Why Has Everyone Suddenly Fallen in Love with US Markets?

Dear Investors,

Jai Hind

Over the last few months, one question has landed in our inbox with increasing frequency.

“Why aren’t we investing in US markets?”

“Why are we not buying into the AI boom?”

“Why is Hum Fauji not recommending international funds when everyone seems to be talking about them?”

These are perfectly valid questions.

After all, the United States is home to some of the world’s most innovative companies. Artificial Intelligence is changing the way businesses operate; the US markets have generated enviable returns over the past decade; The newspapers are writing about it, influencers are discussing it, and mutual fund companies are launching or promoting products around it.

Naturally, investors do not want to be left behind. Yet, whenever an investment idea suddenly becomes popular, I have learnt to become a little more curious and a little less excited.

And hence I thought to address these concerns personally through this email.

History suggests that investors rarely become interested in an investment opportunity before it becomes fashionable. More often than not, they become interested after a long period of success. By then, the headlines have arrived, success stories are everywhere, and a sense of urgency begins to creep in. The fear of missing out quietly replaces the discipline of investing.

The “Winning” Cycle: No Single Country Leads Forever

[Source: Tata Capital Wealth, CYTD Performance as on April 2026]

One of the most fascinating lessons from market history is that no country remains the world’s best-performing market forever. The chart above demonstrates this far better than any opinion can. Leadership rotates and different economies shine during different periods; today’s winner often becomes tomorrow’s laggard, while today’s laggard quietly prepares for its next turn in the spotlight.

This is not a new phenomenon.

In the late 1980s, Japan was considered unstoppable. Investors around the world believed Japanese companies would dominate global business for decades. Japanese real estate valuations reached levels that, in hindsight, seem almost unbelievable. There was a widespread belief that the future belonged to Japan. Then reality intervened. The Japanese stock market entered a decline from which it took decades to recover.

A decade later, the world became intoxicated with technology stocks. To be fair, the underlying story was correct. The internet did change the world. It transformed communication, commerce, entertainment and productivity. Yet many investors still lost substantial amounts of money because they confused a great technology with a great investment. They paid prices that assumed perfection.

The same pattern emerged during the BRIC boom, when Brazil, Russia, India and China were viewed as the engines of future growth. Money poured in. Expectations soared. Then the cycle turned.

More recently, China was widely regarded as the inevitable economic superpower of the twenty-first century. Investors who chased that narrative at the height of enthusiasm have discovered that economic success and stock market success are not always the same thing.

The point is not that these countries or themes were bad. The point is that investors often arrive after the excitement has already reached its peak in valuations. That is why the current debate around international investing deserves careful thought.

However, there is an important distinction that we should understand as investors. The strongest argument for international investing is diversification. The weakest argument is recent performance. Unfortunately, much of today’s enthusiasm appears to be driven by the latter.

There is another aspect that receives surprisingly little attention. When Indian investors buy US assets today, they are not making a single investment decision. They are making multiple bets simultaneously.

They are betting that US markets will continue to perform well. They are betting that a handful of technology giants will continue to justify their lofty expectations. They are betting that Artificial Intelligence will deliver extraordinary growth. And they are also betting on the future direction of the US Dollar relative to the Indian Rupee.

Many investors view the depreciation of the Rupee as a permanent tailwind. It may continue, it may not – nobody knows that. What we do know is that Indian investors are currently converting Rupees into Dollars at exchange rates that are among the highest seen in history, when they invest in the US markets with their rupees.

That does not automatically make overseas investing a bad idea, but it does mean that one should think carefully before assuming that yesterday’s currency trends will continue indefinitely.

What concerns me most is not international investing itself – what concerns me is the psychology surrounding it.

When investors wanted nothing to do with international markets a few years ago, diversification was probably a stronger argument than it is today. Now, after a prolonged period of strong performance, the same investors are suddenly eager to participate.

Human nature has not changed. We are attracted to what has recently worked and sceptical about what has recently disappointed us, even if our investing horizon is really long term. Successful investing often requires the opposite temperament.

At Hum Fauji Initiatives, we have never believed that our role is to participate in every fashionable investment trend. Our responsibility is to evaluate opportunities calmly, objectively and without the pressure of public excitement.

Sometimes that means acting early when nobody is interested.
At other times, it means waiting patiently while everyone else appears convinced.

Will international investing play a role in portfolios in the future?
Quite possibly.

Will we recommend it if we believe the risk-reward equation is attractive?
Absolutely.

But investment decisions should be driven by valuation, diversification benefits and long-term portfolio objectives – not by headlines, social media discussions or the fear of missing out.

Markets have a way of rewarding patience and punishing excitement. They have done so repeatedly across countries, across decades and across investment themes.

The lesson from history is not that international investing is wrong. The lesson is that whenever everybody suddenly falls in love with the same investment idea, it is usually worth asking a few extra questions before joining the crowd.

We will keep on making the right recommendations for your portfolio, it is just a matter of time. Until then, you can also keep sharing the concerns as they help the community at large.

Best Regards,

Col Sanjeev Govila (retd.)

CEO, Hum Fauji Initiatives