The Top 10 Construction Equipment Manufacturers in the world are shown in the graphic below:
Click to enlarge
Source: Market Research Reports
Fact of the Day: US Stocks Beat Foreign Stocks Over The Long Term
I have written many times on this blog that US investors have to diversify their holdings across assets including owing foreign equities. The convention wisdom that American multinationals derive a substantial portion of their earnings form abroad and hence foreign stocks are not necessary to own does not necessarily hold true. However in recent years US stocks have outperformed foreign stocks by a significant margin. I came across the below fascinating fact in the latest article by Jason Zweig at the WSJ.
- The S&P 500 yielded an average of 8.7% annually higher than the MSCI World Ex-USA index over the past five years
- Over the past 25 years the S&P 500’s annualized return over the MSCI World Ex-USA index was 4.5%
Source: Blown Election Calls, the Stock Market and You, WSJ
The following chart shows the wide gap in returns between the MSC World Index and MSCI World ex USA. The MSC World Index includes the US.
Click to enlarge
Source: MSCI
Related ETFs:
- SPDR S&P 500 ETF (SPY)
- Vanguard MSCI Emerging Markets ETF (VWO)
- iShares MSCI Emerging Markets ETF (EEM)
- Vanguard Developed Markets Index Fund ETF (VEA)
Disclosure: No Positions
The Largest 10 US Stocks at the Start of Each Decade: Chart
Many of the top US firms stayed in the top 10 rank for decades while others did not. For example, AT&T(T) lasted in the top 10 for six straight decades from 1930. General Motors(GM) and General Electric(GE) also ranked in the top 10 for many decades. Some of the one-time wonders include Lucent Technologies and Cisco(CSCO) at start of the 21st century. In this decade, 5 new entrants are at the top 10. These are Amazon(AMZN), Facebook(FB), Alphabet(GOOG), Visa(V) and Berkshire Hathaway Inc (BRK.A).
Out of these Berkshire Hathaway can be counted as it is a conglomerate operating in multiple unrelated industries with no particular vision or mission. The three members of the FAANG gang can easily be replicated by some other startup in the future. It remains to be seen which of these top 10 companies will continue to dominate the US in the next several decades. Fifty years from now people may ask if Facebook is some kind of new book published about one’s face.
Click to enlarge
Source: Large and In Charge? Giant Firms atop Market Is Nothing New, Indexology Blog
Disclosure: No Positions
On the Year-to-Date Return of Exchange-Listed Foreign Oil Stocks
Oil prices have fallen dramatically this year as the pandemic decimated global oil consumption. Currently Brent crude is trading under $37 for January delivery. With the fall in crude oil prices oil stocks have been crushed well. Most of the foreign exchange-listed oil stocks have plunged by 50% of more as shown in the table below.
In April oil supermajor Shell cuts it dividend for the first time since World War Two. Shell slashed its quarterly dividend to 15 cents from 47 cents. Last week Shell announced it was raising dividend by 4% to 16.65%. Though the increased amount is still far below the original dividend amount, the raising of the dividend is a step in the right direction.
| S.No. | Company | Ticker | Stock price (as of Oct 30, 2020) | Year-to-Date % Change | Country |
|---|---|---|---|---|---|
| 1 | Transportadora de Gas del Sur | TGS | $4.82 | -32.78% | Argentina |
| 2 | China Petroleum & Chemical | SNP | $39.33 | -34.61% | China |
| 3 | Equinor | EQNR | $12.83 | -35.56% | Norway |
| 4 | PetroChina | PTR | $28.46 | -43.45% | China |
| 5 | China National Offshore Oil-CNOOC | CEO | $92.12 | -44.73% | China |
| 6 | TOTAL | TOT | $30.33 | -45.15% | France |
| 7 | Ecopetrol | EC | $9.25 | -53.66% | Colombia |
| 8 | Eni | E | $13.98 | -54.84% | Italy |
| 9 | Royal Dutch Shell - A | RDS.A | $25.55 | -56.68% | United Kingdom |
| 10 | Petroleo Brasileiro-Petrobras | PBR | $6.63 | -58.41% | Brazil |
| 11 | BP | BP | $15.48 | -58.98% | United Kingdom |
| 12 | Royal Dutch Shell - B | RDS.B | $24.15 | -59.73% | United Kingdom |
| 13 | YPF | YPF | $3.22 | -72.19% | Argentina |
| 14 | Vista Oil & Gas | VIST | $1.99 | -74.65% | Argentina |
| 15 | Sasol | SSL | $5.26 | -75.66% | South Africa |
Source: BNY Mellon
Demand for oil will continue to be depressed until there is some sense of return to normal life. The new lockdowns starting in many European countries this week does not help oil companies. Despite the known uncertainties investors willing to make a bet on oil stocks can consider some of the beaten down stocks.
Disclosure: Long EC
Foreign Equity Markets Offer Plenty Of Potential Investment Opportunities
The US equity market accounts for about 40% of the global equity universe. This means the other 60% of investment opportunities exists outside of the US shores. So investors looking to diversify their portfolios and potentially boost their returns on investment must consider adding some foreign stocks. For example, the Spanish stock Exchange has over 3,000 listings. The German equity market is home to over 500 firms and the London Stock Exchange has over 2,500 listings. Even our northern neighbor Canada has over 3,300 listed companies.
With that brief intro, let’s take a look at the share of the Global Market Capitalization below:
Click to enlarge
Source: International Growth Opportunities Amid the COVID-19 Crisis by Donald Huber, Franklin Templeton
Though the US market is home to the largest market capitalization in the world, investors can find plenty of rich pickings in overseas markets. Emerging markets in the Asia Pacific including China and India account for 26% of the global equity market capitalization.
The key takeaway is American investors can expand their investment horizon beyond the domestic market. One way to invest in foreign stocks easily is thru Foreign ADRs listed on the US markets.
Related ETFs:
- iShares MSCI Emerging Markets ETF (EEM)
- Vanguard MSCI Emerging Markets ETF (VWO)
- iShares MSCI Germany Index Fund (EWG)
- iShares MSCI Canada Index Fund (EWC)
- iShares MSCI Australia Index Fund (EWA)
- iShares MSCI United Kingdom Index (EWU)
- iShares MSCI Singapore Index (EWS)
Disclosure: No Positions