How Global Markets are Faring in 2014 so Far

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

If you’ve been invested in a stock market anywhere in the world over the past month, then I feel your pain.

That’s because no one who’s been invested in the market (myself included) has made any money in their long stock positions, particularly over the past four weeks.

Indeed, even the past three months have been a tough slog for most stock markets around the world.

To give you a sense of just how rough the equity market seas have been of late, consider that of the 46 global stock markets I monitor daily at my firm Global Guru Capital — not a single one is in positive territory for the past month.

The absence of a single global stock market in positive territory over the past month is quite rare, as is the paucity of global stock market gains over the past three months.

Here my global market tracking data shows that only four global equity market exchange-traded funds (ETFs) are in the green since July. They are the Market Vectors Gulf States ETF (MES), Market Vectors Egypt ETF (EGPT), Market Vectors Vietnam (VNM) and iShares MSCI Thailand Capped (THD).

The underperformance of global stock markets has accelerated in recent months. While they recorded solid gains in the first six months of the year, only 17 of the 46 global ETFs I monitor are in positive territory year to date, as of yesterday’s close.

The World’s Best…

On top of the global performance pyramid in 2014 is India via the WisdomTree India Earnings ETF (EPI), with an enviable 27.15% total year-to-date return. Second on the list is Egypt via Market Vectors Egypt ETF (EGPT), with a robust 25.67% year-to-date gain.

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Regular readers of this column, as well as subscribers to my Triple Digit Trader service and subscribers to The Alpha Investor Letter, have benefitted handsomely from India’s bull market in 2014.

Still, aside from India, Egypt, the Gulf States, Thailand, the Philippines, Vietnam and Indonesia, there hasn’t been any market that’s scored a double-digit percentage gain year to date.

And the Worst…

Bringing up the rear in my list of 46 global stock markets are a few you might expect — and a couple that might leave you scratching your head.

The absolute worst-performing market so far in 2014 is Russia, as measured by the Market Vectors Russia ETF (RSX). RSX is down more than 25% since the beginning of the year. Investors who followed the Rothchilds’ advice of buying when there’s “blood in the streets” have yet to be rewarded for their contrarian instincts.

With actual blood in the streets running in Crimea and the Eastern half of Ukraine — thanks to bellicose incursions by Russia — it’ll take a while for these daring bets to become good.

Greek stocks, as measured by the Global X FTSE Greece 20 ETF (GREK), are the second-worst performers in 2014, down 22.86%. Greece’s economic and debt-laden woes should come as no surprise. But the performance of the iShares MSCI Austria Capped (EWO) — whose capital Vienna is consistently ranked as one of the world’s most livable cities — down 20.79% year to date, is not something you’d expect.

The Global X FTSE Portugal 20 ETF (PGAL), down 20.79% year to date, is the fourth-worst performer of the year.

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The biggest surprise is the demise of the once-mighty German equity market.

Down 17.35% year to date, the iShares MSCI Germany (EWG) is the fifth-worst-performing stock market that I monitor.

That decline comes in stark contrast to the very strong showing in German stocks in 2013 and 2012, where EWG was up 30.8% and 32.4%, respectively, each year.

The German equity market’s struggle in 2014 reflects the general weakness in the European economy, as even Europe’s famed economic engine and global export champion begins to sputter.

Uncle Sam, the Safe Haven?

The recent selling in markets around the world hasn’t spared Uncle Sam.

While the benchmark S&P 500 Index still is in positive territory this year, up 2.89% in 2014, the past four weeks have seen the large-cap segment of the U.S. market actually fall by more than 5%.

The broader index I use to measure the U.S. markets, the Vanguard Total Stock Market ETF (VTI), also has managed to stay in positive territory in 2014 with a year-to-date gain of 1.5%. Revealingly, VTI currently ranks 14th in terms of 2014 performance. Back on July 7, VTI was ranked 26 of 46 in terms of year-to-date performance.

What this tells you is that the U.S. market has held up much better than most global markets during the sell-off of the past three months. It also confirms that when global risk rises, the smart money flows into the relative safety of U.S. stocks.

Over the past few years, U.S. investors have enjoyed the privilege of investing in a stock market that ranked #1 in 2011 and #4 in 2013, among its global rivals.

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U.S. stocks are not currently on pace to make a top-five showing in 2014.

But if the current market pullback turns into a full-blown correction, Uncle Sam still may climb his way up the top of the performance charts before we close the year.

NOTE: Global Guru Capital is a Securities and Exchange Commission-registered investment adviser, and is not affiliated with Eagle Financial Publications.

In case you missed it, I encourage you to read my e-letter column from last week about my thoughts on the U.S. dollar’s recent resurgence. I also invite you to comment in the space provided below.

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