US investors are overweight US
Ex-US investors are also investing a lot in US
It’s not clear if overbuying is driving performance or performance is driving overbuying
Eventually for US companies to grow earnings, they need other DM and EM regions to buy their products. So in a way investors want companies (ex US) to flourish and buy goods & services from companies in S&P 500. But investors don’t want to invest in them.
I‘m glad I‘m 80% into US stocks and 10% of it being in UPRO. It‘s just the superior stock market and will likely stay that for decades.
Check this zealot out: https://www.reddit.com/r/Bogleheads/comments/15bvmpl/comment/jttdehm/?utm_source=share&utm_medium=web3x&utm_name=web3xcss&utm_term=1&utm_content=share_button
He’s been posting this list for literal years. Part of the reasons I left r/bogleheads and r/dividends are this sort of zealots (r/dividends seems to have more dividend haters spamming than anyone who wants to have an adult conversation).
They probably don’t have enough intellectual capacity to respond/converse using their own brains so they resort to spamming long lists nobody reads (though I actually did go through these links and read them, once), or appeal to authority.
I found my dream job as an unpaid market commentator.
In that vein …
Despite my fanboy-like propping up of the US economy, quoting Buffett et al, it’s actually quite amazing to me how US assets continue to seem to outperform, given US (GDP) growth expectations are actually lower than “the world’s”.*
(Source: The Market/NZZ)
I suppose one has to differentiate between the strength and reliance of an economy and the proxy of how a market (like the stock and bond market) see this. You would think there is a rubber band between the two, but how far can it stretch?
Seems kind of hard to imagine at this point, but I would expect this rubber band to work – “mean revert” – at some point. When (or if?) it does is anyone’s guess, but it certainly doesn’t look like anytime soon.**
I do wonder whether a reversion would come gradually or “overreaction-snap-back”. Probably the former, gut feeling only though. I think individual companies do overreact snap back, but supertankers like (valuations of) 2-digit multi-trillion dollar economies probably don’t?
Maybe there are also other more self-reflexive and subterranean forces at work … mumble mumble something about … active … vs … passive mumble mumble …
↑ : witness live in this post Goofy responsibly reminding himself not to open certain cans.
* Whatever “the world” means.
** Famous last words …
I think the US Stock market is being pushed up by excessive capital that needs to be deployed. False sense of security based on following is pushing investors towards US because of
Personally I think #3 will actually drive the problems for #1 & #2 in long run because when countries try to keep their dominance using other means (coercion, threats, sanctions etc.) , then in long run they become complacent & also lose their competitive edge.
The fact is US is less than 25% of world GDP, less than 45% of world market cap and has a debt crisis looming. It is not the only market in the world to invest butt media and past returns are making everyone believe otherwise.
Market cap driven index funds are further supporting this idea because they are tracking investible market caps which is high in US due to higher portion of listed vs unlisted companies.
One lens that seldom disappoints me is that people in rich countries and especially very well paid non-exec positions are lazy. It’s easier for most fund managers to not challenge what has worked for them so far and consider the US as the holiest market of them all, US Treasuries as risk free and the USD as a strong currency than to take career risk and bet otherwise.
Hence, it’ll keep outperforming until it won’t and ‘we couldn’t possibly have seen it coming’ when it will.
I am clueless as always, but you seem quite educated about this.
Maybe first, what would be “fair” terms on competing? (applicable to both sides, of course)
Secondly, maybe a little rethorical, what would you expect the reaction of a declining power to be?
(a) Concede (as it’s the fair thing to do)
(b) Fight until death!!
Thirdly, adding a twist, which one is the declining superpower?
(a) China
(b) USA
In my own personal macro book,
(1) the terms for fair terms are being negotiated as we speak, i.e. they certainly don’t exist on an absolute idealistic scale.
Simply speaking, “fair terms” are the terms that work for both sides given the current power situation.
(2) the declining power will resort to a dirty knife fight, retreating into its corner kicking left and right
(3) China is declining – demographically doomed, technologically just mostly free riding on Western technology, not exactly loading up on sympathetic views in my favorite countries list (I’ll give you that, there’s many that heavily do welcome China, but I can’t think of one that cross-sections with my favorite country list).
I’ll save this for another day. Even unpaid macro full time macro commentators like myself only have so many hours per day to set things straight. 
