In my clients asset allocations, Europe, Australia and Far East better known as EAFE makes up about thirty percent of all equity allocations.  In preparing client reports yesterday I noticed that those percentages were way down.  Then I glanced at 12 month returns and SPY was kicking EFA's butt by over 1400 basis points.

I ran these charts this morning because I felt a compelling blog post.

First a three year to give some background.  There is a high correlation between these two asset classes.  The gap in performance that has crept into the relationship is the compelling opportunity that this blog is trying to highlight.





This gap is being driven by recent news headlines no doubt, but I want to remind everyone a year ago the "Talking Heads" on Wall street were suggesting that the dollar would lose its reserve currency status and that China was moving massive reserves into the EURO. 

Remember, buy low, sell high.  EFA is low relative to SPY therefore it is time to rebalance to neutral, even overweight EFA.