Iceberg Dead Ahead Captain!

July 23, 2007

OK, Matt - I'll jump on with EAFE.  International markets make me even more nervous than the U.S. market right now if that's possible.

I've always been much more of an international investor than most U.S. investors. So my roughly 50% allocation to international markets (which is roughly in line with the global capitalization breakdown) has looked pretty good lately.   But ooweee, I've looked at the portfolio lately and it's screaming for a rebalance.  EM has been a rocket ship.  The euro has gone SKY HIGH.  Even moreso than a U.S. backpeddling, a reversal of those two trends seems imminent to me. 

When's the last time you saw EM go up so high for so long?  It's usually two years of 50% and two of down 40% or something.  And despite all the dollar bearish signs, it's just hard for me to believe we can keep pushing new lows there.  So bale and run? Nope.  Rebalance a bit toward the other side?  That's what I'm thinking.

Get my broker on the phone.  I'm in the market for some bonds and U.S. large.  Who'd have thunk it?







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