A World of Options

One of my favorite annually updated infographics is shown above (for 12/31/19 as the most recent one isn’t out yet). Dimensional Fund Advisors’ compiles it, and it shows a map of the world scaled by market capitalization - a fancy term for how large a stock market is in each country. 

If you’re like most Americans, your eyes instantly go to see how large the US is compared to everyone else. And it is. Yet it’s still only just over half of the investing universe. For an enlightening experience, just look how large Apple is - larger than some entire countries itself. Pretty staggering. 

Sometimes we forget about the remaining half of the investing world, and over the past decade the US has strongly outperformed our international peers. So much so that even those who are paying attention may wonder why we invest in any companies outside of the US. 

However, it wasn’t that long ago that we experienced “The Lost Decade” here in the states - the time from 2000-2009 where the S&P 500 Index had one of its worst 10-year performance with a cumulative return of -9.1%. 

Around the world, at that same time, things looked a bit different.

In fact, for the 11 decades starting in 1900 and ending in 2010, the US market OUT-performed the world market in 5 decades, and UNDER-performed the remaining 6. As that data is updated, the most recent decade ending in 2020 will likely show an even 6-6 matchup. Vanguard recently put out a piece that estimates a 2-out-of-10 likelihood that the US outperforms non-US over the next 10 years. 

Does that mean we should bail on the US and invest more heavily overseas? 

No, not in my opinion. I’m still a proponent of a globally diversified approach to stocks - because we never know where (or what) is going to do well and where (or what) won’t, as this "Skittles" chart below shows. 

[Note- for important disclosures, click here for a full piece that shows the content I mentioned above.]


[Note- for important disclosures, click here for a full piece that shows the content I mentioned above.]

Interesting Resources

F. Scott Fitzgerald
“The test of a first-rate intelligence is the ability to hold two opposing ideas in mind at the same time and still retain the ability to function.”

Enough - Part 2
12 mins | CalibratingCapital (that's me) 
Long-time readers of Fident Friday may catch some familiar themes here, as this follow up to my Enough blog post consolidated the original Enough series I did last year in this letter. While the overall content is largely unchanged, I did tweak some things to help it flow better. And I also some additional thoughts at the end after a conversation with a friend about how the term "Enough" can be a trigger word, depending on which side of the socioeconomic table you're sitting on. 

The Pursuit - Enough
20 min listen | All About Your Benjamins 
My good friend Justin Castelli was kind enough to have me on his podcast to talk about Enough, and in it he asked some really great questions. Not just about the idea of Enough, but the genesis of the idea, my fears I have, and how we can frame the question of What's Enough by first getting really clear on What's Important to us. I'm totally biased, but I enjoyed the conversation. 
Our Giving Liturgy
1 min | Church of the City New York
Fident Friday reader and friend JM passed this my way after some great dialogue back and forth about my Tithe letter the other week. This is the liturgy the Church of the City uses during their Sunday gathering. It's beautiful - to say corporately or to say individually. 

The Biggest GameStop Overreactions
5 min read | A Wealth of Common Sense
Remember just last week when all everyone was talking about was GameStop? Man, that feels like a while ago. As my friend Ashby says, "Today's Headlines are Tomorrow's Footnotes." Ben Carlson has some great rebuttals to some of the overreactions from last week's events (even written in the middle of it all!). Probably my favorite takedown is the debunking of the Robinhood/SEC/hedge funds 
conspiracy that was floating and oh-so-tempting to buy into. I would imagine conversations are shriveling up about this, but the next time it comes up, here's some great educational material. 
See you next week. 

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