Animal Spirits Podcast - Talk Your Book: International Stocks, So Hot Right Now

Episode Date: April 7, 2025

On this episode of Animal Spirits: Talk Your Book, Michael Batnick and Ben Carlson are joined by Rahul Sharma, Portfolio Manager and Executive Director at Schafer Cullen to discuss the catalyst for recent international outperformance, what policies have led to international performance, avoiding/concentrating into different countries, how the US Dollar affects international investments, and much more! Learn more at: https://www.cullenfunds.com/ Find complete show notes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation.   Check out the latest in financial blogger fashion at The Compound shop: https://www.idontshop.com Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ The Compound Media, Incorporated, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here https://ritholtzwealth.com/advertising-disclaimers. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits Talk Your Book is brought to you by Schaefer Cullen Capital Management. Go to cullenfunds.com to learn more about their global high dividend strategy, international high dividends strategy, and emerging markets high dividends strategy. That's cullenfunds.com to learn more. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. All opinions expressed by Michael and Ben are solely their own opinion, and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only

and should not be relied upon for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Michael, good timing here. Thank you. International stocks are so hot right now. People are trying to figure out, is this real?

Does this actually have legs? Or is this just another head fake? I'm not going to answer that question, but I'm just going to say, Ben, we're old. That was rhetorical. No, okay. Well, we're still using references from the aughts, the early aughts. And I'm going to give the full story of animal spirits, but those references, they don't play anymore.

How about this? That's because the 2020s doesn't have very quotable movies. That's because it's 20 years ago. People don't remember things from 20 years ago. Like U.S. underperformance. That's true. We spoke about this on the show with Raoul, but we're talking about international stocks today. And investors, a lot of investors, have literally never seen a period of U.S. lagging for more than, I don't know, two weeks.

Yes, there hasn't been a sustained period of outperformance. And there hasn't really been a reason for it in this past cycle. And now people are coming around to the idea that maybe there is a reason now. And it seems to have come very fast and the markets moved fast as well. But we get into all that great conversation, Raoul Sharma, who is a portfolio manager, and executive director at Schaefer Cullen Capital Management. He has been managing strategies for emerging markets and international stocks for well over two decades. Great conversation.

Here's our talk with Roel. Raoul, welcome back. Great. Thanks for having you guys. So it's been a long period of underperformance for anything benchmark, not that international stocks are benchmark to the U.S., but in the eyes of clients, they are. It's been a long painful period of underperformance. And some of the narrative heading to the end of the year, and really for the last couple of years, was what in the world could change the current trajectory, the current narrative of U.S. dominance, particularly the mega cap tax?

Like, what could possibly change? And I know you're not necessarily a macro guy. Nobody could have seen this come and just talk through some of the dynamics that are in place that led to a reawakening of investors' appetite for stocks, domiciled. outside the United States? Well, I think it's a couple things. I mean, you know, I think, first of all, the correction in the MAG 7 that we saw, you know, at the beginning of the year, I think that was kind of the start of it because just everybody owns these stocks. And it's not just U.S. investors. When we talk to investors in Japan or South Korea and other places, they're all owning them too.

They're not owning their own stocks. And so once those stocks started to finally lose, I think people were really looking for another, you know, home. And then probably more importantly, you are seeing some pretty meaningful. full catalysts, I think for the, I won't say for the first time, but so many at once and I think bigger than before in both emerging markets and international development markets. And I think the short story is that, you know, President Trump's policies are forcing some of these countries to do things that they really, frankly, should have done a long time ago. And I think Europe's definitely the best example of that. And so I think, you know, that's a start of it. I mean, there's a lot

we could talk about within that in terms of specific catalyst, but I think I'll just, you know, pause right there. So one of the things that we've talked about for years is, listen, international emerging market stocks are way cheaper than U.S. stocks, but people have been saying that and saying that and saying, well, valuation itself is not a catalyst. And I think this is why it's so hard to predict these things in advance is because even if you try to come into the year saying, I think I know what the catalyst is going to be, no one is No one is talking about this, the fact that Germany is going to spend billions and billions of dollars building up their defense.

