Foreign markets attract
While the U.S. stock market has appreciated this year, many foreign markets have stumbled, making them attractive buying opportunities, experts say. For example, the MSCI Europe stock index has produced a negative 7.5 percent return year to date.
"Europe is three years behind the U.S. in monetary policy. They are likely to dig into more quantitative easing to keep things afloat," says Taylor Gang, a principal at Evensky & Katz/Foldes Financial Wealth Management in Coral Gables, Florida.
"They will likely have to apply the defibrillator the same way it worked here. The stock market seems to really enjoy quantitative easing, even if it doesn't work right away," Gang says. So Europe represents "an opportunity for those who can stomach it," Gang says. "Things may get worse before they get better."
Jack Ablin, chief investment officer of BMO Private Bank in Chicago, sings the praises of emerging market stocks. "They are so darn cheap, and everyone hates them," he says. The MSCI Emerging Markets stock index has plummeted 8.9 percent in the three months through Nov. 5, though it's only down 1.2 percent year to date.
"Economic growth is still great" in emerging markets, Ablin says.
Many U.S. investors are underweighted in foreign stocks, says Tom Fredrickson, a fee-only financial planner in New York's Brooklyn borough. "We are starting to see a divergence between U.S. and international stocks, so they're a good diversifier."