Strategic Equity Allocation Insights
The ‘Buffett Indicator’ defined as [Total Stock Market Capitalization/Gross Domestic Product] in the U.S. is at record high; 2020 YTD average at levels just prior to bursting of the dot-com bubble. However, given the exogenous Covid-related GDP shock, it can be argued that the denominator will soon increase and bring the ratio back to a more normal level. What is more meaningful is to see trends in ‘U.S share of Global GDP’ and ‘U.S share of Global Stock Market Capitalization’ over time……my analysis below indicates a high probability of international equities out-performing U.S. equities in the coming decade; key implications for strategic asset allocation