So is that the biggest thing right now, just that a lot of these countries are going to start spending money and go from the austerity mindset to actually know we're going to open up the floodgates a little bit. Is that the biggest one of the biggest ones? Yeah, and I think kind of led by Germany, but you are seeing it kind of across Europe there, you know, talking about defense spending, big increases in defense spending. again, because of a reaction to Trump's policies, also an infrastructure fund. I mean, there's a lot of needs for that, certainly in Europe and even in Germany, if you look at like the rail system and that sort of thing. And so, you know, and they're talking about creating physical unions to do all these sorts of things, things like joint procurement.

And, you know, when you start spending a lot on defense, it's just not, you know, defense stocks that benefit. It's a lot of different kinds of stocks. I mean, industrial stocks, you know, defense is so high tech that there's a lot of demand for technology. So there certainly is the potential for a spillover effect. You know, but there's other things, too. I think very encouragingly, we're seeing consolidation in certain European markets, particularly in the financial sector. I think, again, after watching the U.S. banks do so well, they're just kind of looking at, looking at, you know, the competitive landscape and saying, we need to be bigger to compete against a J.P. Morgan, and we just cannot do it. And so it's

encouraging to see actually governments, like saying Italy actually promoting consolidation and consolidation is a really good thing for industries to consolidate, whether you're the consolidator or you're just in that industry, the industry structure improves. So you're certainly seeing that in Europe, and that's also a good thing. Then there's the prospects for the end of the war in Russia. That has two impacts. One, you will see the risk premium on European stocks go down. And then there's a lot of reconstruction activity and a lot of increase in bank lending and

that sort of thing that can happen. And so you're seeing, you know, kind of markets like Poland and all of Europe that are kind of well positioned for that if it happens. It's certainly a big if, you know, benefit from that. And it's all just happening at a time when, you know, from a contrary perspective, even after the little rally, equities, international equities are still so out of favor. If you look at the weight of non-U.S.E.I. world, it's only about 30% versus a long-term average of over 45%. And then, you know, back in the early 90s, when Japan boomed, it was, you know, well over 65%. So there's a lot of, you know, room for mean reversion. But I think these things really do bring the promise of earnings growth, which to your point was what was missing.

It was just valuations. Now we have valuations and the potential for that. Yeah, well said. So cheap stocks with a positive catalyst, great things going to happen. Talk about so you, so at Schaefer, Colin, you managed the global high dividend, the international high dividend and emerging markets high dividend portfolios. is any of what's going on making its way into how you think about the individual companies and the way that you construct your portfolios?

Yeah, definitely. I mean, like, you know, for the first time and a long time, starting, you know, earlier last year, we started getting involved in European banks. You know, those banks had also done a very good job of de-leveraging. They started then having these excess capital positions, paying huge dividends with great dividend growth and also doing buybacks. Those are all things we like across all strategies. Even in our emerging market strategy, you've seen exposure.

or say Eastern European banks and places like Greece and Poland go up for the very same reason. You know, we manage with a dividend mandate in emerging markets. We do have a little bit of flexibility with somewhat lower yielders. So the other big thing that's happening is definitely, I think, in China with the Internet companies. So, you know, we own two of those companies that are still, you know, quite cheap. And, you know, we could talk about the implications of Deep Seek, which I think has been a bit of another game changer year to date. That's interesting because that was one of the, one of the. big things is just that, listen, the U.S. is just dominating technology-wise and a lot of these

other countries can't keep up. And China seems to be like the one place where, I don't know, I guess they've copied a lot of what we did here first and kind of are just doing it themselves. But those companies got dinged pretty bad for a couple of years there. So you think that the AI leveling of the world is going to benefit China potentially. What's the story there? Yeah, I mean, I think it's just, you know, the way I think about it, you know, first of all, deep seek was a very impressive, you know, model, definitely. And it's hard to say how much lower cost it was, but I think it surely was a lower cost. Then we've seen other internet companies like Alibaba come up with their own large language learning model that is also even more impressive, arguably.

