2014 begins, which means I'm rebalancing my tax free savings account and starting anew. Since I'm already heavily US-weighted outside of the this account, I'm going to be around 35% invested in the S&P, 30% in emerging markets, and around 15% and 15% in Israel and Japan. I have 5% not invested yet, will figure it out later.
I'm bullish on Japan's fundamentals, but not politically. It's a country full of corruption and lacks the transparency such a country would be expected to have, and while I believe the US will make Japan a big focus in the coming years it will also be a double-edged sword, and Fukushima remains a serious concern to me. I think prospects will be much better once Abe is out because all of what's on the table which makes sense to improve the economy is in no way inherent to Abe and his party, it will be continued and probably in better fashion when his party is defeated. What makes sense for Japan is obvious, there's no more taboo over admitting they had it wrong and need to turn things around, favor startups, improve women's conditions, etc., because they know they'll benefit economically from doing so.
The reason I added Israel is that I'm very confident in that country. Economic booms happen where the society has a motivation to build, something lacking in most developed countries these days. It's how Japan boomed after the war (and before), same for Germany, etc. This motivation is still in its infancy since it has gone through a lot of hurdles but I believe that the real growth will begin over the next decade now that the country has a better footing, entrepreneurs have more resources available, etc. I think worries over middle east wars and Palestine has actually kept a lid on Israel's valuation. The country's main issue is probably its small territory, as I believe the desire for a lot of Jews to live in Israel will grow significantly in the next years since it will become increasingly attractive economically. I don't think space will be enough of an issue to hamper economic growth in unpredictable fashion. Maybe it will be a bigger issue in 20 years.
30% in emerging markets is a lot, but again it's small considering the overall weighting it represents in all my investments. Then again, I like to look at this account as a whole, excluding what I have invested in outside of it, so it is sizeable.
I have nothing invested in developed countries outside what is mentioned above, so nothing in Europe, because I don't believe the US can go down significantly without Europe doing worst, stability there is much more volatile due to political/cultural fractions. Nothing invested in Canada because I don't see us doing better than the US in the coming years.
Biggest worry for 2014 will probably be China, but it might be time for things to balance out.