where everyone's having fun, and you just can't resist joining the dance floor because, well, the stock's going up, right? Now, let's get real. None of us have the magical crystal ball to predict the stock market's every move. And believing that we do is like thinking we could win a lottery with a ticket from last year. Sure, you might guess right a few times, but that's a dangerous game. It's like eating cake for breakfast and not gaining weight—you start thinking it's a sustainable plan. Spoiler alert: it's not. Trust me, I know what I'm talking about because, well, I've been there, done that. I've always been pretty good at following my own advice, sticking to a regular investing schedule using dollar-cost averaging. That's where you invest a set amount of money at regular intervals, come rain or shine, bull market or bear. The goal? Discipline. I figured if I had a schedule, I'd be less obsessed with daily stock movements and more committed to long-term investing. And it was working. I was more interested in how well businesses were doing than the daily dance of stock prices. But then came the bull market of mid-2020, and let's just say my discipline took a little vacation. You know how it is. You're waiting to do more research on a stock, and the next thing you know, it's taken off like a rocket. So, you think, "Why not buy more now before it gets even more expensive?" Sound familiar? Let me tell you about my affair with Peloton Interactive (NASDAQ: PTON). Between April and December 2020, I was throwing money at Peloton faster than a kid spending their allowance at a candy store, all because the stock was on a roll. What made Peloton special, you ask? Well, honestly, nothing more than my belief that they were perfectly positioned to ride the wave of the new at-home normal. Looking back, I might have been a bit shortsighted, but hey, FOMO is real, right? During that time, the stock soared by over 460%, and I felt like the investing equivalent of a rock star. Cut to a year and a half later when the stock was down more than 90% from its highs. Let's just say my encore performance wasn't quite as triumphant. Here's the thing about investing. Yes, if you stick to a set timetable, you'll sometimes overpay for stocks. But other times, you'll snag a bargain. And through it all, you're staying disciplined, not letting fear or greed mess with your investment plan. The secret to investing isn't having the brain of Einstein, or doing so much research that you could win Jeopardy. It's not about having the most cutting-edge technology or the deepest pockets. It's about discipline. Money is already an emotional rollercoaster for many of us, so why make it worse by letting market ups and downs push us into hasty decisions that could hurt our long-term goals? As for me, my little deviation from the path of discipline came with a price tag hefty enough to put a dent in my wallet, and a bruise on my pride. But you know what? It was a wake-up call. It reminded me of the importance of sticking to my investing schedule, no matter how loud the siren song of potential profit might be. Now, my investing schedule and the set amount are as non-negotiable as my morning cup of coffee, no matter how much I think I may be missing out on the "next big thing." Let me put it this way: in the grand scheme of things, it doesn't matter if a stock is partying today, nursing a hangover next week, back on the dance floor next month, and then crying in a corner next year. What matters are the long-term results. Trying to chase these short-term trends is like trying to catch a soap bubble - it's exhausting, and ultimately, pointless. Stick to your plan, stay the course, and chances are, you'll be pretty happy with where you end up.  So, the next time you feel the urge to dive headfirst into the market based on a hunch or because it seems like everyone else is doing it, take a deep breath, step back, and remember that discipline is your best friend in this journey. Keep your eyes on the long-term prize and let the market do its thing. As the old saying goes, slow and steady wins the race... and usually ends up with a much healthier portfolio.   Disclaimer:  The material in this document is for informational purposes based on our proprietary research. It is not an offering, specific recommendation, or a solicitation of an offer to buy or sell any securities mentioned or discussed herein.  Any performance results discussed herein represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.  Due to the timing of information presented, any investment performance reflected within this document may be adjusted after the publication and distribution of this material. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, be equal to any corresponding indicated historical performance levels or be suitable for your portfolio.  Any investment results set forth in this document are not net of expenses and execution costs, nor do they account for other relevant trading or investment fees. 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