And yet, when you look at these companies, I mean, the way I see it, if you look at the 10 or 15 companies, they're going to kind of enable AI, particularly by offering, you know, things like chat GPT and Gemini and these models, you know, probably about five of them or a third of them or whatever are going to be Chinese companies. And then when you look at the valuations, they're some 50% cheaper than, you know, their equivalence in the U.S. with maybe not the same capability, but close to them. And then the other game changer was that we saw, you know, Xi Jinping kind of get behind the internet companies for the first time. There is a meeting with all the leading companies, including, you know, Alibaba, which had kind of fall afoul of the Chinese government. And, you know, he's kind of looking to them to kind of lead the way. that's a huge change in what we saw, say, five years ago, because that was the thing that really

brought those internet companies down, the greater regulation coming out of the Chinese government. So I think all those things are definitely a game changer, and it just shows. And, you know, whether people like it or not with all the tensions and that, I mean, Sina does have very leading technology. I mean, some of the older technologies, like, say, semiconductors, they might still be behind. But when you look at new technologies, like electric vehicles or AI or, renewables. They're quite, quite advanced. And there's a lot of different stats that you could point to that show that. So, you know, they're going to be around from a technology standpoint,

and those technology companies trading so cheap should, you know, really be beneficiaries, I would say. Do you look at things top down from a country perspective and think that anything that's happened in the last six months or so changes how you view which countries to over or underway, or is it more just a bottom-up company thing that you look for, the companies first, in whatever country they're in doesn't really matter as much? We do it both, though. We try to separate it, you know, because when I first started doing this about 25 years ago, we were hoping we'd get a very similar experience than what we get in the U.S. But we learned quickly that country factors really do matter. So we had to kind of come up with this framework to analyze countries. And so we do a lot of country research. So we're looking at stocks from a bottoms up perspective. But we analyze the countries, too. It helps us, you know, learn a lot about the strengths of countries and which types of companies might be successful in those countries. But probably most importantly, it helps us limit exposures to countries that might look cheap but have a lot of other problems, whether it be the risk of war, the risk of sanctions, countries that have really weak external positions

that have constantly declining currencies. So that's what we use the country research for, but we find it to be very important. Recently, international stocks have had higher yields than U.S. stocks. Is that because prices are depressed or is that just a structural phenomenon that they tend to pay out more of their earnings and dividends. Yeah, I think it's a bit of both. I would say, you know, they certainly were cheaper. You know, even over the last couple of years, especially the company's focus on their dividends, have been raising their dividends at pretty nice clips. So that supported higher yields. But then, yeah, I would say in the majority of countries outside of the U.S., the culture

for dividends is kind of greater. They've been paying out more for some time than we are, of course, you know, dominated by the MAG7 and the U.S. tech stocks, which, you know, don't really feel a need pay dividends because they think they have such great growth opportunities. So I think it's all those factors that make yields, you know, approximately 50% higher outside of the U.S. than in the U.S. And that's also an emerging markets, by the way. I want to get more to your process in a minute, but I just wanted to ask about one more catalyst. Do you think all of these new policies are going to make for a weaker dollar as well? Because that's been another headwind for international stocks from the perspective of a U.S. investor that the dollar has been so strong in recent years

That's been just another headwin there. Is that going to become a tailwind potentially if there's less foreign capital flowing into the United States? Yeah, that's always been the single best thing for non-US equities. I think the stats are that if you look at the 10 periods when the dollar declined over the last 30 years or something, EFA, MSEI, which is developed market stocks, outperform by about 25% with a 90% hit rate almost all the time. And EM up almost and went up even more. It was over 40% with an 80% hit rate. So a declining dollar is the best thing for those stocks.

