Jun

1

Australia has outperformed the rest of the world for a century with a 7.5% returns adjusted for inflation vs our own 6.2%.

The triumph of the optimists study attracted enough following and we were bombarded in 2006 to 2009 with reports from bulge brackets ( most notably Credit Swiss ) explaining the virtue of investing in Australia for the long Haul. The reports invariably mentioned the outperformance of Australia vs the U.S. with a standard deviation of 18.2 vs our own 20.4 etc..etc..

Other reasons for the outperformance according to the authors of these reports included the resource rich nature of the country and the sound banking system.

The attractiveness of the Aussie dollar should add to the outperformance of Australia over he rest of the world.

The market in its infinite wisdom and sense of humor managed to tell a different story over the following years where Australia managed to underperform by a wide margin. If one incorporates the weakness of the Aussie dollar into the equation, things will look even worse over the last ten years. Ever changing cycles at its best.

One was tempted today to buy some Australian ETFs after listening to a speech from the same guys about "why Australia and Canada will underperform going forward".

One was tempted to bet that the cycles are about to change again.

anonymous writes: 

Huh? The 10 year trailing compounded return of EWA (Australian) ETF is 8.02% The 10 year trailing compounded return of EWC (Canada) ETF is 7.25% Both of those ETF's have an annual ~ 0.51% mgmt fee so add 5%ish to those numbers to compare with the The 10 year trailing compounded return of the SPY is 7.96. And one concludes that it's a backward looking yawn.

Of course, if you just want to look at the past five years, then you are making a commodity market call. Period.

If you want to make a macro cyclical call, perhaps you should look at Japan. For a US investor, it's produced a 0% RoR for the past 20 years — that is, no buy&hold investor under the age of 50 has made a dime there. Readers of this list may remember my macro call on Japan in 2012. I have not touched my position since then.


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