Love you man, @Abs_max ! 
I would say the only fair thing to do is to innovate and win. But by creating sanctions simply to stop progress of other countries is not very fair in my view. I personally don’t have a preference over who is winning and who is not. I am also not saying this (fair fight) would happen. I am actually saying exact opposite would happen.
China was just an example because I have seen how attempts have been made to push back Huawei and other companies and even coercing NL to not sell tech. In the end it doesn’t work because China will develop its own tech at some point.
Having said that , most nations work based on their self interest (like they should). So obviously it’s not a fair world. And the investors firmly believe that US would do whatever it takes to ensure US is dominant over long term. Hence the capital flows. Let’s see if they are right.
I also hope that EU also start working towards its own long term interests (of course if US would let that happen :))
Personally no real views on who is declining and who is not. There are different metrics to measure different things. US is #1 and China is #2 and I think that’s why we see all this friction. If China was #10, there wouldn’t be sanctions on getting best chips.
The US can be successful in delaying China and they can potentially delay them for a long time. Nobody other than ASML managed to get EUV working even without sanctions - China has an uphill battle there and I wouldn’t be surprised if it takes them >10 years to build a machine equivalent to ASML’s current line-up - if they ever manage it.
Although from a personal standpoint, I’m very much against the blocks on China. I do hobby electronics and a lot of interesting stuff was starting to come out of China and at good prices given the culture of cost-optimization there.
Huh, ok, I see. So sorry to un-love you so soon, but I just don’t believe you anymore, love.
You need to remember meta platforms
Only likes , no dislikes
I agree.
ASML is gem from Europe. Very tough to compete against. I have never seen such high tech anywhere else
In the context of life and innovation, conceding isn’t the fairest way forward: you deprive your opponent of the right to the best possible opposition they could have had, which would have nurtured their drive to get better and outcompete them.
There shouldn’t be a “I’ve lost, I’m going home, have a nice game”, it should be a sportsmanship-like “welcome to the field, your products are good but see what I can put out!”
Protectionism delays the inevitable but it also makes a country weaker than willful acceptance of competition and enthusiastic dive into it would.
I know nothing about the tech, but I’ve read that sentiment many times. I remember reading China bought a machine, broke it down in a university environment, set their best engineers to put it back together and it didn’t work despite their best efforts.
I don’t see the US ever stopping being the destination for the world’s brightest and most ambitious, and neither do I see China becoming that, given their political system and the plain fact their culture is far more insular towards foreigners compared with the US.
Edit: this is NOT a dig on Chinese culture, but the insularity is exacerbated there (as is for JP, Korea, just without the lack of democracy). As someone who has plenty of friends who’ve lived or live abroad, we’d agreed that being in English speaking countries is just EASIER. France, Germany, Sweden, Switzerland, Austria, Netherlands - I have friends in these countries - are all very insular socially compared with UK, Canada, US, and I’d guess Australia, but I don’t have any friends there! My experience is you can be a (bloody) foreigner in the UK, but you won’t feel it on your skin, perhaps ever, while in CH I feel it every single moment. I’m sure it’ll improve once I pull the finger out and learn some proper German, but hear even Germans feel it!
China is also a developing country while the US is one of the richest. So the US will always attract talent there as talent follows the $$$ and there’s also a boost from a less oppressive government too.
Look at how Jack Ma made one ill-advised comment and was crushed. Or a female tennis player ‘disappeared’ to protect the reputation of a high-ranking politician.
Imagine if China had an Elon Musk - on the one hand they’d like to have Starlink, but do you think such an outspoken person would last 5 minutes before being ‘disappeared’ in China? Maybe China already had the equivalent of 1000 Musk’s but they all got crushed by the system along the way.
Andre Geim might be considered such a science equivalent of Musk almost crushed by an authoritarian system.
He is the first and only individual, as of 2024, to have received both Nobel and Ig Nobel prizes, for which he holds a Guinness World Record.
Thanks. This video made my day. IMO he should have received more than an IgNobel for this work 
Meanwhile in South Korea -: martial law declared in middle of night
False alarm. Their Trump tried to fool everyone to avoid probably jail or something.
This seems pretty serious and will, for sure, have people injured or even be killed. IMO not the best moment to drop a questionable joke.
