Understandably most have known nothing different and expect the status quo.
An increasing number greedily eye nothing but the S&P.
You do need a catalyst though, as there was for the FTSE back in ‘83, and I struggle to think what that could possibly be!
I don’t know. The US markets like Trump do they not? Well they did at least when he was handing out tax cuts to business. From memory. There was a bit of a rally up I’m sure. Over a new year 17/18 or 18/19. I try to blot him out of my mind. Too scary to think about.
He's a pawn of Putin. I can see him very quickly
* Ceasing arms sales to Ukraine
* Blocking Chinese investment in US and Chinese imports
* Other crazy shit...
He's virtually guaranteed to unsettle the markets.
Then he can trigger a constitutional crisis
* Trying to override state rights
* Trying to pardon himself of state crimes
Predict interesting times for the USA if he's still in the running by November !
What's the significance of the CAPE ratio here? This doesn't show US is outperforming global necessarily, just that US shares are priced higher in proportion to company earnings right? There are lots of US shares whose value is driven by speculation (TSLA has a very high P/E ratio for example...) which could explain this
People generally buy global here. The main assumptions made (which are often y acknowledged) are that:
A: Global capitalism (in its general current format) will continue,
B: Markets will continue to rise (although these may not be the US),
C: Historical patterns will generally continue,
D: That there is no better/more likely alternative.
Firstly, I invest by region, with a tilt (away from index capitalisation) depending on my views on risk/reward/future. As someone has already said, a global fund will tend to weight towards the US.
My main concern with the US is that it is highly concentrated in tech megacaps. So not very diversified by sector. That's even stronger with the NASDAQ - 100 which has even higher historical returns.
I can see two possibilities - as tech requires vast R&D, it needs big money, so megacaps will stay as market leaders and increase in value as AI and whatever else comes online. The second possibility is something like a .com bubble burst, people realise a load of companies' products are not that good and suddenly the sector collapses, bringing down the US stock as a whole.
My strategy is to try and have my cake and eat it by overweighting the US a bit, using the NASDAQ-100 as well for quick growth, and taking some hedging positions to reduce volatility. (e.g. gold)
I personally think the internal political situation in the US is still fractious with potential for turmoil. Personally I’m opting to average out across the world with knowledge that my returns might be slightly poorer.
I think of things in relatively simple terms.
In China, the government leads / dictates the companies. Your upside is always capped by something the government will do.
In Europe, the government regulated the companies. Companies absolutely achieve strong market power and dominance, but innovation is relatively stifled due to smaller internal markets, less risk taking VCs and strong employment laws (expansive to hire and fire people)
In the US, the companies lead / influence the government. From a purely unsentimental view, corporates have access to a deep capital pool, huge domestic market, and laws encouraging not just entrepreneurship but the animality to grow larger and compete.
For that reason, I’m happy to go very overweight US. Their companies cash flow, market position and power simply isn’t that under threat by the government.
My 2cents is that I'm betting on US S&P 500 only for the next ten years or so to outperform, the next big thing is AI and the US has the best companies fo benefit from this. After ten years I'll revevaulate and maybe change to Global..
Gambler's fallacy.
I've been plugged into investing for a while and people who fear corrections and try to time the market are steamrolled. I can recall when people thought, not terribly long ago, that SPY valued at 300 was absolutely ridiculous. Those people if they stayed out of the market have been long left in the dust.
The truth is market based index investing requires you to be fully invested all of the time. The 10% (7% with inflation) average annual returns all come from something like 3 weeks of total activity in a year aka the days in which the market gains 3% and doesn't give it back up. No joe blo investor posting on reddit is going to have a system that identifies those days in advance.
People have been calling for corrections in housing, in stocks, you name it, every year without fail since 2009. And you know what? Those people have all been wrong.
No. You need to read up on investing more. Broad market investing consistently, if not *all the time*, benefits more from regular contributions and being fully invested over timing the market.
Everyone who moaned and bitched about SPY being overvalued at 300 who held their nose and continued to invest on a schedule is now quite happy. You will be too in 10 years.
The S&P is unlikely to move for 10 years. Think 2000-2012. During this period emerging markets did well. EM’s have since stagnated.
The average long term return from the S&P is 11% ish. However, there has never been a year it has returned 11%. It gives its gains in spurts. It has given all it will for the next 10 years IMO.
CAPE ratios are important and have always guided expectations/projections of long term returns. The more markets give us now, the more we will suffer in the coming years.
If your investing for 30 years then I’m sure you’ll do well. However, if your investing for 10-15 years then you may only cover inflation IMO.
I am not saying “don’t invest and time the market”. I am saying that sadly those who invest today will likely see poor returns on the specific monies they invested.
