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Two Quants and a Financial Planner | Bridging the Worlds of Investing and Financial Planning
Do You Really Need International Diversification? 10 Top Investors Debate
Dec 23, 2024
Dan Rasmussen, an investing expert known for discussing the 'Great Rotation' and U.S. equity dominance, dives into the heated debate on international diversification. He highlights how interconnected today’s markets are and questions the long-term trends favoring U.S. stocks. The discussion uncovers currency exposure's role and critiques passive investing flows. With insights from top investors, the conversation explores optimal allocation strategies, market unpredictability, and the case for a globally diversified portfolio, helping listeners refine their investment approaches.
57:06
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Quick takeaways
- Understanding 'international exposure' requires recognizing the significance of revenue sources over geographical listings of companies.
- Despite U.S. stocks dominating recent performance, historical trends show international investing can yield stronger returns, emphasizing portfolio diversification.
Deep dives
The Misconception of International Exposure
The definition of international exposure is often misunderstood, as many people assume that if a company is listed on a foreign exchange, it is an international company. However, revenues and expenses matter more than geographical listings; a U.S. company with substantial operations abroad may still be primarily considered a U.S. investment. The S&P 500, composed of multinational corporations, offers significant global exposure through its revenue streams, making additional international investments questionable. This raises the question of whether investing in U.S. large-cap stocks inherently provides sufficient international diversification.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode