Dr. Alan O'Sullivan

But so we have got, I think, a couple of nice counterpoints to that lazy thinking.

So the first one is that we show that most of this outperformance in the last 15 years happened through richening U.S.

equities.

So their valuations, such as the Shiller-Cape ratio relative to that in the non-U.S.

markets, was getting higher and higher.

Like in 2000s, there was roughly equal valuation.

So the valuation ratio was about one between U.S.

and non-U.S.,

And then since 2010, it was gradually rising, pretty much reaching to about a year ago.

And it's come down a little from that, but not too much.

So almost double valuations in the US.

And that should be worrisome.

And when we look at historical data, whether this type of valuation ratios are useful, they have been, except for the last 50 years where we so far haven't gotten the

But my sort of nice anecdote here is that there has been once this kind of twice situation, but it was the mirror episode that in 1990, around that Japanese bubble time, Nikkei bubble time, the non-US valuations were twice as high than US valuations.

And what followed was a terrible recession.

performance over the next 10 years, both in an absolute relative sense for the non-US and especially Japan.

And so I'm not saying that's going to necessarily be as extreme, but I think it is very difficult for US to outperform from here.

But if I can, I'll tell.

So I think I've got a good story trying to understand why this happened.

And it is related to this story of U.S.