As far as geographical exposure goes, we continue to recommend over-weight positions in the developed world (Europe, Japan and the US). Since April 2011, the developed world has outperformed the emerging nations by a wide margin and we expect this trend to continue for the foreseeable future. However, over the past few weeks, a number of emerging markets ETFs have broken out of multi-month trading ranges, so we now recommend modest exposure this area.
In terms of specifics, we continue to see incredible momentum in India’s stock market! You will recall that we first recommended exposure to this market several months ago and despite the recent run up, we see plenty of potential.
Elsewhere in Asia, Hong Kong has recently broken out of a lengthy consolidation phase and even Taiwan’s stock market is gaining momentum. So, our readers can consider looking for opportunities in these stock markets.
Over in South America, Brazil’s stock market is showing signs of strength and the uptrend could continue for several months.
In summary, the monetary backdrop remains favourable towards stocks, America’s housing market is rebounding and a variety of technical indicators are showing strength. Therefore, we continue to believe that the ongoing primary uptrend will continue for several months, so our readers should stay fully invested in common stocks.
Although this bull market is mature and we will get some volatility heading into spring, the path of least resistance remains up and investors should stay positioned for the northbound journey.
- Puru Saxena
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