Recently, the global investment market has shown a rare extreme emotional divergence.

According to senior investment expert Ben Carlson, in his 20 years of fund management, he has never seen such pessimism among investors regarding international Stocks, value Stocks, and overall market valuations. In contrast, USA Large Cap.Growth Stocks are highly favored, attracting a significant Inflow of funds.

Ben Carlson stated that investors have almost completely given up on these investment areas, especially this year, where this abandonment trend is particularly evident:

"I know you might say the same thing over the past 5-7 years, but it feels like the dam really broke this year. Investors are waving the white flag."

Although Carlson acknowledges the cyclical nature of the market still exists, he does not rule out the possibility of a paradigm shift in the market, meaning that USA Large Cap.Growth Stocks may hold an advantaged position for a long time. Therefore, the idea of diversified investment remains necessary.

Historical perspective: The evolution of market relationships.

To understand the current market situation, it is necessary to review history.

Before the 1950s, investors generally expected Stocks to provide higher returns than Bonds because Stocks were considered riskier. At that time, when the dividend yield aligned with the bond yield, it was usually seen as a Sell signal for Stocks.

However, this relationship fundamentally changed in the late 1950s. Bond yields exceeded dividend yields and maintained this status for the next 50 years, until the financial crisis of 2008. This indicates that market relationships are not fixed and can undergo long-term structural changes.

Carlson referenced Peter Bernstein's views in the book 'Against the Gods', noting that old market relationships may fail in a new market environment, even if some seasoned investors who have experienced market turbulence still cling to outdated beliefs that the market will return to 'normal'.

So, is the current situation any different? Are we in a world where only USA growth stocks are worth investing in? Have market cycles become a thing of the past?

Carlson candidly stated that he cannot provide a definitive answer. Although the market history he studied indicates that cyclicality is the most reliable pattern in the market, he cannot rule out the effects that technological changes may bring. He believes it is naive to completely dismiss the possibility of a paradigm shift in the market.

But Carlson mentioned that the current popularity of USA Large Cap.Growth Index stocks is for a reason. These companies are experiencing growth in profitability and market share, and the quality of these companies is higher than in the past. Secondly, these companies' stock prices are outperforming other Stocks, and their business fundamentals are performing better.

"To be frank, the S&P 500 Index and$NASDAQ 100 Index (.NDX.US)$Companies with higher rankings are better enterprises. They outperform the Large Cap in the stock market because they excel in business fundamentals compared to the Large Cap.

Diversified investment remains important.

Despite the excellent performance of USA Large Cap Stocks, a key question investors face is: Is the current pricing reasonable? Carlson admitted:

"Regardless of the outcomes over the next 5 to 10 years, it will seem obvious in hindsight. It might be 'Of course, the USA stock market continues to outperform because they are the best companies!' or it might be 'Of course, the USA stock market did poorly because valuations were too high!'"

In the face of the current market environment, Carlson emphasized the importance of diversified investment: "Diversification is acknowledging our ignorance about the future." Despite the recent strong performance of USA Large Cap Stocks, history shows that the rotation of market cycles and investment styles is the norm.

Ultimately, time will tell whether the current market conditions represent the beginning of a new investment era or merely another example of investors over chasing past performance. In this uncertainty, maintaining a diversified investment strategy while closely monitoring market changes may be a wise choice.

Editor/Rocky