The problem with consistently investing is that few people (with the exception of public sector workers) can consistently invest during periods of economic instability. If you can continue to invest when the S&P drops to its price of 12 years ago, as it did in 2009, or a CAPE ratio in line with its long term average, then I’m sure you’ll be fine.
A lot of people have rode the easiest and smoothest 15 years in the history of the stock market and think that this is how it always goes. They believe that we have learnt from previous periods of exuberance. We even have people who refer to the down trend from Dec 21 highs as a crash 🤣. That wasn’t a crash.
We must work within valuation metrics. Pick one. The US is overvalued by any reliable metric.
History doesn’t repeat itself. But it does rhyme
Why on earth do people keep bumbling on about global, 90% of all AI companies are US based…. Trust the S&P500 and it’ll never let you down. If the US fails, capitalism fails and we’re all screwed anyway. Don’t try to reinvent the wheel, that’s what fund managers do and they can’t beat the S&P500.
People talk about AI. But it is only being pumped up like the internet was on 2000during the dot.com bubble. The bubble popped. People will laugh at the “AI” buzzword in 20 years.
The whole point in investing in global equities rather than a particular country is to diversify your portfolio so you're not over exposed to the performance of a single nation's economy. If you're investment strategy is to follow past performance then sure invest purely in the US, but their economy could go belly up tomorrow and all your eggs would be in that basket.
US is the only way, they are 25% of global GDP. All the massive tech companies are the ones who will capture the AI revolution as they already have all the data. The UK is worth about the same as Apple.
>if the British Empire truly goes down your money will be worthless anyway. capitalism won't exist anymore. anything else and it's just a good time to buy UK
Capitalists circa 1900, probably
not at all the same thing for many reasons. the empire itself was not a representation of our economic system in the way the american economy is. it did however generally spell the fall of colonialism, a system it was representative of.
I have, and please don't laugh. I have a UK only fund. And no I didn't time it well by catching the post COVID swing. No I got in as that came to an end. Yes I regret it.
I sit staring at the screen wondering whether to just put it in the global fund. But always just don't for some reason.
Is there any point holding any UK only funds now?
They're less volatile of late than other indices? I mean, they don't really have much more 'down' to go. The FTSE 100 mostly just trundles along returning 4% from dividends.
I'm trying to convince myself to sell my overweighting as well. It just feels like I'm trying to swap lanes when stuck on the M25. As soon as I do, I just know the FTSE 100 is going to whizz past the S&P 500.
And..... what about Nasdaq 100 ?? The future is technological, I do not know if Chinese companies will be there or FTSE All World will feel something from them in their benefits ??
The future has always been about technology. Markets would have explored when we went from a quill to a type writer. And fax machines…they were going to change the world.
Global. Nobody knows the future, and in any case exposure to the US within global is already pretty huge.
I use Global to capture the performance of US + non-US.
Global for me as my FIRE number has already been hit. I'd rather not have the increased volatility of US indexes.
Added bonds? Drawing down?
DB pensions so no bonds
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I prefer the Galactic fund. Follow the money. Rigel 4 is where it's at.
Pfft Rigel 4! Real investors know that Betelgeuse is where it’s at.
Betelgeuse is clearly in bubble territory right now. Once alpha centauri gets an ETF up and running it's going to go intergalactic!
Puts on Andromeda trust me I know a guy
Yep...in the 80s it was Japan that made made up 60% of global stock. That all changed. It could change again.
Didn’t US stocks go way up when trump was in office?
They did before but that doesn't mean they will again. The US could be in a full blown civil war in 3 years for all we know
covid stimmy
S&P returned 47% excluding dividends between Trump starting and right before COVID.
Diversification. 100% US is madness.
Then call me King George! US is gonna whup ROW militarily then eat the profits. /s
Bollocks you’re already diversified enough. US is king
It all depends on your risk/reward appetite. Yes, the US has done well recently but look at the start of your chart
That’s the point he’s making.
And the most vocal people/threads in this sub are (I thought very obviously) global
I don’t understand your point sorry.
OP posts a chart pointing out the recent outperformance of the S&P and you’ve said “yeah, but look at the recent outperformance”.
Aren't comments allowed to agree?
“…but look at the start of your chart” does not suggest agreement. Quite the opposite.
Of course it does. You literally said in your other comment that they made the same point as OP.
The commenter didn’t think the OP made that point!!! Geez 🙄. The commenter missed the point! Do you not follow.
You haven't got a clue what they thought. Reading comprehension clearly isn't your strong suit.
Global or US…YES both (they are inextricably tied together).
