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How does this end? Euro & stocks
Old 11-20-2011, 12:10 PM   #1
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How does this end? Euro & stocks

I shouldn't post this as it's probably an impossible task i.e. to get the future of world markets right.

Anyway here is a chart of the US total stock market (VTSMX), the emerging markets, European markets, and the EURO vs US dollar (FXE):




The chart is since May when things seemed to start to fall out of bed.

Notice the EM markets are not decoupling from the developed markets as some predicted would occur. Also the big problems in Europe are viewed as much bigger then in the US for now.

An interesting (and troubling) situation, no?

So have others adjusted their international exposures in stocks?
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Old 11-20-2011, 12:16 PM   #2
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Not yet. Looking to buy more emerging markets later. It is called re-balancing.
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Old 11-20-2011, 12:58 PM   #3
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Just Saturday I checked my allocations to Europe, concerned about the Euro mostly. It's already probably underweighted, so I decided to leave it as is. I do have a few year's cash already, otherwise I would probably go ahead and raise some now even with depressed prices. I have been rebalancing, and did have a chance to buy a little in the last dip. I am disappointed in EM so far, but they are dependent on the world economy as well.
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Old 11-20-2011, 01:09 PM   #4
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I'm not usually a pessimist on these things, but the EU has me worried. Europe has never been able to agree on much, and don't feel to good about it this time. The question I would like to see an answer to is what would the impact be on our markets? Even if, as most economists are predicting, we see continued growth in 2012, will a contagion in Europe touch our markets also? And how much? Every time a sovereign debt in Europe is challenged, so far our markets are affected. (I fear I know the answer. But for how long?)
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Old 11-20-2011, 01:58 PM   #5
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I'm staying invested in foriegn markets just as before, with about 30% of that in EM. However, I'm less comfortable in international index funds than before so I've got most of these assets in active mutual funds where management will hopefully use some good judgement.
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Old 11-20-2011, 02:04 PM   #6
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My bet is EUR 1 = $2 in the long run. I am very pessimistic about the value of $US. The next huge crisis will be currency-related IMO, and those countries where the central banks have printed most money will be penalized most. My view only.

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Originally Posted by Lsbcal View Post
An interesting (and troubling) situation, no?
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Old 11-20-2011, 02:08 PM   #7
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On the flip side EFU is up ~ 30% since May 1.
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Old 11-20-2011, 02:31 PM   #8
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I'm 40% non-us equity (35% developed, 5% EM). Not making any changes any time soon.

In the past, more often then not, any adjustments I made resulted in worse overall performance. So I accepted that I don't yet know enough. For almost 5yrs now I've made no adjustments. Anytime I thought of making a change I've done it on paper, and my results are pretty much 50/50. So, I'm sitting tight.
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Old 11-20-2011, 03:37 PM   #9
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Here is a worthwhile review of the situation from John Mauldin
Where is the ECB Printing Press? - Thoughts from the Frontline Investment Newsletter - John Mauldin
For those of you have not seen his stuff, he is a financial advisor who contributes to much of the financial media. I found his reasoning and explanation of some incredibly complex machinations of Europe particulary helpful. He has a free newsletter that is well worth the read. You can subscribe from his site. I have been subscribed for a couple of months and not been spammed so far.
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Old 11-20-2011, 04:22 PM   #10
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If one is looking for Europe coverage and op-eds, I like the BBC here:
BBC News - Inside Europe

There are many good stories about the Europe crisis on the BBC. Good to read them occasionally over the weeks.

But note, the point of this thread was to ask how we are individually reacting with our investments?
Also should note that one does not have to take evasive action.
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Old 11-20-2011, 05:43 PM   #11
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I've been on Mauldin's newsletter list for several years. They can be troubling to read sometimes, but I've learned a lot reading his weekly letter.
I'm flirting with moving to a stronger cash position, but if I act the way I usually do, I'll do nothing different. SP500 index ETF equal weight, world ex-US, EM, commodity futures fund, and some MM.
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Old 11-21-2011, 08:08 AM   #12
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While all boats will either rise or fall with the tide, its always seemed to me that international, especially emerging markets, will drop more precipitously than US. I have backed off my non-US exposure quite a bit since the Spring, and have plenty of cash to redeploy to several equity areas, including EM.
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Old 11-21-2011, 11:27 AM   #13
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This is a great time to buy European stocks. That is where most of my investment money has gone the last two years. I have been buying VGK. It has about 500 stocks, a very low turnover rate, and a very low ER.
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