Each week we run our behavioral finance - agent-based models to predict future asset prices globally. We run measures for major markets around the world. However, we always like to look at our US measure being the largest economy in the world. One of our measures for the US is showing an interesting similarity with the measure back in 2004.
Date
12/19/2004 0.9435
12/19/2010 0.9563
Our agent-based US measure back in December of 2004 is almost identical to the measure in December of 2010. In fact we have noticed similar dynamics for 2004 and 2010. If these similarities are to continue than we would predict 2011 will be similar to 2005 in the US. This means it will take a year for US markets to become slightly over valued. Therefore, the US market is currently under valued. However, we view the US as an under performer relative to other markets such as:
Indonesia
South Africa
Mexico
Malaysia
Chile
Easter Europe
We also like REITs.
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