The S&P 500 (SNPINDEX: ^GSPC ) hit new record-high levels this week. But as the bull market rages on, some investors have started to worry that U.S. stocks are too expensive. Instead, they're focusing on emerging-market stocks, which haven't performed as well but have started to bounce back from recent setbacks.
In the following video, host Alison Southwick interviews Dan Caplinger, The Motley Fool's director of investment planning, to learn more about the prospects for emerging-market stocks. Dan notes that stock markets in many emerging nations have performed dreadfully over the past year, with the Vanguard Emerging Markets ETF (NYSEMKT: VWO ) essentially flat since this time in 2012. But in many areas, emerging-market stocks have started to come back. Dan explains that economic slowdowns have been exaggerated and that nations such as Brazil are starting to show signs of recovery, boosting iShares Brazil ETF (NYSEMKT: EWZ ) and other Latin-American-focused investments. At the same time, individual stocks in emerging markets are looking more attractive. Dan points to Baidu (NASDAQ: BIDU ) , which had many investors worried about potential competition but which has reasserted its leadership of the Internet search space in China.
Dan concludes that emerging-market stocks could have further to run, given that the longer-term declines they've suffered have improved their relative valuations. He suggests everyone consider whether boosting international exposure in their stock portfolios could reduce overall risk and boost returns.
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