Tackle Today: Regime Changes
May 11, 2021
≈ Looking Abroad≈
Traders,
U.S. stocks have dominated the rest of the world over the past decade. One of the biggest reasons is the star-studded growth of technology stocks. The S&P 500 is peppered with tech giants from Apple and Amazon to Microsoft, Alphabet, Netflix, and Facebook. No other country boasts the breadth and depth of companies that you find leading the U.S.
But while the current landscape makes betting on U.S. dominance obvious, it wasn’t always the case. In fact, the leadership baton has passed back and forth between the U.S. and foreign stocks rather consistently over time. Sometimes America led, and other times it lagged.
Today’s chart shows the regime changes between the USA and EAFE. For those otherwise unfamiliar, “EAFE” stands for Europe, Australasia, Far East. It is the go-to Index on Wall Street for tracking foreign developed countries. You can follow it using ETFs like EFA and VEA.
As the chart shows, there have been numerous periods where EAFE trounced the performance of U.S. stocks. Those believing that the past is prologue would be well served in adding some foreign exposure to their portfolios.
#TeamTackle
Chart of the Day
MSCI EAFE and MSCI USA Relative Performance
U.S. stocks find themselves in a long period of outperformance. The post-2008 world has looked upon America kindly. But if history is any indication, money will eventually rotate toward foreign equities. Consider adding VEA or EFA to your watchlist to keep track of the competition.
Video of the Day
Onboarding with Coach Frank
Every Monday night on the Tackle Trading YouTube Channel Coach Frank holds his weekly onboarding class where he highlight’s the products and services at Tackle Trading. If you are a new member or interested in what Tackle Trading is all about be sure to check out this week’s onboarding class!
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Halftime Report 12:30 PM EST
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