By Tom Bradley

My posting last week (A Simple Risk Management Tool to Avoid the Next Bubble) garnered lots of comment. In one of the kinder emails, a reader asked what weaker performing assets I would consider to be an attractive balance to the current high flyers. I gave him a few ideas:

• High-quality foreign stocks – Slow-growing, global franchises with good yields and reasonable valuations.
• Japan – The ultimate underperformers – slow or no-growing, global franchises that are becoming more investor friendly and seriously penetrating the rest of Asia.
• Canada's fallen angels – A package of solid companies that have stumbled - names like RIM, Shoppers Drug Mart, Ritchie Bros, Manulife and Royal Bank.
• Natural gas – Perhaps baby steps at this point.
• Arizona real estate – Was just there … very reasonably priced.
• Cash – Some dry powder when opportunities become more plentiful.

Markets have been riding high lately and the ‘New Low’ list has been sparse, but there are still stocks available that haven’t gone up and represent excellent value.

At the risk of repeating myself, I’m not suggesting that investors should never buy assets that have done well in recent years, but … if that’s all they’re buying, then they’re setting themselves up for disappointment.

To quote Howard Marks of Oaktree Capital Management:

“It has been demonstrated time and time again that no asset is so good that it can’t become a bad investment if bought at too high a price. And there are few assets so bad that they can’t be a good investment when bought cheap enough.”