Date updated:08-13-2007
See analysis here: http://www.stockpickr.com/members/port/Research-quot-The-Beta-Theory-quot-pt-1a-focus-international-equity-markets/
After having read that, we see the possibility of risky assets becoming excessively overpriced (due to financial innovation => greater stability => excessive risk taking; financial flows => bidding up of risky assets).
What countries/equities (bonds, money market instruments are excluded from this list) might outperform in the case of such an event? Look below for possiibilities...
Things I consider:
- Risk
- Liquidity
(if you can think of any more, please e-mail me, and I'll add them in)
By: Matthew

-
SPY
S&p Dep Receipts - $109.62
- +0.54%
- $109.31
- High liquidity & market depth (Avg Vol: 127,403,000) - US company's are typically considered less risky (for accounting, regulatory, etc... reasons) - US maturity - Recent equity underperformance relative to other nations might allow for equity-specific outperformance (Annual 5-year returns = 7.5% In the end: you'll still be hit b/c it's a stock, but maybe you'll be hit less than if you were invested in - say - China...

-
EWU
Ishare Msci Uk In - $16.69
- +1.34%
- $16.58
- For a foreign index-based ETF, it has pretty good volume (Avg Vol: 563,000) - UK - like the US - is relatively safe and mature - Recent relative underperformance, as compared to other foreign countries' equity markets (14.65%) In the end: like the U.S., in the end, you'll still be hit b/c it's a stock, but maybe you'll be hit less than if you were invested in - say - China...

-
IEV
Ishare Sp Eur 350 - $40.13
- +1.26%
- $39.91
- See "EWU" above - Avg Vol: 297,000

-
DUK
Duke Energy Cp Hl - $16.04
- +0.19%
- $16.03
- Relative safety of utilities + dividend yield => should leave it less harmed by such an event. Indeed, we'll always need energy, right?

-
BRK-B
Berkshire Hath Hl - $3411.00
- +0.22%
- $3412.00
- AAA-rated credit + low multiple + good utility exposure + Warren Buffett => gonna be ok in the long-run :-)

-
DVY
Ishares Dow Sel D - $42.69
- +0.64%
- $42.50
- Solid liquidity (Avg Vol: 430,000.00) - Dividend yield should give it support

-
IWB
Ishare Rus 1000 I - $60.09
- +0.52%
- $59.93
- Large-caps should outperform (relative to other equities) during such a time - Decent liquidity (Avg Vol: 282,000.00)

-
EWJ
Ishare Msci Japan - $9.58
- +0.95%
- $9.53
- High liquidity & market depth (Avg Vol: 23,825,000 ) - Japan - like the UK and the US - is mature - Recent equity underperformance relative to other nations might allow for equity-specific outperformance (Annual 5-year returns = 13.28%) In the end: the risk-reward balance of Japan - when combined with exposure to various other countries - seems to make it a decent investment
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favorite (now)investment firms are in on
the DG deal and not the one who had
purchased a fund of hedge funds last
year.
A. The only one I own : SLX,
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