Almost every International Index Fund is near its 52 wk high.

KaneKungFu123 · #1 12-09-2005, 08:15 AM

Is this unusual? Shouldnt these markets work against eachother? If not, why not just put 100% of your money into International Markets?

Sniper · #2 12-09-2005, 09:33 AM

Why do you think the international markets should work against each other?

KaneKungFu123 · #3 12-09-2005, 10:25 AM

Well, if they dont work against eachother i cant see why it wouldnt be a good strategy to invest completely in international funds.

Sniper · #4 12-09-2005, 10:29 AM

[ QUOTE ]
Well, if they dont work against eachother i cant see why it wouldnt be a good strategy to invest completely in international funds.

[/ QUOTE ]

Sometimes International funds outperform relative to the US markets, and sometimes its the other way around.

DesertCat · #5 12-09-2005, 11:16 AM

[ QUOTE ]
Is this unusual? Shouldnt these markets work against eachother? If not, why not just put 100% of your money into International Markets?

[/ QUOTE ]

What's the U.S. dollar doing? Because of currency translation, Intl. funds also go up when the dollar gets cheaper, and down when the dollar appreciates. It's argued that as long as we run big budget deficits the dollar will decline in value. When Clinton balanced the budget, the dollar got stronger. Since there seems to be no end to the budget deficits right now, it's expected the dollar will continue to decline over time.

That's one reason why if you have a passive portfolio (i.e. index funds) you should consider putting 25-35% in an international index fund.

DesertCat · #6 12-09-2005, 12:43 PM

[ QUOTE ]

What's the U.S. dollar doing? Because of currency translation, Intl. funds also go up when the dollar gets cheaper, and down when the dollar appreciates.

[/ QUOTE ]

I guess I should have checked the charts. This this chart shows the exact opposite happening. . If the Euro is typical of intl currencies it appears intl funds are outperforming even as a strengthening dollar reduces their (currency translated) gains. I still think the dollar will continue to decline over the long term, as long as we run deficits. But these year has not supported that theory.

MrBlue · #7 12-09-2005, 01:48 PM

Some speculate that the USD rose against several currencies this year because of carry trades (interest rate differences) and the one time American Jobs Creation Act that allows companies to repatriate foreign earnings without being subjected to regular tax rates. Does the estimated 500 billion USD repatriated really have that much of an effect on the 3 trillion dollar fx market? Who knows, but it ends at the end of this month.

Many also believe that USD rate increases will stop at 4.5-5%. Whether that slows down fx carry traders remains to be seen as well.

DesertCat · #8 12-09-2005, 03:25 PM

[ QUOTE ]
Does the estimated 500 billion USD repatriated really have that much of an effect on the 3 trillion dollar fx market? Who knows, but it ends at the end of this month.

[/ QUOTE ]

Well if you believe that annual $450B deficits cause our currency to depreciate, then it's reasonable to think that a one time $500B repatriation would reverse that for a year.

Another way of looking at the deficit issue isn't that we are devaluaing our currency through deficits. It's whether we are devaluing it faster than other governments, presuming they are running deficits as well. So the argument is that our $450B deficit is worse than most other leading countries, so the dollar should depreciate. A $500B inflow temporarily makes seem like our budget is balanced, hence the dollar appreciates vs. the other deficit running countries currencies. And as the temporary inflow ends, we should go back to depreciating again.

I'm sure this simplistic theory missing is a dozen other causative factors of various importance. But it seems to explain the dollars history vs. the Euro pretty well.

BadBoyBenny · #9 12-10-2005, 06:59 PM

Typically a strong economy in one part of the world is helps everywhere else, it is not zero sum.

International Funds usually do not include US companies, by not investing in US companies you are missing out on much of the world's best businesses.

That said, my guess is that I have a much larger percentage of my retirement fund in international markets than most Americans.

Bosox · #10 12-10-2005, 11:24 PM

[ QUOTE ]
International Funds usually do not include US companies, by not investing in US companies you are missing out on much of the world's best businesses.

[/ QUOTE ]

US markets have the best businesses but everyone knows this so they're valued as such. It's the inefficiencies in the international markets that you're taking advantage of and that's a better deal.