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US stocks have outperformed, but are they still a safe bet?

Why viewing the US as a safe haven could cost you (Part 1 of 5)

Since exiting the recession in mid-2009, US stocks have significantly outperformed international markets. But can the United States still be viewed as a “safe port” in a storm? Russ K explains why it might be time for investors to consider raising their allocation to international stocks.

In the past few years, having a strong U.S. focus has been a good trade. Since exiting the recession in mid-2009, US stocks (IVV) have significantly outperformed international markets.

Market Realist – The graph above compares the performances of the S&P 500 (SPY)(IVV) and the rest of the world as measured by the iShares MSCI ACWI ex-U.S. Fund (ACWX) since Q2 of 2008. While the U.S. index has given a holding period return of 37.7%, the latter fund has lost 15.6% since April 2008. That translates to a compound annual growth rate (or CAGR) of 5.0% for the S&P 500 compared to a CAGR of -2.6% for ACWX.

Also, a strong dollar (UUP) has played its part in reducing the already poor returns provided by international stocks (QWLD). Remember, a U.S. investor in foreign markets benefits if the U.S. dollar depreciates in the investment period.

Please read the next part of this series to learn why U.S. stocks have outperformed.

Continue to Part 2

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