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The correct way to frame relative valuations

Lawrence Hamtil points out that MSCI US index seems expensive versus MSCI World ex USA but sector composition can give a different look.

"At first glance, such a disparity in valuation seems compelling, and it would appear to make sense to underweight U.S. equities relative to the rest of the world, as some have argued. However, I would caution investors to think twice before doing so, as making allocation decisions based solely on aggregated valuations is misguided."

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