And I do think there's a very good chance with that happening on the back of several factors. One is just kind of the technical position of the dollar and how well it's done over the last many years. It's kind of where it was back in 2001. It peaked back then and then went down for the next decade, which was a boon for non-U.S. equities. We have a lot of countries that are interested in transacting and things other than the dollars to buy basic commodities like oil or food products. you know, that's something that could also put a bit of pressure, you know, on the U.S. dollar. You know, I think the fact that you see gold doing so well is a direct indication of the fact

that people are trying to diversify away from the dollar. But then probably the biggest thing is just, I think, you know, Trump's policies, I think that he, you know, really does want to see the dollar go down and you might not talk about it so much. But certainly, and there's members of his administration that are even more outspoken about it. But, you know, if you want to make America great again and build manufacturing and attract manufacturing and investment into the U.S.

And you're going to be employing tariffs too. We'll weaken the dollars, in my opinion, the single best policy tool to do that. And pretty consistently throughout his career, he said that he thought that was a good thing. So that's another reason I think that the dollar could go down. You know, I'm not going to say it's going to collapse or anything like that. But you could see weakness. And then a final fact number was if the Mag 7 were by chance to continue to correct, that's a lot of dollars coming out of the U.S.

that that alone could be the biggest kind of near-term factor if it were to occur. If you were to change his mind overnight and there's no indications that it's going to, but who knows, do you think that the rally in international stocks would fizzle out or is there something bigger at play here? I don't think it would fizzle out. I think you would have to see, you know, kind of more of a turnback in some of those, you know, pro-growth policies you're seeing in Europe or maybe, you know, kind of the war escalate or something like that.

You know, I think, you know, what we've seen happen has. has been very good for non-U.S. equities. Again, his policies are promoting these countries to finally change. It's kind of unbelievable that they've taken so long to do so. And I can't imagine such an about face. You know, and then it varies by country. You know, he came out kind of really attacking Canada on Mexico. We would say that Mexico is doing a lot better than Canada and reacting to that. And so we think they're in a bit better shape than, say, the Canadian market. So it differs by market as well. So for the past, I don't know, five to seven years, but it felt like really last year, it felt like kind of a crescendo for not only people being against international

stocks. I made a comment that in my career, I've never seen such poor sentiment against international stocks where people are just throwing their hands up and saying, I give up, I'm going to be all the U.S. But it was also the value investing in the dividends. Like, why am I buying these low fundamental or low valuation stocks or these high dividend stocks when growth is, is all that matters. So maybe you could just give us a whole background of why you're looking for these certain stocks that for a lot of people were out of favor for some time. Well, I think, you know, because we have great growth too. We demand earnings growth from our companies too. Our only thing is that we're not willing to really pay up for it. And we think that, you know, investing in

dividend paying stocks is kind of a lower risk approach. You do usually do better in down markets. So for our investors, they like kind of a lower risk approach. But you'd be surprised, I'd say probably even more so in emerging markets with the opportunity set that you could get within these dividend stocks. So we kind of have less exposure now because they got a bit more expensive. But certainly, I mean, you know, emerging markets is a great place to play the AI supply chain, arguably better than in the U.S., because the AI supply chain is not going anywhere without places like Taiwan or even South Korea. And you'd be surprised how many of those stocks were quick. quite cheap. And they're actually getting cheap again, but after correcting in the last couple

months, paying really nice dividends. And so, you know, that's a theme that we've always liked to invest in, kind of playing these big megatech, tech trends through the supply chain. To talk about Europe and other places, we think the multinationals are quite interested. We're quite loaded up in them in our international portfolio. Because if you compare some of these global multinationals from, say, Europe or Japan to U.S. peers, you know, you'll see the businesses are kind of similar in terms of where their revenues and assets are located, but then you just look at the valuation. So, you know, I'd say about 60% of our portfolio, if you compare it to U.S. peers, it's about 25% cheaper, would literally double the yield. And, you know, when you look

