Ed Yardeni: Buy Foreign Stocks, Even With the War
Speakers
Ed Yardeni -- Economist / Investment Strategist
— Yardeni Research president
Summary
- Ed Yardeni switched from a "stay home" (overweight US) investment stance to a "go global" strategy in December 2023, seeking better value overseas.
- The US represents 65% of the MSCI All Country World Index market cap, which he views as overweight relative to its economic importance, justifying an underweight.
- He believes financial markets are already looking past the Middle East war and that oil at $100 is not a recession trigger, with historical spikes being temporary.
- China is structurally unattractive due to a burst property bubble, aging demographics, increased government intervention, and a multi-decade sideways market trend.
- He prefers emerging markets excluding China for their lower valuations, growing middle classes, and relative economic resilience.
- Europe, Japan, and Korea are highlighted as additional regions with lower valuation multiples and opportunities.
- The global economy has shown resilience, with non-US stock markets also achieving record highs, supporting international diversification.
- He acknowledges the war caused a temporary setback for the "go global" call but remains committed to the strategy as tensions subside.
Trade Ideas
China faces structural headwinds including a burst property bubble, aging demographics, increased government control, and a history of sideways market performance. These factors have resulted in poor investment returns and create a deflationary export dynamic that pressures global industries. Avoid investing in Chinese equities due to an unattractive risk-reward profile and lack of sustained upward trend. A significant shift in government policy toward economic liberalization or successful stimulus could improve the investment case.
Emerging markets excluding China offer lower valuations and contain growing middle classes with strong aspirations for higher living standards. These demographic and valuation dynamics provide a more favorable growth and return profile compared to the US and China. Long emerging markets ex-China as a core component of a global diversification and value-seeking strategy. Geopolitical events or a materially stronger US dollar could pressure emerging market currencies and asset prices.
The US represents 65% of the MSCI All Country World Index market cap, which is overweight relative to its importance in the global economy. High concentration and elevated valuations compared to other regions suggest better risk-reward opportunities exist abroad. Recommends underweighting US stocks in a global portfolio to capture superior value elsewhere. Persistent US exceptionalism or escalating geopolitical tensions could increase demand for US assets, leading to continued outperformance.
Up Next
This Wealthion video, published March 25, 2026, features Ed Yardeni discussing FXI, EMXC, SPY. 3 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Ed Yardeni · Tickers: FXI, EMXC, SPY