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Why U.S. Investors Are Buying Foreign Stocks

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Why U.S. Investors Are Buying Foreign Stocks 

Here is the opening of this interesting and informative column from Bloomberg: Many Americans are making smart moves with their investment portfolios. They just might not know it.

With U.S. stocks at records and many commentators saying they'reoverpriced, American investors are diversifying into cheaper international stocks. Investors have pulled a net $6.3 billion from U.S. stock funds this year, according to Investment Company Institute (ICI) data, while putting $60.5 billion in foreign stock funds.

This lack of enthusiasm for high-flying hometown stocks is exactly the opposite of what you'd expect of U.S. investors. Individual investors have a well-deserved reputation for following the herd, and the S&P 500 has offered twice the return of non-U.S. stocks since early 2013. Given investors’ past behavior, it’s hard to believe they’ve all become savvy value investors overnight, with a sudden appreciation of buying low and selling high, says Leuthold Weeden Capital Management analyst Kristen Hendrickson.

Rather than crediting the mass of investors with new investment wisdom, Hendrickson sees other forces at work. The shift toward foreign stocks, she says, owes more to long-term trends as Americans age and retirement plans get more sophisticated.

A few decades ago the typical American investment portfolio was pretty simple: You had U.S. stocks and U.S. bonds. In the 1980s and 1990s, the U.S. stock market surged. By the 21st Century, older investors -- including the large Baby Boom generation -- ended up with portfolios heavily weighted toward U.S. stocks.

The move into international stocks this year is part of a natural, gradual process of diversification in investor portfolios that’s been going on for a while, Hendrickson says. Data from ICI back her up: In 2003, domestic stock mutual funds made up 57 percent of assets in all equity, bond and hybrid funds. At the end of May, that was down to 41 percent. In the meantime, fund investors took extra helpings of foreign equity funds, which went from 10 percent to 15 percent of assets.

David Fuller's view 

Historically, US investors have invested overseas when confidence has been generally high, but pulled it back quickly when problems occur.

This item continues in the Subscriber’s Area. 

 

Email of the day 

On a suitable ETF for the Indian market:

“Dear David, As a Barclays stockbrokers client I have been searching for a suitable ETF to play the Indian market, do you have any advice on how I can achieve this cost effectively via ETF or any other vehicle via the UK.”

David Fuller's view 

Certainly, and as a general comment to all subscribers, I will mention that Eoin & Sarah Barnes are actively engaged in a massive restructuring of the Chart Library, to make it easier to navigate, which became necessary as it now contains so many instruments. Working on this every day, they hope to have it completed before the end of September.  Meanwhile, if you do not know the name or code of an instrument that may be of interest, such as an India fund or investment trust, use the Library’s ‘Search’ facility for India.  If you have opened the Library so that it fills your screen, this will produce and highlight everything in the Library containing the word India in its title.  When you find something of interest to you, consider adding it to your Favourites by clicking on the green cross to the left of each instrument.  Once in your Favourites section, you can drag and drop it wherever you want.

This item continues in the Subscriber’s Area.

 

My personal portfolio 

A trading position increased

David Fuller's view 

Details and charts are in the Subscriber’s Area.

 

Interesting chart of the day 

A value play for investors which is not a cyclical miner

David Fuller's view 

This item is in the Subscriber’s Area.

 

Global Ripple Effects Of American Energy Independence 

Thanks to a subscriber for this highly informative report which ties a number of energy themes together. Here is a section: 

It’s rare for more than one disruptive change to occur, but the unfolding of seven disruptive changes at once is unique to energy market today.

Much attention is rightfully being placed on the shale revolution in the US, which is impacting both sweet and sour crude flows starting in North America, but soon after that, the world.

Not far behind is the deep water revolution, also focused substantially on N. America, but also the Atlantic and Pacific Basins.

Refinery capacity build-out in the Middle East and East Asia are turning global flows on their head.

Russia’s move from a lumpy European supplier of oil and gas to a global supplier is having significant repercussions on the balance between pipeline and seaborne transportation.

China’s preference for pipeline sourcing, is impacting not just Central Asian supply lines, but is reinforcing Russia’s move toward tied pipeline transportation.

