Stock Market Leadership is Changing

We have seen a shift in market leadership away from the United States to foreign markets. Foreign stocks have under-performed US stocks for 10 years and we believe this shift will last for years to come. We believe emerging markets (EM) can be the best performing area in these markets… Why? There are four reasons EM stocks should outperform US stocks: 1) EM stocks are selling at a significant discount; 2) EM stocks have a higher dividend yield; 3) EM countries have a younger workforce; and 4) EM countries have less systemic liabilities (i.e., Social Security and Medicare).