In the July issue of my newsletter, The Sizemore Investment Letter, I made three predictions for the remainder of 2013.
- Europe would come “back from the dead” and lead the U.S. market.
- Emerging markets would enter a new bull market.
- Income-oriented investments would recover from the beating they took during the summer “Taper Tantrum.”
I love it when a plan comes together. As I noted in last month’s manager commentary, European markets are indeed back from the dead and outperforming their U.S. counterparts, the last week notwithstanding.
Emerging markets have also rallied hard and, I expect, are in the early stages of a new bull market.
And income-focused assets have enjoyed a rebound after the brutal drubbing they took, though it may be too early to call victory here. Treasury yields are rising again and at their highest levels in a month.
Sizemore Capital’s macro themes are working. And in case you’re curious, one of the holdings in my Global Macro Portfolio—Daimler (DDAIF)—is winning InvestorPlace’s Best Stocks of 2013 contest with just two months left to go in the year.
I’m a little worried that the U.S. markets are getting ahead of themselves. Though I do not by any stretch believe we are in a “bubble,” the S&P 500 looks fairly priced, and bargains are getting harder and harder to come by across all market caps.
That is not at all the case overseas, however. European stocks, even after their recent run, still trade at substantial discounts to American stocks (20%-40% based on trailing earnings). And emerging markets are so cheap they appear to have been left for dead. So long as this pricing disparity persists, I intend to focus must of my investment research outside of the U.S. markets.
Again, I’m not bearish on the U.S. markets. I’m just less enthusiastic about them at current prices, and I believe we can find better investment bargains elsewhere.
Charles Lewis Sizemore, CFA, is the chief investment officer of the investment firm Sizemore Capital Management. Click here to receive his FREE 8-part investing series that will not only show you which sectors will soar, but also which stocks will deliver the highest returns. This series starts Nov. 5 and includes a FREE copy of his 2014 Macro Trend Profit Report.
This article first appeared on Sizemore Insights as November 2013 Portfolio Outlook
