The U.S. stock markets have finally had a long-awaited 10% correction. Investors may be pained to see a double-digit loss in their accounts so quickly, but they should rejoice: The U.S., represented by the S&P 500, is one of the best performing indices in the world this year, even after the decline.

After 2009, which saw money invested just about anywhere in the world do well, where should money go in 2010? So far, the answer is not in stocks, at least not in broad indices in major markets. We have looked at how stocks have fared in representative markets, using country-based exchange-traded funds to assess where the best performing parts of the world might be.

The following table shows that only one of the 24 countries examined - Malaysia -- shows a year-to-date gain.

Eight countries have been highlighted, mostly larger economies. Two are in North America, one in South America, two in Europe and three in the Far East. Six of the markets hit their 2010 highs within the past six weeks. Two, Brazil and Germany, made 2010 highs in January. The losses since the most recent high determine whether a market is in a pullback (down less than 10%), a correction (down 10% but less than 20%) or a bear market (down at least 20%).

The following table shows the details of the eight selected markets.

Japan is approaching an official correction, but was not there as of Thursday. With the dramatic selloffs elsewhere and especially on Thursday in New York, it is very likely that Japan will pass the 10% decline mark on Friday This article was written prior to the 2.5% decline of Japanese markets on Friday.

Four global regions are represented by the selected markets. Three of them have one major market in bear territory; only North America has escaped so far.

Looking at all 24 markets, 58.33% are in correction (down 10% but less than 20%), 33.33% are primary bear markets (down 20% or more) and 8.33% are in pullback (down 5% but less than 10%). The specifics are shown in the following tables:

The distribution in time of market tops reveals something very interesting. These events are not randomly distributed over time, but have occurred in two "bunches."

All 24 markets achieved tops at the beginning of January. In April, 19 of them reached new highs for the year. This should be cautionary for investors seeking diversification among a number of country ETFs. It appears that there is quite a bit of correlation between the ETFs in this group of 24. Selecting a number of them, say eight, may not add significant diversification to a portfolio beyond what could be achieved with just one or two.

Many individual country stock markets have come down hard in the past month. A third are already down more than 20%, a common definition for a primary bear market. Where these markets stand in longer secular market cycles is not clear. These could be countertrend bear markets in new secular bull markets that started in late 2008 and early 2009. Or these could be renewals of secular bear markets that started in 2007. In the latter case, the huge primary bull rallies that may have ended in 2010 would have been countertrend moves.

It may take years to make a final determination of the exact nature of the 2008 and 2009 market lows around the world. It is actually more of an academic question than a practical one for investors looking at allocations on a frequent basis, say quarterly. Nonetheless, longer-term investment strategies will change depending on whether the investor assumes the secular trend is up or down. Investment tactics (quarterly judgments about allocations) will try to take advantage of any bull market, whether it is countertrend or with the trend.

At the time of publication, Lounsbury was long a number of stocks in the S&P 500. He frequently trades country ETFs, but currently has no positions.

John B. Lounsbury is a financial planner and investment adviser, providing comprehensive financial planning and investment advisory services to a select group of families on a fee-only basis. He worked for 34 years with IBM, and spent 25 years in R&D management and corporate staff positions. He also was a Series 6, 7, 63 licensed representative with a major insurance company brokerage for nine years.

Specific interests include political and economic history and investment strategy analysis. He holds degrees from the University of Vermont, Columbia University and the Illinois Institute of Technology, where he studied chemistry, physics and mathematics. He is a contributor to Seeking Alpha and his own blog, PiedmontHudson.

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