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The Magnificent 7 Is a Bubble

The Compound and Friends

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*Emerging markets and venture capital are inversely correlated, interesting pattern. *

Historically, there has been an inverse relationship between venture capital and emerging markets by decade. This trend indicates that when venture capital performs well, emerging markets tend to underperform, and vice versa. The sentiment in the market plays a significant role as well, with periods of favoritism towards venture capital or emerging markets affecting investment decisions. Factors such as risk capital allocation, global equity markets, and changing trends in relative earnings also influence the performance of emerging markets. Portfolio managers may consider overweighting emerging markets in their portfolios based on these dynamics. Additionally, the long-term narrative of de-globalization, or 'friend-shoring,' is seen as a significant growth story, with shifts in the supply chain from countries like China to emerging markets like Vietnam and Mexico.

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