From a comparative perspective, it really is kind of unproductive to invest in US stocks right now. From a holistic point of view, the US stock market is overvalued. You only need to look at the average price-per-earnings ratio of American stocks in general to understand what I am talking about. It appears that, thanks to all the financial stimulus programs embarked by central banks, there is just so much liquidity in the market. All this liquidity has pushed up the value of sensible stocks until they are no longer sensible investments. Next, they float into riskier and riskier stocks. Things have gotten so ridiculous that Twitter is worth billions upon billions of dollars. That is how crazy things have become. Considering how overvalued the US stock market is, it might be a sensible time to start looking at overseas markets for better investments.
If you are looking for a stock market that has been beaten up quite badly and looks like any good news regarding its economic fundamentals is sure to drive up its stock price, turn to Russia. However, if you are looking for a more fundamental play based on market reforms and deep structural changes, your best bet probably isn’t Russia. From a structural perspective, there is really not much going for the Russian market except for the energy sector. As you already know, the energy sector is flat on its back currently.
The better structural play would be India. Thanks to the new BJP government, India is poised to make structural reforms to its economy. If these economic reforms take effect and produce an economic renaissance in India, expect key Indian stocks to increase in value. Of course, this is not going to happen overnight. However, if you are looking for structural reforms and a long-term stock appreciation, Indian stocks might be a great place to invest in. If you don’t want to invest in individual stocks directly, look for ETFs that focus on the Indian market.
