International shares - important part of your portfolio now

August 11, 2017

Over the last 10 years, many international share investments have out-performed Australian shares by a  large margin.

 I believe that this out-performance is likely to continue over the next 5 and 10 years on average (albeit with the usual volatility of shares) particularly for Asia and Japan for a range of reasons such as:

  • Asia has on broad averages, much lower share market valuations,

  • Asia and Japan have comparatively recently commenced secular bull markets, whereas the best spin you could on (say) US and Australian share markets is that their secular bull market is very old by long-term historical standards, having commenced in 1982. However, some would argue (including ourselves) that USA and Australia have already commenced a secular bear market (defined by a long periods of typically over 10 years [sometimes much more], of declining cyclically adjusted Price-Earnings Ratios.)

  • Asia and Japan broadly have much lower house-hold debt / GDP ratios.

  • The likely balance sheet recession coming to Australia.

 

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