As of November 14th, the S&P 500 is down a fraction, but up about 1% if you include dividends. In other words, despite the U.S. debt ceiling battles, euro debt chaos, and slow economic growth blues, investors are still beating money market funds and CDs. Granted, CDs don’t fall nearly 20% in a few weeks, look like they're going to slide another 50%, and then  recover. Such is the new market: low returns, sky-high volatility.

After this long plateau, inflation fears abound, oil prices remain uncomfortably high after skyrocketing a few years before. A global superpower is stuck in a war in Afghanistan, and Iraq is a war zone putting global oil supplies at risk. We have no idea where economic growth will come from, or when it will kick in. The government is a mess. Tax and regulatory uncertainty has business leaders scratching their heads. The unemployment rate, no longer stable at around 5%, seems to be heading toward 10%, and investing in precious metals or the far east appears to be the only way to make any money.

This is how America’s fascination with foreign stock investing ends. It is also not far off from when we add some emerging market stock funds back into the Powerfund Portfolios. While the 10 year return for non-emerging foreign stock funds still beats the S&P 500, all the huge inflows into foreign funds were in the last five years, and for the last five years US stocks have been ahead.

We’ve executed a trade in both the Conservative and the Aggressive Powerfund Portfolios today, September 19th 2011. The main goal is a small increase in stock fund allocation by 5% for the aggressive portfolio and 1% for the conservative portfolio because stocks, while riskier, are more attractively priced than bonds after the slide in stocks this year. More important to our methodology, fund investors are taking money out of stocks and going into bonds at elevated levels.