Belgium and Financials

Two factors that have consistently worked over time are value and momentum.  Lots and lots of research in the archives as well as our work here.  We also emailed out a must read debate between Arnott and Asness this weekend on GTAA and factor investing…

On the sector front, the three most undervalued sectors relative to their valuation over the past 20 years are financials, energy, and healthcare.  The three best sectors for momentum are financials, healthcare, and consumer discretionary (over a 1-12 month timeframe).  Obviously I think financials and healthcare are good spots to be as they combine the nice combo of cheap assets that show nice momentum.

On the country front for foreign some of the best momentum has been Belguim, Hong Kong, Germany, Greece, Turkey, Egypt, Thailand, and Mexico.

The cheapest are Russia, and basically all of the struggling Euro countries.  (Greece, Ireland, and Italy lead the pack).  The best combo of the two is Belgium as it is trading at a sub 10 CAPE with nice momentum.

More background here.

Disclosure: I own, trade, and will buy and sell stocks, futures, options and ETFs based on these countries and sectors now and in the future for clients.  I have said this plenty of times, but 100% of my investable assets are in the funds I manage…