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Investors Should Look Abroad Now

http://www.fool.com/investing/general/2013/09/19/investors-should-look-abroad-now.aspx

Alex Dumortier, CFA
September 19, 2013

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

A warm wave of surprise and delight swept across global stock markets today in the wake of yesterday's decision by the Fed not to curtail its $85 billion-per-month bond-buying program. In Asia, the Japanese, Hong Kong, and Singapore markets all gained more over 1.5%. In Europe, three major markets -- Germany, France, and the U.K. -- are all up by roughly 1% or more. But the biggest gains were reserved for emerging markets; in Indonesia and Thailand, for example, benchmark indexes rose 4.7% and 3.3%, respectively.

That phenomenon was foreseeable, given yesterday's performance of the iShares MSCI Emerging Markets ETF (NYSEMKT: EEM), which smashed that of the S&P 500 (note the 2 p.m. EDT spike in both graphs, coinciding with the Fed's announcement):

EEM Chart

EEM data by YCharts.

Getting back to the U.S., it appears there is still a bit of sentiment steam left to push stocks yet higher this morning, with the S&P 500 (INDEX: ^GSPC) and the narrower, price-weighted Dow Jones Industrial Average (INDEX: ^DJI) up 0.15% and 0.05%, respectively, as of 10:05 a.m. EDT. This is turning out to be a rather extraordinary month of Septe