It's been a tough few months for the stock market but things could be worse.  While the S&P 500 has declined roughly 12% from its peak in early May, the price action overseas makes the grass look a lot greener on this side of the pond.  While we struggle domestically with high unemployment and uneven economic data, foreign markets continue to deal with those and a host of other issues, the most notable being the European sovereign debt crisis.    

The most widely accepted index to measure foreign market performance is the MSCI EAFE Index.  It seeks to provide investment results that correspond generally to the price of publicly traded securities in the European, Australasian and Far Eastern markets.  A look at the performance of this index demonstrates just how bad things have been overseas.  While the S&P 500 is -2.5% on the year, the EAFE index is a staggering -11.9%.  The attached chart demonstrates the relative performance of the EAFE vs. the S&P 500, highlighting both the long-term and notable short-term underperformance since May. Download EFA

Despite the many headwinds we face here in the United States, it is clear investors continue to find relative value in our stocks versus those abroad.  Let's hope that trend continues.