The Meb Faber Show - Better Investing The Best Investment Writing Volume 5: Sean Duffin, Cambridge Associates – Benefits of Global Diversification
Oct 22, 2021
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Don't Bet On Today's Market Leader
- Global diversification insures investors against sudden shifts in regional equity leadership.
- You cannot reliably predict which country will be the next top performer, so diversify across regions.
Japan's 1980s Boom And Long Bust
- Sean cites Japan's 1980s boom-then-bust as a vivid example of market complacency.
- Japan peaked with massive gains and then endured a prolonged multi-decade downturn, punishing home-biased investors.
Decades See Different Equity Winners
- Equity leadership rotates by decade, so past dominance doesn't guarantee future outperformance.
- An equal-weighted or blended US/non-US approach would have outperformed the US in most decades due to rotation.