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Investors Should Look Abroad Now

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