Are pension funds and big endowments heavily weighted towards US investments?

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Pension funds and big endowments heavily invest in private equity, which is mainly focused on the US. This leads to a significant US bias in portfolios, as individuals also own US real estate and businesses. Recent memory of the US performing well diminishes arguments for international investment. This strong conviction is evident in the premium valuation of US stocks compared to international stocks. Listing on the US exchange and passive investment flows contribute to the consensus and push valuations higher. However, higher valuations suggest lower future returns.

Clay Finck chats with Dan Rasmussen about why Japanese equities offer some of the most attractive valuations in the market today, how stretched growth stock valuations are relative to value and much more.

Dan is the Founder and Portfolio Manager of Verdad, which is a global asset management firm that strives to achieve the highest risk-adjusted returns possible through rigorous research and its practical application.

IN THIS EPISODE YOU’LL LEARN:

00:00 - Intro.

01:45 - Contrarian views of the market Dan holds relative to the rest of the market.

05:14 - Why the US is overvalued relative to international stocks.

09:19 - Historically how undervalued value indices are.

13:27 - Why Dan is bullish on Japan.

13:44 - The value mandate that Japan put in place to try and juice stock market valuations.

24:11 - Dan’s views on Japan’s policy of yield curve control.

24:42 - What’s keeping investors away from Japan’s stock market.

30:57 - What the financial accelerator is and how it relates to the 2023 banking crisis.

36:12 - How equity markets tend to behave after a Fed pause.

36:30 - How high-interest rates are affecting corporate earnings.

51:21 - Dan’s views on the Chaos Kings and their strategy of Crisis Investing.

60:40 - How Verdad’s portfolios are positioned today.

72:21 - What technologies excite Dan in creating a better society for the future.

Disclaimer: Slight discrepancies in the timestamps may occur due to podcast platform differences.

BOOKS AND RESOURCES

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