New sources of LNG in the US, Canada and Australia are about to have dramatic impacts on the pricing and flows of natural gas globally.

The dramatic drop in solar pricing, combined with ongoing drive to boost renewable generation, is already impacting coal and natural gas markets, but is posing questions of economic viability for various high-cost LNG projects. 

Eoin Treacy's view 

A link to the full report is posted in the Subscriber's Area.

We are living through an incredibly interesting period in the energy markets. The high price environment that has prevailed for much of the last decade has translated into a supply response where new supplies and adoption of alternatives will change the complexion of the market for years to come. 

 

Laggards catching up 

Eoin Treacy's view 

At FullerTreacyMoney was have been highlighting the return to outperformance of cyclical sectors for much of the year. We have also pointed out that this type of action is often an indication that the cyclical bull market is entering a mature stage. A select group of miners, fertilisers and oil companies have been completing base formations and I thought it would be illustrative to highlight the recent performance of some of the laggards.

 

Hasbro saddles up 3D-printed My Little Pony figurines designed by fans 

This article by Nick Lavers for GizMag may be of interest to subscribers. Here is a section: 

While fan-created My Little Ponies may be something of a niche, such forward-thinking ventures highlight the potential of 3D printing. The technology has opened up all kinds of possibilities, but one very real implication is the issue of intellectual property theft. So much so, research firm Gartner predicts that by 2018, 3D printing will result in the loss of more than US$100 billion in intellectual property each year.

Collaborative efforts like SuperFanArt, where consumers are empowered and enticed by an element of authenticity, rather than the convenience of reproducing their own knock-offs, could see established brands such as Hasbro get the jump on the Pirate Bays of tomorrow.

The first line of My Little Ponies designs will be on show at Comic-Con San Diego from July 24 to 27. You can check out the designs in the gallery and find out more about becoming a SuperFanArt featured artist via the source link below.

Half of Europe’s Jobs Threatened by Machines in U.S. Risk Echo – This article by Simon Kennedy for Bloomberg may be of interest to subscribers. Here is a section: 

Eoin Treacy's view 

In much the same way that intellectual property is threatened by the ability of people to download music, videos and books from the internet, the evolution of 3-D printing represents a similar threat to product designers and products. Music companies and publishers have changed their business models to permit downloads and adjusted their pricing to lower the barrier to entry. It is conceivable that 3-D products will go the same way. 

 

The Chart Seminar and Global Strategy Sessions 

Eoin Treacy's view 

Following an encouraging start to the year’s speaking engagements I am looking forward to our events later this year. . . 

We are also available to conduct private seminars and occasionally agree to speaking engagements at investment conferences and professional societies. 

With regard to The Chart Seminar, 2014 marks a number of changes in how we organise the event.  In order to facilitate more venues we are open to partnering with other groups to market the event. If your organisation would like to arrange a seminar either internally or for your clients please do not hesitate to contact us. .

The remaining dates and venues for 2014 are:

September 22nd & 23rd The Chart Seminar Chicago

November 13th & 14th The Chart Seminar London - Radisson Edwardian Hotel, Leicester Square

If you are interested in any of our remaining venues please contact Sarah Barnes at [email protected]

The full rate for The Chart Seminar is £950 + VAT. (Please note US, Australian and Asian delegates, as non EU residents are not liable for VAT). The early booking rate of £875 for non-subscribers expires two months ahead of the event start date. Subscribers are offered a discounted rate of ¡ê850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

The full rate for the Global Strategy Sessions will be £450 + VAT). The early booking rate of £375 for non-subscribers expires two months ahead of the event start date.

Subscribers are offered a discounted rate of £350. Anyone booking more than one place can also avail of the £350 rate for the second and subsequent delegates.

Delegates who attend both The Chart Seminar and the Global Strategy Session receive a reduced rate of £250 on the Global Strategy Session.

 

52nd Annual Contrary Opinion Forum 

Eoin Treacy's view 

It has been my pleasure to accept an invitation to return to the Basin Harbor Club in Vermont to speak at the 52nd Annual Contrary Opinion Forum hosted by Fraser Asset Management between October 1st and 3rd. The Forum’s convivial atmosphere is something Mrs.Treacy and I look forward to not least because it gives us an opportunity to meet so many subscribers.  

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