Key insights
- The author suggests that seemingly undervalued non-growth stocks may reflect a new normal due to reduced foreign capital inflows into the US. This shift could be causing lower PE ratios, similar to those seen in foreign markets. The author believes a market-wide correction to account for this may have already occurred, impacting valuations outside of the AI sector.
the inflow of global fund flows fell from 72% in 2024 to 50% in 2025. I know that's still an increase in absolute dollars but US listed companies have also been growing their revenue.
When i heard this earlier in the year i was a bit anxious thinking there would be a market wide correction eventually to account for it, but now I look around at so many seemingly undervalued stocks in sectors outside of the AI stack and I'm starting to think it already happened.
For those unfamiliar with foreign markets, companies listed on other exchanges typically are valued at lowet PE ratios with comparable performance. there's averages by exchange you can check.