In some sense, the sands have already begun to shift. Over the past three months Nasdaq has outperformed the EAFE index of foreign stocks by a lot–enough that the US is no longer the laggard to the rest of the world’s stock markets that it has been since early 2025.
There have also been significant turns of the wheel within NASDAQ itself. The latest is the move from software to the firms that make semiconductors and their suppliers. Customer demand for memory chips is so high that the makers are saying that, although they are all adding capacity, supply won’t be able to meet the current level of demand for three or four years. Two reasons: the fabs themselves are complex things and take several years to come online; and ASML, the principal manufacturer of the machines inside them, tries to avoid boom/bust in its own business by keeping its output at a steady pace rather than expanding capacity during industry upturns (thus avoiding the worst negative effects of the inevitable subsequent bust periods).
The next large stock market rotation, as I see it, should be a move into firms that either serve domestic consumers, or have global brands that also allow them to sell to the rest of the world as well. One set of potential buyers for these consumer-oriented stocks would be portfolio investors like you and me. Another would be multinationals, domestic or foreign, who, in Warren Buffett fashion, would recognize the potentially immense value of intangibles like brand names and distribution networks.
I decided to begin to nibble at stocks like this early in 2026. Continuing weakness in this arena, however, told me that I was at the very least too early (a technical portfolio term meaning “wrong!“). Two factors working against the move: the domestic economic weakness created by tariffs + shrinkage of the workforce; and the reputational damage done to the US brand name by ICE and, more recently, the bungled war against Iran.
$300 billion+ (about 1% of domestic GDP) in reparations later, Iran is in the rear-view mirror. Within six months, the negative effects of administration policies will have been around long enough to also be in the base against which future earnings will be judged.
Arguably, then–and absent any new negatives from Washington–at some point investors will begin to trim their IT overweights and move money into domestic GDP-sensitive names.
This is a potential issue to be aware of, I think, but one that it’s way too soon to act on. An odd thing has just happened a couple of towns over from where we live, however. There was just a special election in that affluent right-leaning community to vote on a Republican-backed proposal that in future town elections candidates need not disclose their party affiliation on the ballot. The proposal was rejected.