American Stocks Are Priced to Move

With patriotic feelings running high this November, now is the time to "buy American" -- American stocks.

Even though the greenback may be getting more buying power overseas, one area where you shouldn't be traveling is in your portfolio.

The Fall of Foreign Stocks

Just a year ago, the financial world was playing a markedly different tune. Foreign stocks were where the money was. For some time ADRs and ETFs were popping up left and right on American exchanges, offering investors the chance to put their money in dozens of lucrative regions across the globe.

In an eerie parallel to the "tronics boom" of the 1960s, some unscrupulous companies even started adding "China" to their names to try and cash in on the hype (leading to this alert from FINRA).

In 2007, Latin American funds were the top performers out there while indices measuring the stock markets of scores of developing countries reported gains well into the double-digits. Then the subprime crisis hit.

Suddenly, foreign stocks have lost much of their cachet as investors here in the U.S. are scrambling to make sense of the high valuations they had been giving them. Index ETFs like iShares FTSE/Xinhua China 25 Index (FXI Quote) and iShares S&P Latin America 40 Index (ILF Quote) are down over 50% and over 40% respectively on the year.

The main reason to stay away from foreign stocks right now is that they're simply too volatile now. While emerging market stocks still have a ton of potential for investors in the future, their near- to mid-term prospects aren't quite as certain.

Buying American

Even with calamity facing overseas investments, it's being made clear by some of investing's biggest names that now is the time to buy if you want to cash in on the super-low valuations many companies are seeing these days.