Last time I checked Japan generates a bit of income from overseas and yet market cap share to GDP share has plummeted from ~3X to ~1X.FIREchief wrote:Are you implying that US GDP and global market cap share are somehow linked? Doesn't this chart just illustrate that US companies generate about fifty percent of their earnings from overseas? (which we already knew) The only way that divergence would disappear would be if somehow US companies got kicked out of all foreign countries. I guess it could happen, but good people in bad neighborhoods generally don't want the cops to leave.watchnerd wrote:retiringwhen wrote:
YMMV and if you believed that America is not as exceptional or safe as it was before, you may weigh the balance differently.
When you see data like this...
...it raises questions about how long such a divergence between global GDP share vs global market cap share can continue.MnD wrote:
A country's global share market capitalization to their % of global GDP is a function of many variables.
The point of my original post is to point out that investors that are "only" 54% US equity share are not way out on some limb.
A hypothetical 1988 conversation 30 years ago on Bogleheads Japan might have been debating a range of "non-Japanese" stock investing for Japanese investors from 0% (don't need any! - Japan has a superior system and Japanese companies have a huge amount of international diversification of income and profits) to as much as 55% non-Japan equity (global market cap share crowd). In retrospect this range didn't bracket anything remotely close to the "right" percentage.
Our conversations here now are bracketed between 0% ex-US to perhaps 50% ex-US. I wouldn't assume that range contains the best AA for the next 30 years.