Nvidia reported better-than-expected earnings and revenue after the stock market closed today. Revenue growth has now exceeded 50% for nine straight quarters. Nvidia is one of several mega-cap technology stocks that have fueled the bull market in the US, causing it to outperform overseas stock markets. The outperformance was briefly interrupted earlier this year, but the US market seems to be back on its winning track.
We continue to recommend a Stay Home investment strategy rather than a Go Global one. We've been doing so since 2010, and it has worked out very well. The US now accounts for a whopping 72.0% of the market capitalization of the All Country World MSCI stock price index (chart). That's up from 50.0% in 2010. So, perversely, it is becoming easier to overweight the rest of the world, as it accounts for a relatively small 28.0% share of the world's market capitalization. We don't deny that foreign stocks are cheaper and that there are opportunities to diversify globally.
In addition to tracking the market-cap shares on a global basis, we also monitor the ratio of the US MSCI stock price index to the All Country World ex-US MSCI stock price index in local currency and in US dollars (chart). These two ratios tell the same story. The ratios did fall earlier this year, particularly in dollar terms. However, they seem to be back on their long-term uptrends.
