Time to move money out of the US stockmarket...
STOCKS are having another great year, with the S&P 500 up 9% so far in 2017, writes Steve Sjuggerud in his Daily Wealth email.
But I hope you're not solely invested here at home.
You see, another part of the world is actually crushing the US right now. It's up 19% since the start of the year. And the long-term upside is dramatically better than the US market.
If you've read my work on recent months, then today's message won't surprise you.
The biggest and best investment opportunity in the world today isn't in the US – it's in emerging markets.
I explained why two months ago. Here's the simple story.
From 2010 to 2016, the US market soared. The S&P 500 increased by triple digits. It was an amazing time to be invested in the US
What happened to emerging market stocks over the same period?
Emerging market stocks actually lost money.
It's a crazy thing to imagine happening...a massive block of the global stock market losing money over a six-year period. But it happened. And it set up a fantastic buying opportunity.
You see, one of the oldest rules of finance is something called "mean reversion".
The idea of mean reversion is that, yes, crazy things can happen – but no, they can't happen forever. The tech bubble in the late 1990s is a perfect example...
Internet stocks soared throughout the 1990s. The crescendo happened in early 2000 when companies like Microsoft (MSFT), Cisco (CSCO), and Qualcomm (QCOM) hit true bubble valuations...All three traded for more than 25 times sales.
What happened next? Mean reversion.
Tech stocks crashed. And plenty of them never recovered. It took Microsoft and Qualcomm well over a decade to come back up to their dot.com-peak share prices. Cisco still hasn't done it.
The point is that crazy things can happen in the markets...But mean reversion says they can't last forever.
And mean reversion tells us we want to invest in emerging markets right now.
From 2010 to 2016, US stocks dramatically outperformed emerging markets. They increased triple digits, while emerging markets lost money.
The only other time we've seen emerging markets underperform the US like this was the late 1990s. What happened then? Mean reversion took over...And emerging markets went on to soar 400% in just a few short years.
That's the kind of upside we have when mean reversion kicks in...And I believe it's starting now.
Remember, US stocks are having another banner year, up 9% so far. But emerging markets have more than doubled that return. They're up 19% this year.
History tells us this is just the start. It tells us that emerging markets will likely continue to outperform...for years to come. And triple-digit gains are likely from here.
So, while I hope you're invested in the US and profiting from the Melt Up, please don't fully invest in US stocks.
Some of the biggest winners over the next few years likely won't be here at home. They'll be in emerging markets. Don't miss it.