Your Money This Week

More All-Time Highs

Europe

European stocks hit an all-time high this week with good earnings, positive economic news, and better valuations than in the U.S. being potential reasons for the nice move higher.

While I don’t see many investors target exposure to Europe solely through the benchmark (Stoxx 600) that hit the all-time high, most of Europe is covered by owning Developed International stocks and it’s important to allocate there.

Close to 30% of the global stock market is in these Developed International stocks. You don’t want to have a home country bias and only invest in the U.S. since there are periods when international stocks do better. And as I wrote above, they are cheaper now.

U.S.

A global stock market investor should have about 60% of their portfolio in U.S. stocks if they’re trying to mirror the global stock market index (MSCI ACWI).

The S&P 500 also hit another all-time high this week, and if this bull market continues you’re going to be seeing many more all-time highs for the index.

It’s still primarily a large cap growth rally led by the so-called Magnificent Seven: Apple, Amazon, Alphabet, Meta, Microsoft, Nvidia and Tesla.

Those seven names are now almost 30% of the S&P 500, meaning that if you believe in them and are trying to outperform the market they need to be more than 30% of your portfolio.

Too concentrated for my taste. I think even the benchmark weight is too high.

At some point, they will top out, and I’d prefer to have exposure to them without making them 30% of my stock portfolio so I get the gains but maintain diversification for the road ahead.

If you want to dig further into this concept, GMO’s latest quarterly newsletter is titled MAGNIFICENTLY CONCENTRATED. While there’s a talking your book vibe to it, it takes investors into the minds of an active manager wrestling with not being able to keep up with these hot stocks and when and why they think their relative performance will improve.

Josh Brown also talks about this in The Most Crowded Trade on Earth, where he stakes the bold claim that these stocks and the Nasdaq are topping out.

Cutting the Cord – Kind of?

In Tracking My Spending, I explained why and how I’m diligently tracking our spending this year and shared a few initial takeaways one month in.

Well, here’s one more.

Hello, YouTube TV.

Like many, our cable and streaming bills have gotten out of control, and we also are fortunate to own a second home where we pay for a second cable service.

With YouTube TV you can get up to 6 household accounts, which means replacing cable at two homes, letting our adult children use it at no extra cost, and while we were at it we dropped some of the streaming/premium stuff because it’s nearly impossible to watch it all.

Net savings? About $200/month.