Paulsen: Investors might shift to more foreign stocks
Jim Paulsen, chief investment strategist for Wells Capital Management, writes in his monthly Economic and Market Perspective newsletter that the U.S. stock market is currently residing in a unique global ZIP code.
The U.S. stock market has been dominating global stock markets with leading returns over the last four years. The outperformance rewarded investors who overweighted their portfolios with U.S. holdings during that time. But it also means that the U.S. stock market has become increasingly expensive relative to foreign markets.
Paulsen writes that if the global economies show signs of growth, investors may start shifting their focus to exploit the divergence between U.S. and foreign markets.
"We suspect a forthcoming bounce in global economic growth will soon shift interest toward foreign stocks initiating a period of outperformance by international stocks," Paulsen wrote. "Investors who have been solidly rewarded in recent years from overweighting U.S. stocks, may want to consider a new ZIP code for some of their assets during the balance of this recovery."
Patrick Kennedy
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