Jeff Cedarholm of Longview Financial Advisors, Inc. has been looking beyond the U.S. for investing opportunities even before he launched Cedarholm Advisors, the predecessor to his current firm, in 1999.
While the way he's pursued those opportunities has changed, as has the global economy, he says that international equities continue to offer more affordable possibilities. While the U.S. may be "the best, the most stable" of investing environments, other countries can still offer good options.
"When we look at Europe in particular," said Cedarholm, that's the case at present. "The U.S. is trading at 18½–19 times earnings—[economist Robert] Shiller said at 25 times earnings—American stocks are not cheap. Europe is in the14½-15 range for good, high-quality industrialized companies like Nestle's, equivalent to U.S. large caps."
Presently Cedarholm, who's the CIO for his firm, has "about 18% in Europe and 7% in Asia, which is a little off. Usually we have more in Europe and less in Asia." But he does a "tremendous amount of research" to guide the direction of investments, and that's led him to various moves outside the U.S.
"I've always used a global fund as an anchor fund, so to speak," Cedarholm said. "Always had some international exposure, [although it can] vary—anywhere from 5%, if things were not going well, to as much as 20–25%. We've had specific emerging markets funds over the years, and they do well till they don't. And then it's not time to cut back, but to get out. Over the past 15 years, we've done some of that, but had at least a minor amount of international exposure."
And that international exposure has stood his clients in good stead, even in a roaring stock market at home. "Right now we're seeing good returns at the end of the quarter," he said. "We're talking about how much portfolios are up or down based on our benchmark, the S&P. I'm looking at portfolios that are up anywhere from 2.7-3% in the quarter, and the S&P is up less than half a percent. We're happy with that. It's due to better returns overseas than in the U.S."
