By Victor Reklaitis, MarketWatch
While non-U.S. stocks look promising, investors shouldn’t ditch American equities as they go abroad, according to one analyst.
“We often hear that the opportunity is overseas based on attractive valuations,” said Oppenheimer & Co. technical analyst Ari Wald in a weekend note.
“We believe that if this view proves correct, then taking a cautious stance on the U.S. based on elevated multiples is misguided advice, because a bet on the world is often a bet on the U.S.”
History suggests the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.02% — the main U.S. stock gauge — won’t stumble while Europe soars, Wald said.
“The S&P has gained in 88% of all rolling 52-week periods since 1987 when Europe outperforms vs. the S&P,” he wrote.
The picture overseas is indeed encouraging, the analyst added. The number of global markets rallying to new all-time highs is growing, Wald said as he offered the graphic below.
Wald also provided a second graphic, with both titled “Global Breakout Watch.” The foreign stock benchmarks he highlighted include Germany’s DAX /zigman2/quotes/210597999/delayed DX:DAX -0.02% , Japan’s /zigman2/quotes/210597971/delayed JP:NIK -2.66% and Canada’s S&P/TSX /zigman2/quotes/210598478/delayed CA:GSPTSE -2.75% .
Many strategists have beaten the drum this year for non-U.S. stocks, saying foreign equities look like bargains while the American market’s rally seems overdone.