There's something uniquely American about our financial self-absorption. We tend to view the S&P 500 as the beginning and end of investment wisdom—as if Wall Street were the only street that mattered. But lately, I've noticed a fascinating shift among the truly sophisticated players in finance. They're quietly—and sometimes not so quietly—looking elsewhere.
And maybe they're onto something.
When titans like Blackstone start earmarking $500 billion for European investments, it's probably worth asking what Stephen Schwarzman sees that your Vanguard account doesn't. The smart money, as they say, is making moves.
I've spent the last decade tracking global capital flows, and this current rotation feels different—more structural than cyclical. It's not just about fleeing American political chaos (though there's certainly some of that); it's about recognizing fundamental shifts in the global economic landscape.
Three Big Bets the Smart Money Is Making
The international investment thesis breaking out right now isn't monolithic. It's playing out across three distinct theaters, each with its own risk-reward profile.
LATAM: The High-Risk Rehabilitation Project
Argentina might be the most fascinating economic experiment happening on the planet right now. After decades of being the poster child for how to wreck a naturally wealthy country, along comes Javier Milei—a libertarian economist with rock star hair and radical ideas.
Look, I've seen plenty of would-be economic saviors come and go in emerging markets, but Milei's approach is different. He's essentially performing economic shock therapy, and heavyweight investors like Rob Citrone are betting big on the outcome.
When a country has been running 200% inflation, even getting to "merely terrible" represents massive progress. The Argentine playbook—brutal fiscal discipline, rapid deregulation, and massive privatization—isn't pretty, but it's worked elsewhere.
Brazil continues its maddening cycle of promise and disappointment (I remember covering the "Brazil is finally arriving" stories back in 2010... and 2004... and 1997). Meanwhile, Colombia and Chile offer stability but less explosive upside.
Europe: The Forgotten Value Play
Europe—the region everyone loves to dismiss. Too old, too regulated, too socialist, too... European.
And yet.
European equities have traded at a persistent discount to U.S. stocks for so long that it's become accepted wisdom that they should. But markets have a funny way of challenging accepted wisdom just when everyone agrees on it.
I spoke with several fund managers last month who described Europe as "the most obvious value play hiding in plain sight." The continent's demographics are challenging (that's putting it mildly), but many European companies are global leaders trading at substantially lower multiples than their American counterparts.
The ECB might—finally!—be pivoting, and the region's renewable energy transition represents a genuine structural opportunity. Europe isn't sexy, but at these valuations, it doesn't need to be.
India: The Growth Story Everyone Believes In
While China wrestles with its property bubble hangover and demographic decline, India stands tall as perhaps the most compelling long-term growth story in the world economy.
The numbers are simply staggering: 1.4 billion people, a median age of 28, and roughly 25 million people joining the consumer class annually. That's essentially adding a new Australia to the global middle class every year.
Modi's government, whatever one thinks of its politics, has created an increasingly business-friendly environment. The infrastructure buildout alone represents a multi-trillion dollar opportunity.
The catch? Valuations already price in much of this optimism. You're not exactly discovering hidden value when you invest in India in 2023—you're paying a premium for the most obvious growth story in global markets.
How to Think About Your Global Allocation
Having covered international markets since the early 2000s, I've developed a framework for thinking about global diversification:
1. The "Sleep at Night" Allocation: This is your developed market exposure—parts of Europe, Japan (despite its recent bout of volatility), and perhaps resource-rich economies like Canada or Australia. These aren't moonshots, but they diversify away from U.S. political and monetary policy risk.
2. The Growth Accelerators: Here's where you're making an explicit bet on structural growth stories—India, select opportunities in Southeast Asia, and specific sectors within emerging LATAM and Middle Eastern markets.
3. The Asymmetric Bets: This is the high-risk, high-reward category where sophisticated investors like Citrone make their real money. These are deeply out-of-favor markets with potential catalysts for revaluation. Argentina fits this profile perfectly, as might Turkey or specific sectors within other beaten-down economies.
Your relative weighting depends on your risk tolerance, time horizon, and how seriously you take the possibility that American financial hegemony might be gradually fading rather than merely hitting a rough patch.
The Demographic Reality Nobody Wants to Face
The most compelling reason to look beyond our borders isn't political or even strictly economic—it's demographic. And demographics, as they say, are destiny (or at least a pretty good approximation of it).
Japan has been the canary in the demographic coal mine for decades now. Much of Europe isn't far behind, and even China—long the growth engine of the global economy—now faces population decline.
When viewed through this lens, the case for places like India, Indonesia, the Philippines, Mexico, and parts of Africa becomes more structural than tactical. These aren't just places to invest for the next quarter—they're where the economic center of gravity is shifting over the next several decades.
I remember interviewing a leading demographer back in 2018 who put it bluntly: "The 21st century belongs to countries with young, growing populations. Everything else is just noise."
That's probably an overstatement, but not by much. The aging developed world will need to find increasingly creative ways to maintain productivity growth in the face of shrinking workforces. Some nations will succeed through technology and immigration; others will stagnate. Betting on which is which might be the most consequential investment decision of our time.
In the meantime, perhaps the wisest course isn't to abandon U.S. markets entirely (I'm certainly not), but to recognize that American exceptionalism in financial markets—like all historical anomalies—has a shelf life. The dollar may not be headed "to the toilet" as some hyperventilating commentators suggest, but a gradual rebalancing of global financial power seems not just possible, but probable.
And honestly? Having some money invested where your president (whoever they may be) can't tweet it into submission might help you sleep better at night.
