| Account | Shares | Price | Value | % of acct | Cost/sh | Gain $ | Gain % | Target |
|---|---|---|---|---|---|---|---|---|
| 401K | 31 | $67.47 | $2,092 | 0.09% | $48.00 | $604 | +40.6% | — |
In short: The S&P's outperformance vs MSCI EM stopped at end-2024 and it has since underperformed by ~20% — "I further believe that this is going to drop going forward." S&P-vs-EM tracks the trade-weighted dollar; if the dollar falls, "it's quite likely the S&P 500 will underperform emerging markets."
Since late 2024 the S&P 500 has lagged emerging-market stocks by about 20%, and Gundlach expects that to continue. The driver is again the dollar: his chart shows the US-vs-EM line moving in lockstep with the dollar's value, so a weaker dollar means emerging markets keep winning. They also started from far cheaper valuations than US stocks.
29:55Here's the S&P 500 versus Morgan Stanley, only the emerging markets. Here the underperformance is pretty obvious. The outperformance of the US stopped at the end of 2024 and it's underperformed by about 20% now. So it's not insignificant and I further believe that this is going to drop going forward. Here's the S&P 500 relative performance to the MSCI EM index.
In short: Cited as the exhibit for what is wrong with market-cap weighting — the diversification is nominal. "Take EEM, where it's comical that it has 1,226 holdings yet allocates 27.61% to three companies." The criticism is structural rather than a view on emerging markets themselves: an index that looks maximally diversified on a holdings count is, in economic terms, a concentrated three-name bet with 1,223 rounding errors attached. It sits inside the broader argument that opens the section — "I'm pondering how market cap weighting became the optimal way to allocate capital passively. Yes, it is incredibly efficient and is hard to beat, yet it reminds me of the same arguments made for 'just-in-time supply chains.' Can't beat them until something breaks; then resilience/redundancy is everything." Ferg is explicit that the conclusion is not to short it — "this doesn't mean I want to take the other side of market cap weighting" — but to hold the same asset class through a different weighting scheme (see EYLD).
EEM is the long-established way to own emerging-market shares in one ticket — China, Taiwan, India, Korea, Brazil and the rest, weighted by company size. Ferg uses it here not as a market call but as an illustration of a flaw in how such funds are built.
The number that does the work: the fund holds 1,226 different companies, yet 27.61% of the money sits in just three of them. He calls that "comical," and the point is precise rather than rhetorical. A holdings count of 1,226 sounds like the safest diversification money can buy; in practice more than a quarter of the fund's fate rests on three names, while the other 1,223 collectively barely move the needle. If any of those three stumbles, the "diversified" fund takes the hit anyway.
How this happens is not a mistake — it is the design. Weighting by market value means that as a stock rises, the fund automatically owns more of it, and the biggest winners keep compounding into a larger and larger share. That is exactly the behaviour Ferg likens to just-in-time logistics: maximally efficient, with no redundancy built in, and fine until something breaks.
Importantly, he is not recommending a bet against it. "This doesn't mean I want to take the other side of market cap weighting; I want to go long in a smarter, passive way." The conclusion is to own the same asset class through a different weighting rule — which is where EYLD, an emerging-markets fund weighted by cash returned to shareholders instead of by size, comes in. The practical takeaway for anyone screening funds: judge diversification by the weight of the top few positions, not by how many holdings the fact sheet advertises.
In short: EM equities are "one of our favorites" — they have "crushed the S&P" again this year.
EEM is a fund holding stocks across emerging markets (China, India, Brazil, Korea, etc.). Hay calls emerging-market equities "one of our favorites" — and says they have "crushed the S&P" again this year, after also beating it last year.
It fits his broader theme: step away from the over-owned, over-concentrated US megacaps and toward cheaper, faster-growing markets that have been quietly outperforming.
39:51Um, — yeah, and emerging markets, which has been one of our favorites, has has crushed the S&P again this year after last year, too. Uh, yeah, I think that it's makes sense to kind of go down the the size because you're going to get out of some a lot of those bubble stocks. Uh, the one that we preferred the most is the midcap index.
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Verbatim excerpts from the public transcripts (auto-pulled at each mention's timestamp, lightly cleaned). Timestamps link into the video; "source page" opens that commentator's full analysis at this row. Click a mention's header line to expand it (one open at a time). For personal study — not investment advice.