When the U.S. economy fell off a cliff, a bunch of investors fled to the "safety" of booming emerging markets, like China and Brazil.
Turned out to be a good bet for a while, until our credit crisis became a global disease... and even stellar markets had their corrections.
But now, on the slightest bump up in the dollar, some analysts are now questioning whether emerging markets is the best place for your cash. Some say that U.S. stocks are a better bet than foreign stocks.
What's really going on is that other major currencies, like the euro and the British pound, are being hit by recession fears and the possibility of more bank write-downs.
The dollar hasn't really risen that much on its own yet. We're still seeing poor housing numbers and sky-high inflation. There have been bright spots in the U.S. economy, and I won't deny that things are starting to look better, but a major shift back to holding only U.S. assets in your portfolio is a big mistake.
There are still some great choices out there in foreign markets, and the number of ways to access them as investors grows every day. Just look at the number of ADRs available for Latin American countries.
And get this: 2008 GDP growth for Latin American countries as a unit has been revised up 0.1% since the first quarter of 2008. Look at these projections for the year:
Argentina: 6.7
Bolivia: 4.5
Brazil: 4.6
Chile: 4
Colombia: 5.1
Costa Rica: 4
Cuba: 6.4
Dominican Republic: 4.9
Ecuador: 2.6
El Salvador: 3.1
Guatemala: 4.4
Honduras: 4.4
Jamaica: 2.3
Mexico: 2.4
Nicaragua: 3.5
Panama: 7.9
Paraguay: 4.2
Peru: 7.5
Uruguay: 5.3
Venezuela: 5
Investors would be fools to ignore some of these growth numbers.
Is it time for U.S. investors to come home to U.S. markets? It's not for me to say for sure... I'm at least a little wary about this recent uptick in the dollar, and I'd like to see it rise of its own accord before I advocate for more U.S. stocks.
That said, there are deals to be had in U.S. markets, and in global markets for that matter. Without the euphoria of a bull market (or a bubble?) it boils down to fundamentals and value. And that goes for all investments worldwide.
