Systemic Risk in Europe, Relative Strength in the US, and the Benefits of Diversification

January 9, 2012

Summary

Our goal is to understand world economic events not to make predictions but to evaluate potential outcomes and recognize extremes in investment markets. We continue to think fear has driven defensive investments like US Treasurys and several high dividend-paying global stocks to uncomfortably high prices. In contrast, US stocks, corporate bonds, and other areas like high yield and some emerging markets, appear relatively more attractive.