Charles’ Note: It’s here. 

“Liberation Day.” 

President Trump is offering a little more clarity about what direction he plans to take on his tariffs. 

I’ll be parsing his comments this evening and will report on what it means in tomorrow’s Freeport Navigator. 

In the meantime, we still have portfolios to run, and my colleague John Pangere is recommending you cast your net a little wider. As he notes, the Mag 7 isn’t the only game in town. There are stretches – long stretches! – when value stocks outperform growth stocks and when international stocks outperform American. 

Is now one of those times?

Both John and I believe it is. 

And we eat our own cooking. 

I’ve been adding exposure to European defense stocks in Freeport Investor, our flagship investment newsletter. 

Below, John offers a solid trade recommendation you’ll never see reported in the Wall Street Journal. 

Take it from here, John!

Don’t Buy the Dip

By John Pangere, Senior Analyst, Freeport Strategic Opportunities

Are you a sheep… or a wolf?

If you’re like most folks, you follow the flock. 

The S&P 500 has rallied for nearly 15 years straight. 

The flock knows how to do only one thing – buy the dip.

And in the face of recent double-digit falls, that hasn’t changed. 

Buddies of mine are still asking me about buying more shares in the popular Magnificent Seven stocks – Amazon, Apple, Microsoft, Google, Meta, NVIDIA, and Tesla. 

Barron’s, a bastion of sheep-like thinking, even featured this idea on its March issue cover.

(Source: Barron’s)

But I’ve been in this game for nearly two decades. And I can tell you categorically: Buying the dip isn’t always the right move. 

Between the late 1960s and early 1980s, the U.S. stock market went nowhere. The same thing happened between 2000 and 2010, albeit with greater volatility. 

That can happen again. In fact, it may be happening now. 

Most investors don’t see it. Rookie investors are completely blind to it. 

But today, I’ll show you what that shift is. And we’ll look at how you can not only avoid more pain in popular U.S. stocks but also profit in greener pastures.

Is the U.S. Turning Japanese?

It’s all in the chart below…

It tracks the market cap (the sum value of all outstanding shares) of the U.S. stock market as a percentage of the global market cap.

As you can see, the U.S. stock market makes up about 50% of the market value of all the stocks around the world. A multi-decade high.

That tells me two things. 

First, at some point that trend will reverse. 

Second, international stocks have a chance to rise far more than you think. 

It’s happened before. 

In the late 1980s, Japanese stocks were all the rage. They made up about 50% of the world’s market cap. Everyone wanted a piece of Japan. 

But after hitting that high water mark, the Japanese stock bubble burst. 

If all you did when Japanese stocks became so dominant as a percentage of the global market cap was to shift back to U.S. stocks, you would have done well. 

In the decade after the Japanese stock bubble burst, the S&P 500 was up about 315%. Meanwhile, Japan’s Nikkei got cut in half.

Small shift. Big outcome. 

And that may be even truer today, with the Magnificent Seven stocks valued more highly than any other stock market except the U.S. 

You read that right. 

Just seven U.S. tech stocks are worth more as a group than any single overseas stock market. 

They’re worth more than all Japanese stocks combined… all German stocks combined… all British stocks combined… and so on.

It’s an unsustainable situation – something investors in the Japanese stock market learned the hard way in the 1990s.

So what do you do?

Buy What’s Set to Boom, Not What’s Already Boomed

Before you follow your friends and neighbors back into popular U.S. tech stocks, consider that what worked over the last 15 years might not work anymore… at least for a while.

That’s why I recommend you widen your scope and consider buying shares in overseas markets.

When it comes to international stocks, you don’t have to pick individual winners all the time to make money. You can buy entire markets and do very well… even as your home market struggles.

A great example of this is what’s been going on in Argentina. 

About 18 months ago, Argentinians wanted change. They were tired of decades of the same pattern of massive inflation that was continually eroding their wealth. 

So, they elected a chainsaw-wielding libertarian economist, Javier Milei, to do something radical. His plans included aggressive government spending cuts to get inflation under control and spur growth. Think DOGE, but on steroids. 

Milei has reduced wasteful spending. He cut entire departments of the government. In doing so, he dramatically helped reduce inflation. Investors who recognized that are benefitting.  

Argentina is one of the best performing markets over the last 18 months. 

It’s up about 100% over that time.

It’s a similar story in Greece. 

In the 2010s, Greece was in a dire straits. It had one of the longest and deepest economic contractions after the 2008 meltdown. Yields on its government bonds were shooting to the moon (because investors wouldn’t buy them unless compensated for the increasing risk). Its banks were teetering on the brink of collapse. And its government was forced to impose severe austerity measures on the population.

Eventually, this dug the country out of its debt hole and freed up the economy to flourish. 

Greece is now the fastest growing economy in the European Union. 

I like per-capita GDP as a yardstick. It tells you how much output is generated per person in an economy.

Between 2019 and 2024, Greece has grown its per-capita GDP by 11%. And investors who recognized this are benefitting.

Over the past five years, Greek stocks are up more than 200%. That’s nearly double the return of the S&P 500 over the same time.

Those gains may already be long in the tooth. 

The good news is there are other places you can invest today ahead of a boom.  

A (Controversial) Way to Play It

One of my favorites today is also the most controversial – China. 

This next chart paints a bullish picture of the Hang Seng Index. It’s Hong Kong’s version of the S&P 500.

Can you spot the pattern?

It’s making higher highs (red circles) while also making higher lows (green circles). 

That’s a classic hallmark of a bullish trend. 

If an index keeps setting new peaks – each one higher than the last – that tells you buyers are consistently willing to pay more over time. 

If the pullbacks don’t go as low as the last time, it means sellers are losing steam and buyers are gaining confidence.

In short, it’s a trend you want to buy into. 

And it’s the opposite of what the U.S. market looks and feels like right now. 

What’s more, Chinese stocks account for less than 10% of the world’s total stock market value. That’s despite China having about a 30% share of global manufacturing… and making up nearly 20% of global GDP.

China is a major player in the world’s economy. But its stocks aren’t… at least not today. 

Now, I know what you may be thinking, “Isn’t China in big trouble thanks to Trump’s tariff war?”

The fact is China doesn’t just sell goods to the U.S. Today, the U.S. makes up about 15% of China’s overall world exports. And that number is on the decline as more and more countries do business with China. 

Countries that aren’t trying to get into a trade war with China.

So if you’re looking to gain some international exposure, consider China. 

My favorite way to play it is through the iShares China Large-Cap ETF (FXI), an exchange traded fund (ETF). It tracks 50 of the largest companies in China, including its tech giants such as Alibaba and Tencent.

This isn’t a play for sheep. 

But a wolf recognizes the problem of a thinning herd. Then he hunts for a new full flock where he can continue to feed. 

Sincerely,

John Pangere

P.S. There’s a lot of buzz today about Trump’s proposed tariffs. As Charles mentioned up top, he’ll be taking a deep dive on those tomorrow. And if you want to know more on Charles’s tariff playbook, make sure to catch the Navigator issue he sent out yesterday. In it, he recommended two assets to buy now to protect you from any fallout.