I'm not sure that the above-quoted (did not requote, for brevity) chart is accurate. Does it include dividend reinvestment? The US vs. ex-US disparity has been bad indeed, but not as bad, as the chart purports. At least, not yet.So your perspective is the markets, as in worldwide investors, have failed to realize the points you are making and have thus overvalued ex US stocks vs US stocks? Also it is your view that the US markets will continue to become a greater and greater share of world markets, to the point where the US markets will become almost the entire global equities market cap?A long-term chart comparing the returns of US vs ex-US stocks is beginning to resemble the Himalayas vs. the Flatlands. ...
As for the "do you assert knowing better, than what the market knows" argument, the rebuttal is easy. At any given moment, prices could be reasonable... EMH and all that. The US market would not be overvalued or undervalued. Then, new-news comes, and the markets react. US and ex-US diverge further, on some mixture of the news, and expectations prompted by the news.
Guessing future news, is NOT the same as abandoning or refuting EMH. One person might guess, that in the foreseeable future, the US will continue to thrive relative to ex-US, the US dollar will keep rising, US equity P/E will keep expanding relative to ex-US, US corporate profits will continue to increase relative to ex-US, and so on. Another person might guess the opposite. Some will allocate according to such guesses. Others will just buy-and-hold, regardless... maybe because they don't trust their own guessing-power.
I don't trust my own guessing-power, but if I HAD to guess - say for a parlor game - my guess would be the following (for entertainment purposes only!):
* The US becomes the global engine of stock market listing. The most successful European and Asian companies de-list from their native markets and move to the US. Before long, LVMH and Novo-Nordisk move to the Nasdaq.
* Private ex-US companies who seek to IPO, do so in the US... whether they're from Singapore, Germany, Israel, India or wherever else. Their HQ might stay in Mumbai or Taipei, but they effectively become US companies through financialization.
* US-listed companies continue to dominate those listed in other markets.
* By the end of the 21st century, the US stock market becomes something like 80% or 85% of global market cap.
None of this purports that the US economy itself will commensurately dominate. It might, or might not. It does purport that the US will serve for stock markets, as Switzerland served in the early 20th century for private banking, or Italy in the 15th century for the concept of banking itself.
Statistics: Posted by unwitting_gulag — Fri Jul 05, 2024 10:11 am — Replies 6259 — Views 1613971