at companies like Siemens or Munich Re, which is the largest reinsurer in the world, you know, I'm not sure you could say that they're really inferior to the U.S. companies. I mean, I think you can for a lot of other companies, but so we think that's a great opportunity in itself, too. So one of my favorite analogies that investors often use is they're thrown the baby out with the bathwater. So is that you think what happened in a lot of cases here where you could find these much cheaper companies because people were just putting all international emerging market stocks in the same bucket and saying, get me out of here? Absolutely. Absolutely. You're absolutely correct. And I think passive is the big driver of that

because, you know, people just sell the ETF and, you know, maybe a third of the ETF is actually attractive in terms of the fundamentals of the companies, but they're selling those too, right, when you sell your ETF. So I think that that's, you know, definitely been a phenomenon that's happening and one that creates a lot of opportunities. Talk to us about how people are accessing your products. Are these separately managed accounts only, or what does that look like exactly? Yeah, we manage separately managed accounts and mutual funds. So, you know, the exposure is generally the same because in separately managed accounts,

if it's U.S. base, they're almost always custodying in U.S. dollars. So whether it's an ADR or local security, you're getting the same exposure. I mean, the way I like to think about it, whether you're buying a local share denominated in U.S. dollars or an ADR, you're basically buying two things. You're buying a foreign currency and you're buying the local stock. And so if the local stock goes up 1%, and the currency goes up 1%, you're going to be up 2% of your position. If each goes up, if the currency goes down one and the stock goes up one, you're flat. But whether it's an ADR or a local, it's the same. And, you know, most of our clients through the SMAs are with the big major banks. We have several different relationships. And then we have the funds, I think. An additional thing is in emerging markets, I think mutual funds make a heck of a lot of sense because of the access capabilities. It's very, very hard and much more costly. And also, you have to give up a lot of your kind of personal information that you might not want to to access all the emerging market countries in a separately managed account. If you want to get into India locally or into the A share market in China or even locally in places like Taiwan or South Korea, not so easy. So I think the funds are a really good vehicle in emerging markets.

people are kind of down on mutual funds these days, but I think EM is definitely an exception. Early in my career, I had to actually do this for separately managed accounts for the endowment fund I work for, for our separately managed emerging markets account. We were sending off letters and getting stuff stamped and notarized. And you're right, to get access to some of these countries is really difficult if you want to own these single stocks, correct? Correct. Yeah, it's very time-consuming. So that's the beauty of the fund.

You know, we could just do that on the behalf of investors. And, you know, John Doe doesn't have to give up his personal information. We're coming in as Cullen Funds Trust on behalf of our investors. Another advantage is that we could reclaim withholding taxes on the dividends for all the investors. That's a much more time-consuming process in a supplementary account where the individual needs to go to his tax account and have that done. I know this is pretty in the weeds, but I'm assuming that we've got a lot of advisors listening. Why the mutual fund and not the ETF? What are the differences?

Like, why can't you do that in that wrapper? You know, I guess maybe if it's an active ETF, it would be kind of similar. But certainly we think the passive ETFs, you know, they bring another layer of problems, particularly in emerging markets or even in developed markets. I just think that, you know, there's a lot of good ETFs that perform pretty well, but I always think they're vulnerable in certain environments, you know, and you never know when those environments come. So COVID was a great example when, you know, COVID ended up, we ended up having the most dividend cuts that we've ever seen in history. And so we were able to actively navigate through that environment by, you know, getting into companies and then extremely unsublished. certain time that we thought we had more secure dividends, whereas the passive approaches that were waiting to rebalance could, you know, could not do that or even the index funds could

