Friends are long-term investors in U.S. stocks, and this year they increased their international allocation to 25-30%.

He says U.S. stock valuations are too high, the dollar has peaked, and some sectors in Europe and Asia have better growth prospects.
Since the beginning of the year, the trend of funds flowing out of U.S. stocks and into international markets has become very clear.
The market share of U.S. stocks in the global stock market has started to decline from its high point in 2024.
The MSCI EAFE (developed markets excluding the U.S.) has begun to outperform the S&P this year.
In terms of valuation, U.S. stocks currently have a forward P/E of about 20x-21x, while Europe is at 13x-14x, and emerging markets are even lower.
This valuation gap is historic.
The movement of the dollar is another key variable.
If the dollar falls from its high, dollar investors holding international assets will benefit from both asset appreciation and exchange rate gains.
Double whammy.
But international allocation is not "escaping from U.S. stocks."
The U.S. remains the deepest and broadest capital market in the world, with pricing power in tech and AI.
Completely avoiding U.S. stocks is another extreme.
A reasonable approach is to adjust the U.S./international ratio from 90/10 to 70/30 or 75/25.
It’s not about betting on which market will rise, but about diversifying valuation risk across markets.
US (excluding U.S. stocks globally) is the simplest one-stop solution.
For more detail, look at Europe with VGK, Japan with EWJ, India with INDA.
If that doesn’t work, consider buying some Hong Kong stocks—really, even the wealthy are flowing back.