1/6/2011 3:22 PM ET|
World’s 5 best markets for 2011
There's a globe's worth of opportunity to make money this year, and knowing where to invest is key. One of your best options is surprisingly close to home.
How did the stock market do in 2010? Depends.
Which stock market are you talking about?
Are you referring to the United States, where the Standard & Poor's 500 Index ($INX) climbed 15%, or Spain, which was down 19% for 2010? How about China, where the iShares FTSE 25 (FSI, news) was up just 3.5% for the year, or India, up 21% for the year? Then there's Chile, which was up 47%, while Brazil was up only 8%.
Last year, like most years, how you did as an investor depended very much on where you did your investing.
Now that 2011 has arrived, what are you going to do next? Invest in the world's best stock markets, of course. But how do you find them?
Today, I'll give you my take on how to separate the best from the rest in 2011. Below you'll find my five picks for countries to overweight in your stock portfolio in 2011.
A world of choices
Once upon a time, investors didn't have much choice about where they put their money; they invested in their home market. When my mom and uncle took me to buy my first shares, I put my money in the New York Stock Exchange. A friend's parents had bought him shares that traded on something that sounded kind of shady called the American Stock Exchange. The Nasdaq? Never heard of it.
Today, you've got a choice. You can buy an exchange-traded fund that gives you ownership of the Indian market -- or Brazilian or South African. You can buy shares in hundreds of foreign companies that trade in U.S. markets as ADRs (American Depositary Receipts). You can even buy shares directly on some foreign exchanges. (Although after running the Jubak Global Equity Fund (JUBAX) for the last six months, I can tell you that it's still not easy to buy direct from many of the world's stock exchanges.)
You've got a choice, and the choice matters.
First, here's what not to do when deciding what countries to buy: Forget about going with growth and simply plunking down your money in the markets that represent the world's fastest-growing economies. You see, everyone in the world has read those same growth forecasts. They know that 2011 economic growth rates in China, India and Brazil, for example, are projected to be better than 9%, 8% and 7%, respectively. That's why India's stock market is among the most expensive in the world right now, with China's not so far behind.
And, of course, what everyone thinks will be true in 2011 can turn out not to be when projections translate into real returns. That's why China's stock market was up just 3.5% last year, even though China's economy grew by more than 10% in 2010.
The U.S. makes my list
The stock markets you want to overweight in your portfolio are those where investors entertain lots of fears and doubts that you think are overblown. One of the reasons the U.S. market did so well in 2010 is because most people were worried about a double dip and projecting end-of-the-year growth at just 1% or so. When expectations are that low, 2.5% or 2.7% growth in gross domestic product looks like Mount Olympus. And, surprise, U.S. stocks delivered a 15% gain for the year.
What markets would I put in this category of likely overachievers this year?
First on my list: I would include the United States again. Not so surprisingly, unemployment of almost 10% can dampen the spirits, especially when that rate refuses to go down. This has produced a classic Wall Street/Main Street piece of cognitive dissonance: Wall Street keeps pointing to signs that the economy is growing at a rate that might approach 3% a quarter or two into 2011. But everybody who lives on Main Street, which is most of us, can't quite believe it. Wall Street knows, though, that jobless growth is great for company profits and that 2011 is shaping up as another year when the U.S. economy and U.S. stocks outperform relatively modest expectations.
If you want to buy individual stocks in the U.S. market for 2011, rather than an index, focus on the banking sector, where prices are still low and will outperform other stocks as the economic recovery accelerates. (See "5 reasons to love big banks again.") JPMorgan Chase (JPM, news), US Bancorp (USB, news) and Citigroup (C, news) are all members of my Jubak's Picks portfolio.
Where else do doubts litter the ground? Europe.
VIDEO ON MSN MONEY
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] Equity indices closed out the month of August on a modestly higher note. The Russell 2000 (+0.6%) and Nasdaq Composite (+0.5%) finished ahead of the S&P 500 (+0.3%), which extended its August gain to 3.8%. Blue chips lagged with the Dow Jones Industrial Average (+0.1%) spending the bulk of the session in the red.
The final week of August represented one of the quietest stretches for the stock market so far this year. The first four sessions of the week produced the ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'