With so much focus on how strong the S&P 500 has been as we wind down the month and the third quarter, many investors have understandably overlooked the fact that Emerging Markets (EEM) have had an even better September. Whether it's the sudden business-mindedness of Brazil's new president or simply relative outperformance, it's hard not to notice that the once-hot developing markets are attracting new money and making a clear effort to close the performance gap against the U.S.
While some may argue that this short-term pop is the start of a trend, veteran investor Don Hays, founder of Hays Advisory, says he thinks it's still too early to go all in on the EEM and still prefers the U.S.
"There are major problems, and they're starting to work on them," Hays says in the attached video. He predicts the next couple of months are apt to lean more towards "back and fill'' rather than an outright breakout.
Still, the pace and depth of the Chinese slowdown continues to dominate the landscape for almost all markets and economies, large and small. Here, Hays says he is not investing in China at this point, as he feels the world's second largest economy is ''still under the gun'' and has a lot of things to straighten out.
And China isn't the only market where this Nashville-based advisor has his foot on the brakes. As heartening as he finds recent news about Brazil to be, he's urging clients to wait a bit, lest they risk ''stepping in too early."
"Right now I would continue to watch the U.S.," he says, adding to that his belief that large-cap U.S. stocks "will continue to be dominant for the next six to 12 months."