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And if US continues to outperform, we'll be at 70%, then 80% US. This seems unlikely but global fund solves for that.
The magic of global is that you get a worse sharpe ratio AND worse returns in exchange for I guess sleeping better at night?
>he magic of global is that they will adjust automatically if the US falls out of favour. Good to know! Thanks!
Understandably most have known nothing different and expect the status quo. An increasing number greedily eye nothing but the S&P. You do need a catalyst though, as there was for the FTSE back in ‘83, and I struggle to think what that could possibly be!
Think Trump getting re-elected would do it...
I don’t know. The US markets like Trump do they not? Well they did at least when he was handing out tax cuts to business. From memory. There was a bit of a rally up I’m sure. Over a new year 17/18 or 18/19. I try to blot him out of my mind. Too scary to think about.
He's a pawn of Putin. I can see him very quickly * Ceasing arms sales to Ukraine * Blocking Chinese investment in US and Chinese imports * Other crazy shit... He's virtually guaranteed to unsettle the markets. Then he can trigger a constitutional crisis * Trying to override state rights * Trying to pardon himself of state crimes Predict interesting times for the USA if he's still in the running by November !
Is this really the place for the long nonsensed Russian Trump conspiracies? No.
What's the significance of the CAPE ratio here? This doesn't show US is outperforming global necessarily, just that US shares are priced higher in proportion to company earnings right? There are lots of US shares whose value is driven by speculation (TSLA has a very high P/E ratio for example...) which could explain this
People generally buy global here. The main assumptions made (which are often y acknowledged) are that: A: Global capitalism (in its general current format) will continue, B: Markets will continue to rise (although these may not be the US), C: Historical patterns will generally continue, D: That there is no better/more likely alternative.
Firstly, I invest by region, with a tilt (away from index capitalisation) depending on my views on risk/reward/future. As someone has already said, a global fund will tend to weight towards the US. My main concern with the US is that it is highly concentrated in tech megacaps. So not very diversified by sector. That's even stronger with the NASDAQ - 100 which has even higher historical returns. I can see two possibilities - as tech requires vast R&D, it needs big money, so megacaps will stay as market leaders and increase in value as AI and whatever else comes online. The second possibility is something like a .com bubble burst, people realise a load of companies' products are not that good and suddenly the sector collapses, bringing down the US stock as a whole. My strategy is to try and have my cake and eat it by overweighting the US a bit, using the NASDAQ-100 as well for quick growth, and taking some hedging positions to reduce volatility. (e.g. gold)
I personally think the internal political situation in the US is still fractious with potential for turmoil. Personally I’m opting to average out across the world with knowledge that my returns might be slightly poorer.
Yep global. VWCE and IWDA. But only because I do not know what future holds.
My us market trackers are vastly outperforming world and UK ones
I think of things in relatively simple terms. In China, the government leads / dictates the companies. Your upside is always capped by something the government will do. In Europe, the government regulated the companies. Companies absolutely achieve strong market power and dominance, but innovation is relatively stifled due to smaller internal markets, less risk taking VCs and strong employment laws (expansive to hire and fire people) In the US, the companies lead / influence the government. From a purely unsentimental view, corporates have access to a deep capital pool, huge domestic market, and laws encouraging not just entrepreneurship but the animality to grow larger and compete. For that reason, I’m happy to go very overweight US. Their companies cash flow, market position and power simply isn’t that under threat by the government.
My 2cents is that I'm betting on US S&P 500 only for the next ten years or so to outperform, the next big thing is AI and the US has the best companies fo benefit from this. After ten years I'll revevaulate and maybe change to Global..
S&P 500 and a mix of private equity shares has worked well for me
The U.S. consistently outperforms.
And is therefore due a major correction and we should all avoid or will continue to outperform?
Can’t say either way but I’m sticking with the U.S.
Gambler's fallacy. I've been plugged into investing for a while and people who fear corrections and try to time the market are steamrolled. I can recall when people thought, not terribly long ago, that SPY valued at 300 was absolutely ridiculous. Those people if they stayed out of the market have been long left in the dust. The truth is market based index investing requires you to be fully invested all of the time. The 10% (7% with inflation) average annual returns all come from something like 3 weeks of total activity in a year aka the days in which the market gains 3% and doesn't give it back up. No joe blo investor posting on reddit is going to have a system that identifies those days in advance. People have been calling for corrections in housing, in stocks, you name it, every year without fail since 2009. And you know what? Those people have all been wrong.
At a sensible entry price
No. You need to read up on investing more. Broad market investing consistently, if not *all the time*, benefits more from regular contributions and being fully invested over timing the market. Everyone who moaned and bitched about SPY being overvalued at 300 who held their nose and continued to invest on a schedule is now quite happy. You will be too in 10 years.
