On this week's episode of THE FINANCIAL COMMUTE, host Chris Galeski welcomes CEO Jeff Sarti to discuss overpriced U.S. stock valuations and whether investors should consider international stocks.
Here are some key takeaways from their conversation:
- With the recent outperformance of U.S. stocks as compared to international stocks, many investors are questioning whether they should ditch international stocks altogether.
- However, U.S. equities are trading at historically high valuations, raising concerns about future returns. Investors may find better value in international stocks.
- While the U.S. makes up 27% of the global economy, we make up about 55 to 70% of the global stock market. This indicates the overvaluation of U.S. equities compared to international markets.
- Cycles of outperformance tend to go in 10 to 15 year cycles. An example is the 2000s where U.S. stocks were flat for the decade and international stocks performed very well.
- Jeff and Chris discuss the tendency for investors to have a home country bias and the pros and cons of taking this approach.
- Jeff says the effects of tariffs on both U.S. and international companies will depend on whether they're exporters and which industries they're in. In conclusion, it is crucial for investors to diversify their portfolios with stock exposure around the globe.