not do that. And so the dividend streams of those funds went down a lot more than ours did. And then similarly later in the year, when COVID, you know, when it was seen that it really didn't have the negative economic impact that people thought, there was a huge increase in dividends and people started paying dividends in 2021 that they didn't pay in the COVID year. And so we were able to reposition into that and then benefit from the best year for dividend growth that we've ever seen in our history. Another example in emerging markets would be the ability to de-risk. So we were able to de-risk our exposure pretty successfully and get more or less completely out of Russia, whereas the ETFs, again, they have to wait to rebalance and

they're stuck holding those positions, and they took heavy losses for that. That's why I personally think active makes a lot of sense. And the other things, if you're focused on dividend yield and and dividend growth like we are, it's very hard to do that just quantitatively, you know. And if you just look for the increases, you tend to get a lower yield. If you look for the highest yield, you get a lot of companies, very poor corporate governance. So you really need a balanced approach. You really need experience. And I think that's what our team brings to the table. Looks like you have a relatively concentrated portfolio too. I think in our EM strategy, it says 50 to 70 names. Your international one is more like 35 to 45. What is your opportunity

say here? How many stocks are you starting with that you're paying attention to and then whittling down to those numbers? So if you look at our initial screen, which is kind of a value screen low P, above average dividend yield, and then getting rid of companies that we think have negative dividend in earnings group because we've looked at them in the past. These days in emerging markets, we're getting about 850 stops to meet the screening parameters. And I'd say in international development markets, we're getting about 600 stocks or so. So combined non-U.S., that's like six times the amount you get in the U.S.

So it's a very large opportunity set. But seeing that we've been doing this since 2000 and the U.S., and the U.S., universe doesn't change so dramatically from year to year. We feel like we know it, you know, quite well. And, you know, it might just be 10 or 15% of the universe that we're unfamiliar with and need to get up to speed with and really get in the weeds with, but the other ones we've kind of looked at before. We're seeing some serious flows into international stocks. I assume that you all are seeing the same. Yeah, we've been getting good flows definitely, you know, probably even more so on the emerging market side. But yeah, we're seeing, especially in the SMA side,

good flows into the accounts. It's just everyone is so under position. I mentioned, you know, the weight of the index. And, you know, and it happens so quickly, too. I mean, and it's not just happening kind of quickly this time, but whatever in the past, I mean, usually, you know, if international, say, in the 2000s outperform for the whole decade when international stocks were up and U.S. stocks on average were down, you know, probably about 80% of that move came in the first year or so.

And then they still kept outperforming, but it wasn't by. quite the magnitude. And if it's not just international versus U.S., the same thing goes for value versus growth, where the reversion happens quite quickly. So for somebody who's listening who says, I just, I missed it. I missed it. What would you say to that person? Oh, you haven't missed it all. I mean, we're still, you know, we could, you know, our marketing team could provide a lot of long-term charts that shows either value versus growth or international versus the U.S. We're so far below, you know, the median average or just the average, you know, I'm mentioned with international stocks being about 50% less in weight than they were on average,

value versus growth still being over one standard deviations, you know, below the market. And this just being a couple months into, you know, what had been, if it is outperformance for international, what had been by far the largest period of outperformance of non-U.S. stocks versus U.S. stocks, more than a decade. We look at charts of this all the time, and we've looked at these cycles of over and underperformance. And in the past, it might have been three, five, seven years, potentially. And this one lasted for, I don't know, 12 to 15 years, depending on when you count it. But it's interesting, if you look at the cycles of outperformance and underperformance,

between emerging markets in the U.S., they tend to be even more drastic, where, like, the magnitude of outperformance by the one who's leading is far different. So people forget that the U.S. had the lost decade in the first decade of the century, and emerging markets did great. right and it was a huge spread and now it's kind of worked its way back and we had mean reversion is that just a currency story why why are those cycles so much more extreme than they are in between the developed nations i think it depends you know kind of almost on the on which cycle we're talking about i mean back in the 90s it was because you know the asian financial crisis

imploded and then we had the russian crisis and that just was very bad for emerging markets because all those countries were emerging countries. And then, by the way, it also coincided with the tech boom that ended in 2001. In the 2000s, you know, you got into a better environment for emerging markets, because commodities, one reason was those commodities were doing a lot better. And that's certainly another thing that could happen and really benefit emerging markets. They always do well when commodity prices do well. So I think that was a big reason.

