Keep in mind, however, the U.S. may be seeing net sellers from larger institutions due to valuation concerns. International investments may offer more compelling valuations alongside greater stimulus from the world’s central banks. And that means, if the buyback approach works well for ETF investors in the earlier stages, one might have reason to consider PowerShares International Buybacks (IPKW). With only 3-months of data to look at, IPKW is outhustling the iShares All-World excluding U.S. (ACWX).
Since we are discussing possible changes that investors might make to their portfolios at this time, I would be remiss if I did not address commentary by the Bank of International Settlements (BIS) this weekend. The BIS is an association of the world’s top central banks and the consortium did not mince words in its condemnation of “euphoric” financial markets. In brief, the group suggested that global economic outlook is shaky at best and geopolitical strife is increasingly stressful to the well-being of the world economy. The buoyancy of the markets, they reported, is out of sync with the uncertainty.
Granted, investments always manage to climb a wall of worry. On the other hand, the irony of the BIS commentary is that the world’s central banks are largely responsible for rational or irrational investor optimism. The U.S. Federal Reserve, the European Central Bank (ECB), the Bank of England (BOE) as well as the Bank of Japan (BOJ) have all engaged in policies that have kept interest rates unnaturally low. From my vantage point, the BIS may be looking for a way to blame market participants for excessive exuberance rather than shouldering any blame for the way that it has endeavored to boost global economic output.
No matter how you look it at the big picture, it is difficult to make the case that U.S assets are fairly priced. A conglomerate of top central banks has conjured up images of Greenspan’s infamous “irrational exuberance” comments. Meanwhile, individuals may be blindly following share prices that are being pushed higher by questionable corporate allocation of capital. Meanwhile, the big wheelers and dealers have been quietly paring back stock exposure.