Investors are getting all excited about the November rally in stocks that has driven the DOW to above breakeven so far in 2005. Leading the major U.S. benchmarks is the small-cap Russell 2000, up over 5% on the year.

 That said, while U.S. stocks continue to recover, I hope some of you have taken the opportunity to invest some of your trading capital in foreign markets. Remember geographical diversification? There are strong markets outside of the U.S.

 I have talked about the strength of markets this year in Japan, South Korea, and India in past articles. The Nikkei 225 is recovering, up 37% this year. Sustained strength in the Nikkei 225 could see a move towards 20,000, last encountered in early 2000. While not yet out of the woods yet, Japan's economy is recovering and people are spending (as Meg Jackson will discuss in her commentary today).

 In South Korea, the KOSPI Composite Index is up 53% this year, while in India, the BSE Sensitive is up 45% this year. Great numbers, especially in light of what we are seeing in the U.S.

 The point is, by diversifying your capital outside of the U.S., you can add some punch to your portfolio and offset what has been a poor year for U.S stocks. If you are apprehensive about investing in the Asia Pacific region, then just look to the south and to the north of the U.S. borders.

 To the north in Canada, the key S&P/TSX Composite Index is up 21% this year. Driven by strong oil prices and commodities, the index has performed well. Moreover, if you bought the index in Canadian dollars, you would also benefit from the strength of the Canadian dollar versus the U.S. dollar. This is an excellent way to hedge the weakness of the U.S. dollar.

 But if you prefer tacos, tortillas, and Corona over Canadian bacon and Molson beer, look south to Mexico. The beaches are hot, and so is the market. The Mexican IPC is up a whopping 45% to date in 2005 and is trading at a record high. A major holding in the IPC index is America Movil, accounting for about 18% of the IPC index.

 As we move forward, if U.S. stocks continue to drag along in 2006, then you really should take a serious look at foreign markets in order to increase your portfolio returns.