Given all the hype over stocks and U.S. dollar weakness correlation in 2009, we thought it might be useful to show this slide form a recent Morgan Stanley global strategy presentation.
It shows how European stocks tend to outperform U.S. ones during periods of dollar strength… except when European growth is deteriorating. In those scenarios U.S. stocks tend to outperform their European peers.
The lesson — just buy the stocks you like and that you think are cheap. Ignore the dollar, these correlations can appear and disappear thus it’s best to just focus on picking up good companies at low valuations, since that’s hard enough to do.