In this episode we explore 'The Great Rotation,' a research series by Brian Chingono1, Head of Quant Research at Verdad23 (Part I | Part 2). The discussion focuses on the risks of heavy concentration in U.S. equities within global indices and the need for balanced global portfolios. Audrey unpacks Chingono’s insights on cyclically adjusted price-to-earnings (CAPE) ratios, showcasing the overvaluation of U.S. stocks compared to international markets.
At the heart of the discussion is the potential for a significant shift away from popular high-valuation US stocks towards undervalued U.S. and international small and mid-cap value stocks, Chingono’s research points to historical patterns, risks, rewards, and opportunities for global diversification, challenging today’s intensified long-term dominance of the U.S. market.
00:00 Introduction
00:45 'The Great Rotation'
01:44 U.S. Market Dominance and Concentration Risk
02:21 Valuation Comparisons: U.S. vs. International Markets
04:15 Alternative Allocation Strategies
05:34 The Hype and Reality of Market Predictions
06:35 Exploring International Market ETFs
07:25 Introduction to Part Two
07:49 Historical Lessons: The Nifty Fifty Era
08:42 Current Market Overvaluation
09:39 Value Investing in International Markets
10:53 Balancing Risk and Reward
11:39 Building a Global Portfolio
12:12 Potential Impact on Global Investment Landscape
13:23 Final Thoughts and Resources
Note: You can find Verdad’s weekly research notes in the ‘Past Issues’ dropdown menu at the research links provided above. Happy reading!
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About Brian Chingono."Verdad." Verdad, 26 Oct. 2024, https://verdadcap.com/brian-chingono.
Brian Chingono."The Great Rotation." 26 Oct. 2024, https://mailchi.mp/verdadcap/the-great-rotation.
Brian Chingono. "The Great Rotation (Part 2)." 26 Oct. 2024, https://mailchi.mp/verdadcap/great-rotation-part-two.
The Great Rotation: Rethinking U.S. Market Concentration