Correlation Between the U.S. and Indian Markets

With the U.S. market looking more and more overpriced, I am very bearish on the U.S. market and want to look for other options internationally. I really like the Indian market as it seems to have far greater upside than downside long term. However, I'm speculative if now is a good time to enter into the Indian market. When I look at the correlation between the two counties' charts as well as other websites' correlation calculators the resemblance is somewhat startling. I would love to hear what others think will happen when the U.S. market goes into a recession as well as the time to enter the Indian market.

Comments

  • Hi there Daman,

    As the late great Value Investor Sir John Templeton said "People are always asking me where is the outlook good, but that’s the wrong question, The right question is: Where is the outlook most miserable?"

    Take a look at this site to see the listings for global market stock valuations;

    http://www.starcapital.de/research/stockmarketvaluation

    As you can see the Indian market is far from cheap at the present time. I agree that the potential for long-term growth within the Indian economy is highly probable as the country transitions into a modern industiral economy but the present valuation for Indian market is expensive on virtually all metrics (Obviously we are talking at the aggregate level here and individual companies selling below IV can still be found).

    The single cheapest market based upon all the valuation metrics is Russia. Noy only that but their levels of both public and private debt are very low indeed. The country is widely avoided by the investment community and an attitude of pessimism surrounds it. This is the place where most value can be found at the present time. Obviously their are certain risks associated with the country such as an increased chance of Government meddling in the market etc but buying a basket of cheap stocks would certainly resolve the issue of non-market risk.

    The Czech Republic and Brazil are looking quite cheap too so there will no doubt be value to be found there.

    Gaining access to some of these global markets can be tricky as many brokers don't provide coverage for them, for this reason I recommend looking at ADR's/GDR's for a particular country in order to get access to some of the companies based in a particular country.

    You can find an extensive collection of lists for ADR's/GDR's for various countries at this very useful website;

    http://topforeignstocks.com/foreign-adrs-list/

    I like to comb through them periodically and look up each company that s trading on a market which is currently hated by the investment community, this is one of the best places to uncover value.

    Regards,

    Anaximander
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