California’s motorcycle helmet law, enacted in 1992, initially led to a drop in motorcycle fatalities, but by 2007, the number of deaths per registered motorcycle nearly doubled, returning to pre-law levels. This trend suggests that while helmets increase safety, they can also foster a false sense of security, encouraging riskier riding behaviors.
In the investment world, a similar overconfidence is observed with U.S. stocks which, since 2009, have delivered a total return of about 1,340%, outperforming the MSCI EAFE Index’s 468%. However, with the S&P 500 currently trading at roughly 26 times earnings compared to under 18 for the EAFE, investors may be taking on significant risk by relying solely on U.S. stocks, potentially missing out on foreign market opportunities.
Historical performance shows that leadership in stock markets can shift; for instance, the EAFE Index outperformed the S&P 500 during two distinct periods in the late 20th century. As current U.S. market valuations remain high amidst increasing uncertainty, diversifying into select foreign investments may mitigate risk and capitalize on potential growth.
5 Stocks Our Experts Predict Could Double In the Next Year
By submitting your email, you'll also get a free pivot & flow membership. A free daily market overview. You can unsubscribe at any time.
