February 23, 2021
The past 12 months saw record inflows into U.S. equities from foreign investors. It’s also interesting to note that foreign investment was consistently low until the mid-1990s when globalization really picked up steam.
Looking at nominal numbers doesn’t really make sense since fiat currencies are constantly being inflated. To make this indicator more range-bound, we can look at foreign investment in terms of inflation-adjusted dollars:
The chart above demonstrates that foreigners have rushed into U.S. stocks at the fastest pace ever (in real dollars), exceeding prior peaks in early-2001 and 2007.
I would consider this to be a long term warning