With all eyes on the U.S. stock market and the return of the “Trump trade,” few investors are focused on global equity markets.
It is easy to see why. Global stock markets have disappointed investors so much, for so long, that most simply have stopped looking at stock markets outside the United States altogether.
The go-go years of the late 1990s, when emerging stocks soared by double-digit percentages year after year, have long faded from financial memory.
Yet, it’s precisely at the point of capitulation – when all investors have thrown in the towel – that stock markets bottom and tend to enter into a stealth bull market.
Although we are only six weeks into the New Year, 2017 just might be the year that global stocks finally make their long-overdue comeback.
Global Stock Markets: ‘This Time It’s Different?’
I track 47 global stock markets on a daily basis. I cover these particular 47 because each is a global stock market in which you can invest readily through exchange-traded funds (ETFs).
There is no point in getting excited about the rip-roaring Hungarian stock market if there is no ETF in which you can invest. Still, with global stock markets performing so poorly in recent years, you may be wondering: “Why bother?” After all, among these 47 global stock markets, the U.S. stock market has dominated the performance tables for over a decade.
The Vanguard Total Stock Market ETF (NYSEARCA:VTI) – my proxy for the U.S. stock market – ranked No. 1 over 10 years, No. 2 over five years (behind Ireland) and No. 1 over three years. Still, to paraphrase John Templeton’s most dangerous words in investing: “This time may be different.”
Here’s why…
The broad-based Vanguard FTSE Emerging Markets ETF (NYSEARCA:VWO) is already up 9.17% this year. That means that emerging markets are outperforming the S&P 500’s Trump-fueled gain of 3.99% by over 2 to 1.
Six weeks into 2017, a whopping nine out of 47 global stock markets I track are up by at least double-digit percentages. Three of these markets are up by over 15%. These are the kind of numbers that get investors’ blood flowing. In another six months, these same investors may start partying like it’s 1999.
