International stock funds have experienced outstandingly bad performance over the past few months. Is it time to consider rebalancing your portfolio into international funds? (At least for long term accounts.)
The plots above show the ratio of foreign stocks (EFA) and emerging market stocks (EEM) to the S&P 500 (SPY). The ratio is the red line, the moving average the green line, and the number of standard deviations the ratio is above/below the average is the purple line. Both plots show the rapid decline of EFA and EEM in the last two months. Each ratio has made multiple moves to -2 standard deviations or less without much of an attempt to move back above zero.
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