It hasn't gone unnoticed that 2017 was an exceptionally good year for overseas stock markets. Gains were recorded in virtually every country stock market in the world. Out of more than 120 stock markets I follow, only a few ended down in 2017. If only it could be that simple every year.
To expect the same kind of returns for 2018, you'd have to see a continuation of last year's super winning streak across the globe. But there is another way to keep the overseas streak going that's proven historically. You just have to be willing to take a deep dive into poorly performing international stock markets at seemingly terrible times.
I'm talking about a Dogs of the World strategy. It exists. I discovered it during my hunt to build an international contrarian stock market strategy. Historical data backs up the approach.
Last year was another one in which the strategy worked. Back in January 2017, the country stock market dogs were Turkey, Italy, Denmark, Ireland and Mexico. These were markets down anywhere from 7 percent to 10 percent in 2016. Here 's how they did for my Dogs of the World strategy in 2017:
- Turkey: 37 percent
- Denmark: 35 percent
- Ireland: 29 percent
- Italy: 29 percent
- Mexico: 14 percent
In fact, if you were to invest in those five dog country ETFs at the very beginning of 2017, you would have made more than 29 percent for the year.