Notorious bears like Peter Schiff and John Hussman have been warning about the bull market's inevitable demise for many years. Ignoring their gloom-n-doom predictions has been the better way to go. After all, six years of zero percent interest rate policy by the U.S. Federal Reserve successfully reflated portfolios heavily tilted toward U.S. equities.
On the other hand, the fact that the financial media focus so heavily on the largest U.S. corporations is a monstrous disservice to investors. The “presenters” did not always avoid global stocks and commodities. In the previous bull market period (10/2002-10/2007), television and radio hosts extensively covered foreign developed markets as well as emerging markets. They even gave us a variety of ways to profit from the commodity boom. Why? Because that's where all the big-time gains were!
Since 2011, however, all you hear about is the Dow, the S&P and the NASDAQ. Is the current broadcasting a function of American ethnocentrism? If that is the case, then why did the theme of foreign and emerging market growth receive so much attention in the mid-2000s? Perhaps the spotlight on large-cap indexes alone is a deliberate effort to sidestep increasingly bleak price movement in other risk assets.
Although there has been a variety of writers and talkers like myself who have talked about “canaries in the coal mines” – high yield bonds, small caps, commodities, foreign/emerging stocks – the discussions are largely dismissed when U.S. large-caps turn upward. It is not that those who are responsible for covering market-based securities deserve blame or shame. Nevertheless, those sickly birds have not exactly been restored to health.
If we really want to talk about a bull market in equities, then the fairest measure might be an all-world index like Vanguard Total World (VT). This exchange-traded tracker seeks the performance of the FTSE Global All-Cap Index – a market-cap weighted index that incorporates developed markets as well as still-developing markets. How is VT performing? Not quite as well as SPY or the Dow Jones Industrials ETF (DIA).
