A comprehensive approach to asset allocation extends beyond diversification solely by asset classes (i.e. stocks, bonds, real estate, commodities, etc.). It should also include diversification by global geography. Behavioral finance research has clearly identified the profound tendency of most investors to succumb to "home-country bias". Legendary investor John Templeton was a leader in advocating for developing a globally oriented value investing perspective to achieve investing outperformance.
Note: For expanded view, left click on this spreadsheet
The Country Value Rankings table above is based on a weighted-average ranking system. You will notice that there are eight categories (and one factor for each category) used in the analysis of each country as follows:
The next-to-last column on the Country Value Rankings spreadsheet shows the Weighted Average Summation Total for each country. The top 5 countries are China, Russia, Hong Kong, South Korea, and Taiwan). Thus, future investments in the Covered Calls Advisor Portfolio (shown in the right sidebar of this blog) will be overweighted in these higher rated countries. It should also be noted that the U.S. is ranked 13th of the 21 countries rated, so U.S.-based companies selected for investment will be those with significant exposure to sales in countries/regions with relatively high expected GDP Growth in 2012.
This Country Value Rankings spreadsheet is detailed in terms of both the methodolgy used and the resources used to capture the information for each country. If you are interested in these details and would like further information or clarification, please share your comments and questions in writing. They are always welcomed. Click the 'comments' link below to post your feedback. If you prefer confidential communications, my email address is listed at the top-right sidebar of this blog.
Hopefully, this information is helpful in your thinking and analysis of your own equities selection methods related to your covered calls investing process!
Regards and Godspeed to All,
Jeff
