No Non-U.S. equities Loading... : Investor Sentiment and Bull/Bear Views

International exposure is a good thing inside the stock sleeve; rather than owning only U.S. stocks, investors should replicate a world equity basket of roughly 70% U.S., 20% non-U.S. and 10% emerging markets.

She holds non-U.S. equities unhedged and favors the Pacific region, including Japan and Korea, because they have beaten the S&P this year and offer diversification away from U.S. dollar and debasement risk.

Non-U.S. equities will be the next secular leadership for the next decade, shifting from the typical one-to-two-year outperformance cycle. She is a big buyer of non-U.S. equities and expects to own them for a long time as the U.S. dominance fades.

He sees the first fundamental market rotation since 2021 and recommends moving down in market cap and out of large growth stocks into value cyclicals, specifically financials, industrials, energy, consumer areas, and non-U.S. equities, as the macro backdrop broadens and incremental earnings accrue to left-behind areas.

Foreign stock markets are crushing the U.S. so far this year, and major allocators are massively overweight U.S. stocks and underweight non-U.S. markets. As capital rotates out of the U.S., every dollar into a non-U.S. market favors those markets.

The rotation out of the concentrated top seven or top ten S&P names into other asset classes is in play. Non-U.S. equities are up 7.25% year to date while concentrated tech is down 4.5%. She likes holding non-U.S. equities and equal weight, owning a basket of everything aside from the top concentrated names while still owning some of them. Non-U.S. also benefits from a weaker dollar, and currency trends tend not to last just one year, so she wants enough non-U.S. exposure. Mega-cap tech profitability may be questioned as capex spending is high.

The diversify-America trade remains intact. There is a compelling value disparity between the U.S. and the rest of the world, with expensive fiscal and monetary support outside the U.S. Japan is cutting taxes and driving fiscal growth; China is seeing manufacturing and consumer improvement; Europe is accelerating defense and infrastructure spending. These factors support attractive return opportunities in non-U.S. equities.

The broadening-out trade should extend outside the U.S. because more cyclical areas dominate those economies, unlike the tech-dominated U.S. economy.

Nela Richardson says strong U.S. headline data are at odds with dollar weakness, which points to the rest of the world being more resilient and having investment opportunity as well.

U.S. dollar weakness and debasement concerns make non-U.S. equity exposure critical, especially after a long period when dollar strength caused a double whammy for unhedged foreign equities; she sees sustained dollar weakness, though with some flattening.

U.S. political risk and the regionalization of the world economy are a structural change; portfolios were too concentrated in U.S. assets, so he would diversify - not hedge - away from that concentration, holding 'not only U.S. stocks' and using unhedged currency exposure, since bonds are typically hedged while equities are not.

Diversification is returning to global equities. Non-U.S. stocks have strong fundamental growth, a weakening dollar tailwind, and delivered over 30% returns in 2025, while U.S. large-cap valuations are stretched, making international equities attractive on a relative basis.

Non-U.S. equities look to him like U.S. equities did in 2010-2011: non-U.S. stocks have outperformed demonstrably, but investors are ignoring it, similar to how consensus favored investing outside the U.S. while U.S. stocks led and people missed the early bull market. That suggests non-U.S. leadership can continue.

Broadening out of tech and international diversification are key themes for early 2026, supported by improving macro conditions outside the U.S., valuation arguments, catalysts such as Japan's election, and new money seeking laggards.

Other central banks have already eased and the Fed is now expected to ease, leading to a gradual reduction in U.S. rates toward the rest of the world. This implies a weaker dollar, though not a collapse, and opens opportunities for investors to do well outside the United States.

Even as the S&P 500 eked out a record high, the dollar remained weaker and Asian/rest-of-world equities outperformed. Investors are looking for opportunities outside the U.S.; even without a full Sell America trade, putting all eggs in the U.S. basket looks less attractive than allocating to non-U.S. equities.

Costello argues U.S. assets are expensive while non-U.S. assets are less expensive, creating a natural rotation from U.S. markets. He says non-U.S. markets are more attractive and help diversify portfolios.

Non-U.S. markets significantly outperformed the U.S. last year and investors are ignoring it. He compares this to the early U.S. bull market in 2010-12 when U.S. outperformance was doubted, suggesting the cycle is turning and international diversification should be part of a boring fundamental allocation.

She expects a repeat of the last two years: falling interest rates should support bonds and equities, non-U.S. equities should continue to outperform, and commodities and the dollar can rise. She cites Fed directionality, fiscal tailwinds, AI, and upside GDP surprises as reasons to be bullish despite fear of heights.

Non-U.S. equities outperformed U.S. equities last year, and she expects more of the same this year as the same supports - Fed directionality, fiscal tailwinds, and upside GDP surprises - remain in place.

Concerns about the U.S. outlook and a desire for global diversification are increasing momentum toward markets outside the U.S., where she sees fundamental strengths; this is not a flood out of the U.S., but it adds to the attractiveness of other markets.

Emily sees a massive rotation continuing into Europe. European stocks were up about 35% last year on just 3% earnings growth, and momentum is there while U.S. momentum stalls. A weaker dollar is a liquidity release valve that helps non-U.S. equities and riskier assets outperform, so she wants to hold non-U.S. assets, done in a higher-quality way.

Julian thinks the rest of the world, including Latin America, is more interesting because he believes the dollar made a significant top a year ago. Over the long haul, that favors portfolio rebalancing away from the U.S. and diversification into non-U.S. assets, even if the AI theme keeps the U.S. attractive near term.

McGlone relays that U.S. equity returns are extremely concentrated, with the top 52 S&P 500 stocks accounting for nearly all gains, and argues there are alternatives outside the U.S. where growth and tax conditions are much better. This reinforces a preference for non-U.S. equities over expensive, concentrated U.S. stocks.

For the next two to three months, he would underweight the United States and overweight the rest of the world because capital is leaving the U.S. amid dollar weakness, sovereign-risk concerns, and policy uncertainty. The overweight is specifically in Japan and Europe; emerging markets are only market weight.