Asset Allocation Ideas

by | Jan 9, 2015 | Archives

Here are asset allocation ideas from the two investment advisers I follow.  The message I see suggested in their advice is take profits on U.S. shares and invest in Europe and Japan.  The two managers that I use are Keppler Asset Management and ENR Asset Management.

Keppler Asset Management’s Top Value Model Portfolio currently holds ten “Buy”-rated markets — Australia, Austria, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore and the United Kingdom — at equal weights. According to Keppler’s analyses, an equally-weighted combination of these markets offers the highest expectation of long-term risk-adjusted performance.

Keppler’s most recent quarterly Developed Market Review showed that Price to Book Value for the Morgan Stanley MSCI US Index is 2.72 while for the MSCI European Index is 1.80.  In other words overall, European shares are a much better buy than US shares.

keppler chart

Fund managers that track Keppler’s advice agree. The State Street Global Advantage Fund for example has 50.1% of its portfolio invested in European equities and another 9.1% invested in Japan.  Here is the fund’s breakdown.

State Street pie chart

The country allocation of the State Street Global Advantage Developed Market Fund.

Eric Roseman at ENR Asset Management agrees. Eric writes in the January 2015, Extra Advisory Review.  The relationship between ‘easy money’ and big stock market returns has been compelling since 2009. In almost every case worldwide, stocks have mustered impressive returns amid central bank balance-sheet expansion and especially, under the guise of weak currencies, boosting exports. A weak currency is bad for bonds. But it’s a big boon for multinationals. So is a plunging oil price.

In 2015, investors should over-weight European and Japanese stocks. This is where central bank largesse will continue to grow as the monetary authorities seek to boost growth vis-à-vis inflation. Combined with a weak local currency and a much lower oil price, stock investors should earn above-average returns in 2015. At the same time, the United States, which trades at a premium to its historical average, is likely to witness a moderation following five years of big gains.

ENR has a buy signal on two ETFs that diversify in the regions. Wisdom Tree Japan Hedged Equity ETF that traded on the NYSE (symbol DXJ) diversifies into Japan.

Screen shot 2015-01-08 at 5.53.50 PM

DXJ Chart at

The other is the Wisdom Tree Europe Hedged Equity Fund ETF also trades on the NYSE (symbol HEDJ).

wisdom tree chart

HEDJ Chart at

A super strong US dollar is also another reason to buy European and Japanese equities.  We’ll see more on this in an upcoming post.

Until then have a good weekend.


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