It’s Dr John today with three of his sensible investments.
Enjoy!
Dominic
The world is divided into two at the moment. There is the USA, and then there is everywhere else
And in the USA the market is divided into two. There is tech, and there is everything else.
In the battle of US tech versus everything else in the US, US tech wins hand-down.
So, first, we have outperformance of tech versus the S&P500, which, statistically, is as high as, no, higher than, it has ever been over the past 100 years:
And then we have the outperformance of the S&P500 versus the world. Over the past 5 years the S&P has basically doubled and the index of ex-US stocks (The Vanguard FTSE All-World ex-US ETF is a good index for comparison) is only up 24%:
We know that the USA for all its problems is the most innovative, entrepreneurial value-creating country there has ever been. I suspect that we are almost all underinvested there as it should be represented in around 30% of our portfolio. Yes, it has a massive fiscal deficit and, yes, the market there is overvalued. But is has the cheap and secure energy, the deepest capital markets, an active and interested retail market following, and the world’s reserve currency.
Assuming you’ve all got a chunk of US assets, we are at such extremes of valuation there has to be value outside the US. But where?
I have three areas, and a trust in each, in which I think there could be good returns in coming years.
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