JCE66 wrote: ↑
Wed Feb 21, 2018 11:18 am
It was the last chart, "Telltale chart relative to TSM 1970-2017", that I was looking at which prompted my comment. Specifically, 1995 and onward. If I am interpreting the chart correctly, the relative performance of Total International lags TSM by a very healthy margin. I see the one 10-year blip (circa 1984-94), and then not much after that.
Well... Look at it this way.
- From 1970 to 1995, there were multiple occurrences where Int'l grew faster than TSM, then fell back on par, then did it again.
- Starting from 1995, the US went in a huge speculative bubble (Internet!), which popped in 2002, and Int'l caught up by 2007
- Since then, after the 2009 crisis hit everybody in a similar manner (hence is not visible on this relative
growth chart), the US went up again in an aggressive manner, and is nowadays acknowledged to be significantly overvalued.
- In 2017, Int'l started to inch its way up (relatively speaking)
I don't know, all I see are cycles of US and Int'l swapping periods of higher (relative) growth, and then returning on par on a regular basis. It just happens that right now, the US has been in the pole position for the past few years. I'm not going to bet that it will stay that way, but time will tell. All this being said, we have to be careful, the human eye tends to find patterns where there is just noise...
PS. looking at the Dimson, Marsh and Staunton data (Triumph of the Optimists & Credit Suisse updates), the US vs Int'l trajectory in the 50s and 60s was pretty much in sync. Before that (1st half of the 20th Century), this was war time, repetitive devastation in Europe and Japan, and yes, the US clearly returned a large premium by then. But not since then, except in the past few years.