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Originally Posted by Table 5
I definitely think more (or at least some) ex-US exposure is warranted these days, as things currently are very overweight US wise. US companies make up something like 60% of global market cap, and the Mag 7 stocks alone makes up around 22%! Historically that's pretty heavy, so chances are things will mean revert.
Never mind that, the rest of the world has been kicking as lately. Despite another pretty good year, the US is actually having it's worse year versus the rest of the world since 2009. And as those above numbers show, historically things are still very skewed. I'm not saying people should dump the US, but I do think more people should be exposed more outside of it...even if something simple like VEU.
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Well there are all kinds of issues with the index, and maybe none more prevalent than today. A dollar invested in the S&P 500 is 40% into the ten biggest companies and over 30% into the biggest companies involved in AI. I think a decade ago, tech was about 19% of the index and today that’s doubled.
Does this mean you should be piling into puts, or shorting? No, because the timing is so impossible. You need some kind of catalyst, and who knows what that is or when it will happen. I’m a believer in the idea that this kind of risk is something we don’t see coming (otherwise people would plan for it). That might not be the case 100% of the time, but it’s kind of how these risks materialize.
Anyway, the markets could run like this and be totally fine for a long time. But people should at least be cautious and use some common sense.