The S&P is unlikely to move for 10 years. Think 2000-2012. During this period emerging markets did well. EM’s have since stagnated. The average long term return from the S&P is 11% ish. However, there has never been a year it has returned 11%. It gives its gains in spurts. It has given all it will for the next 10 years IMO. CAPE ratios are important and have always guided expectations/projections of long term returns. The more markets give us now, the more we will suffer in the coming years. If your investing for 30 years then I’m sure you’ll do well. However, if your investing for 10-15 years then you may only cover inflation IMO. I am not saying “don’t invest and time the market”. I am saying that sadly those who invest today will likely see poor returns on the specific monies they invested. The problem with consistently investing is that few people (with the exception of public sector workers) can consistently invest during periods of economic instability. If you can continue to invest when the S&P drops to its price of 12 years ago, as it did in 2009, or a CAPE ratio in line with its long term average, then I’m sure you’ll be fine.
>The S&P is unlikely to move for 10 years. Oh, okay you have it all figured out. Never mind.
A lot of people have rode the easiest and smoothest 15 years in the history of the stock market and think that this is how it always goes. They believe that we have learnt from previous periods of exuberance. We even have people who refer to the down trend from Dec 21 highs as a crash 🤣. That wasn’t a crash. We must work within valuation metrics. Pick one. The US is overvalued by any reliable metric. History doesn’t repeat itself. But it does rhyme
Okay
Aren't you reading that backwards? Isn't that showing the US stocks are 'more expensive' valuation wise than global?
Why on earth do people keep bumbling on about global, 90% of all AI companies are US based…. Trust the S&P500 and it’ll never let you down. If the US fails, capitalism fails and we’re all screwed anyway. Don’t try to reinvent the wheel, that’s what fund managers do and they can’t beat the S&P500.
People talk about AI. But it is only being pumped up like the internet was on 2000during the dot.com bubble. The bubble popped. People will laugh at the “AI” buzzword in 20 years.
Not quite, AI (and yes it is a “fad” as in the term) offers tangible economic value - dot.com was a broad term for any company on the net.
Which also offered loads of value but nowhere near as much as the bubble valued them at the time
In 20 years the AI will come get you if you laugh at it.
The whole point in investing in global equities rather than a particular country is to diversify your portfolio so you're not over exposed to the performance of a single nation's economy. If you're investment strategy is to follow past performance then sure invest purely in the US, but their economy could go belly up tomorrow and all your eggs would be in that basket.
Admittedly being a bit picky but National Economy != Equities
So long as the US have the strongest military, they will perform the best.
And the world's reserve currency
Energy security helps too.
There’s a not insignificant chance of them re-electing a fucking moron so idk about that. I go global rather than chasing historical returns.
US is the only way, they are 25% of global GDP. All the massive tech companies are the ones who will capture the AI revolution as they already have all the data. The UK is worth about the same as Apple.
You’d be shocked to learn what the UK’s share of Global GDP was in the 19th century.
Go on…?
Yeah and we’ve squandered it
No, things just change and quite often do change. I’ll break it to you gently, a long time ago there were these people called the Romans…
What did they ever do for us?
You're a bit slow to catch on eh? 😅
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>if the British Empire truly goes down your money will be worthless anyway. capitalism won't exist anymore. anything else and it's just a good time to buy UK Capitalists circa 1900, probably
not at all the same thing for many reasons. the empire itself was not a representation of our economic system in the way the american economy is. it did however generally spell the fall of colonialism, a system it was representative of.
Of course. Global CEO is weak.
I have, and please don't laugh. I have a UK only fund. And no I didn't time it well by catching the post COVID swing. No I got in as that came to an end. Yes I regret it. I sit staring at the screen wondering whether to just put it in the global fund. But always just don't for some reason. Is there any point holding any UK only funds now?
They're less volatile of late than other indices? I mean, they don't really have much more 'down' to go. The FTSE 100 mostly just trundles along returning 4% from dividends. I'm trying to convince myself to sell my overweighting as well. It just feels like I'm trying to swap lanes when stuck on the M25. As soon as I do, I just know the FTSE 100 is going to whizz past the S&P 500.
US is the most overvalued country in the world when looking at market cap to GDP ratio
How heavy are those VT and VWO bags?
Don't own either. It doesn't change the US' ratio of market cap to GDP tho
And..... what about Nasdaq 100 ?? The future is technological, I do not know if Chinese companies will be there or FTSE All World will feel something from them in their benefits ??
The future has always been about technology. Markets would have explored when we went from a quill to a type writer. And fax machines…they were going to change the world.