You saw, you know, China really growing at its fastest clip, countries like Brazil were doing very, very well. You know, so, but a constant theme is the dollar, definitely. So, you know, I would be shocked if the dollar went down and an international and emerging market stocks didn't outperform. And by the way, the dividend strategies are a great way to get that dollar diversification too, because, you know, if your current, let's say your company raises its dividend organically by 5%, but then the dollar depreciates 5% versus that currency, then your dividend growth is 10%, you know.

And it's also a great way to get diversification because when the dollar goes down, international products, like think about those trips to Italy or that chocolate from Switzerland or those cars from Germany. They all get, you know, more expensive. So having some sort of diversification to allow you to keep your purchasing power, I think it's a sensible, you know, thing for investors to do. On the flip side, what would you say to somebody who says, no, I want to own international stocks, but I don't, I just, I don't want any dollar exposure.

I just want to own them as if I was a resident. And if I want to own Italian stocks as if I was in Italian. I don't want any like currency fluctuations. What would you say to that person? Then they're going to have to hedge their currencies, which is costly and is going to, at least from our perspective, even to, you know, some of the income. And, you know, time in currencies, this is is pretty difficult. Again, in a separately managed account, it's, it's very difficult in the U.S.

to get that kind of exposure. You know, banks just don't like it. They just have to do, it just gets a lot more costly for banks. and especially, you know, with rates going up, the cost of hedging's gone up too. You know, but I think you want that, especially where we're at now. You know, I think you want that or in currency exposure for the reasons I just described. You're saying get the double whammy. If international stocks are going to outperform, it's like that you're going to get, who knows,

but it's like that you're going to get even more appreciation from a falling dollar. Yeah, I mean, you know, hey, you know, be overweight the U.S. and the U.S. dollar if you want. But, yeah, get some diversification with international stocks and get some diversification away from the dollar with international currencies. I think that makes a lot of sense to me. One of the things that we've heard from a lot of people pushing back in recent years is saying, I'm putting all my money into U.S. stocks. I don't need international stocks, is just that if you look at the S&P,

something like 35 to 40 percent of all revenue comes from overseas. And people say, see, I'm already diversified overseas. So what do you say to investors who have that mindset? Well, first of all, you're just paying a lot more for that international exposure because the valuations are, you know, some 40% higher. But you can make the counter argument. Why don't you get cheaper U.S. exposure by investing in international multinationals? Because if you were like, I think the KAC 40, they get about 40% of their revenues, I want to say from the U.S.

Or certainly outside of the U.S., but, you know, we have companies like Deutscheel, which owns T-Mobile, which, you know, they're just cleaning up on 18T and Verizon. You know, that's a good example. We have cervix insurance, which owns Farmers Insurance, you know, companies like Toyota, obviously have huge businesses here in the U.S., So you could get a lot cheaper U.S. exposure through really good international multinationals that trade at such more compelling valuations. Good answer.

Thanks. I like that one. Strong to quite strong. All right, we all very interesting. For people that want to learn more about how to take advantage of hopefully the early innings of a shift towards friendly or international stocks, where do we send them? I would suggest our website. We have a very equipped marketing team.

We have regional marketers that could get in touch with you. feel free to call the office, you know, so those are all great ways to learn more about our products. Hit us with the website. What is it? It's www.shafor-Cullen.com. Thanks for all. Hey, thanks to Raul, remember to check out cullenfunds.com at C-U-L-L-E-N. Email us, Animal Spirits at Compoundews.com.