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Fellow Investors,

Please enjoy this Market Reflection from our partners at Gradient Investments, LLC. Please call our office if you have any questions. 

- Brad Cooper


"International Markets: Not Quite There, Yet

When investors think of or discuss “the stock market”, most tend to focus on the US market defined by the Dow Jones or S&P 500.  However, international markets can play a vital role in client portfolios due to diversification and the opportunity for enhanced long-term return.  Today, we are going to provide a primer on international stock markets along with recent performance and our suggestions for international stock allocations. 

According to Vanguard, the Total World Stock Market includes approximately 7,400+ stocks of companies located in 47 countries, which are categorized into three major categories: U.S. Market, Developed Markets, and Emerging Markets.  The U.S. market makes up approximately 56%, Developed markets make up roughly 34%, and Emerging markets make up the remaining 10%.  Per Nasdaq, a developed market is one that has high levels of liquidity, meaningful regulatory bodies and high level of per capita income.  Developed markets include European countries (United Kingdom, Germany, and France, etc.) and Asia-Pacific countries such as Japan, Hong Kong, Australia, and New Zealand.  Emerging market definitions can be vague but are essentially countries that are in the process of rapid growth and development with lower per capita incomes.  Countries that comprise Emerging Markets include China, India, Brazil, Russia and Mexico.



In terms of market performance, we have witnessed a significant differential over two distinct timeframes.  From the beginning of 2008 to present, the stock market performance of Developed and Emerging Markets have significantly underperformed the US market (see chart 1 below).  However, the U.S. stock market does not always lead performance.  Looking back to the range from 01/01/2001 – 12/31/2007 (chart 2), the U.S. markets underperformed both Emerging and Developed markets with Emerging markets displaying significant outperformance during that time


As we can see, the recent performance spread between the U.S. compared to international markets has been significant.  International markets have suffered from economic challenges and geopolitical events that have hampered growth and made investors wary of stocks in those regions. It is our opinion that international stocks should remain underweight relative to their global market cap but investors should keep some allocation to international stocks.   As we focus on the fundamentals, once we see data that reflects an improving fundamental picture, we would be willing to increase our recommended allocations.   



Advisory Services offered through Cooper Financial Investments, LLC. Insurance services offered through Cooper Financial Group, LLC, an affiliated company. Cooper Financial Investments, LLC and Cooper Financial Group, LLC are not affiliated with or endorsed by the Social Security Administration or any government agency, and are not engaged in the practice of law. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. The information contained herein is not an offer to sell or a solicitation of an offer to buy the securities, products or services mentioned, and no offers or sales will be made in jurisdictions in which the offer or sale of these securities, products or services is not qualified or otherwise exempt from regulation. The information contained in this material have been derived from sources believed to be reliable, but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.

Whenever you invest, you are at risk of loss of principal as the market does fluctuate. Past performance is not indicative of future results. Purchases are subject to suitability. This requires a review of an investor’s objective, risk tolerance, and time horizons. Investing always involves risk and possible loss of capital. Cooper FInancial Investments, LLC is not affiliated with Gradient Investments, LLC.


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