Summary
Morningstar Index’s strategist and The Long View co-host, Dan Lefkovitz, investigated this. He’ll explain why markets are becoming more interconnected.
The US, for example, is 60% US, 40% ex-US. Japan fell even more. It’s now 49% Japanese revenues.
How Nvidia Is Pushing the US Stock Market to Be More Global. Morningstar data shows that the tech sector gets most of the money from overseas.
Lefkovitz: In 2016, Donald Trump was elected. And there was a market rally in the US equities. The parts of the US market that benefited most from the election were financial services, energy, basic materials.
Lefkovitz: Making a bet on the policy implications of an election and how a presidential administration or a political regime is going to drive sectoral leadership is really tricky business.
How Revenue and Correlation Data Informs Portfolio Diversification. Back to our conversation about sector and sector dynamics and how that influences revenues. Emerging markets tend to be more local in nature.
Lefkovitz: Geopolitical risk is top of mind for many investors right now. If you’re worried about a market for some geopolitical reason, you should look how national is that national market.
Morningstar’s Director of Personal Finance Christine Benz will drop a new book next week. Her new book, How to Retire: 20 Lessons for a Happy, Successful, and Wealthy Retirement, will hit bookshelves on Tuesday. Her companion podcast with the same name will debut in the Investing Insights feed on Wednesday.
Ivanna Benz: Retirement planning isn’t a math problem, even though we sometimes like to make it so. She says there are a lot of nonfinancial variables that are caught up in the mix.
Social Security is a great example. Many people delay Social Security filing until full retirement age or maybe even later in retirement. That means that their spending early on will necessarily be a little bit higher.
Benz: The challenge in retirement is not just portfolio growth. It’s figuring out, “Well, how do I extract my spending money from this portfolio?”
Benz: When you are retired, no one’s doing that for you. You’re pulling your cash flows from your portfolio. Of course, Social Security is a nice inflation-adjusted benefit.
Benz: If you have more nonportfolio income sources, it can give you a little bit more comfort with what’s going on in the investment portfolio. If your portfolio is down, knowing that you have those fixed-income sources coming in regardless can give a little more comfort.
Benz: Research on human happiness and thriving throughout our lives very much points to the value of relationships as we age. She believes some people tend to underrate the role of relationships.
Benz: What’s important is that you do have that close network of individuals to carry you through good times and bad. And also to be constantly on the lookout for how you might replace individuals.
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