No. of Recommendations: 2
It's a fact that value stocks have historically outperformed the market. Also, the excess returns of the past 20 years in the US stock market have resulted in low div yields, high P/Es & P/Bs, and low expected returns for US stocks going forward. Wouldn't it be great if stocks were cheap again?

Well they are in most of Asia, at least relatively so. The WSJ had a great article today on how the stocks of Asia Ex Japan, while they've had a runup, are still cheaper than the rest of the world (A P/B of about 1.5 vs 2.1 for Europe). The focus of the article was the high yields these cheap stocks provide. A quote:

Asia's highest-yielding stock, Taiwan's China Steel, is yielding 11.6% but trades at a price-to-earnings ratio of about 6.6. The second-highest-yielding stock, Inventec of Taiwan, is yielding 9.4% but trading at a P/E of 8.3.

Since many of these can be bought on US exchanges (At least I think they can, China Steel's ticker is 2002.TW, which my Scottrade acct seems to let me trade) after some due diligence it might be worth investing, say, .5% of your port in 20 of these in different countries/industries. I bet you could come up with a basket having 5% yield, a reasonable payout ratio, and room for growth.

Any thoughts?

Nick




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