Tony Coniaris: So let's talk about diversification for a second. So we've had this slow moving disconnect in valuations, and whenever we have a disconnect, dislocation in the markets at, at Harris Oakmark, we talk about checking your portfolio for diversification. You know, are you properly diversified after this dislocation?

And while this one has taken fifteen years to play out, as we dug into this, the actual average allocation to non-US stocks for the average U.S. investor today is about a third where academic research and/or target date funds typically model the ideal portfolio. So, the average investor is under allocated today.

It makes sense, it has been, in hindsight, a smart move, but what really matters from here is what does the future look like? And when we talk about the future at Harris Oakmark, we always start with price. So, let's start there.

So, here's a proxy for price. You can look at the share of global GDP of the US economy, and you can look at the share of the U.S. stocks as a, as a percentage of global indices. And you see this yawning gap here between the proportion of valuation in, in global indices, in U.S. stocks versus a relatively flat GDP as a percent of global GDP. And then, within there, it's within the U.S. market, which has grown as a percent of the total indices, you have increasing concentration, which adds its own element of risk. So that's, that's price.

Europe's one of the only major areas of the globe that’s seen significant multiple contraction over the last decade. And you see it here when you look at the price to earnings ratio in Europe, relative to the United States, should it trade at a discount? Yes. Has it historically traded a discount? Yes, it has. But if you look today, we're at about double that historical discount after years of underperformance, so the earnings have grown, the multiples have contracted, the stocks haven't done much.

That's the basic story, but from here, the prices look really attractive. If you look at the right side of this, this slide, what we're doing here is equity risk premium, and that's your earnings yield minus the local risk-free rate.

And this isn't even more extreme picture than the PE chart, where it shows the difference between the equity risk premium in the United States and Europe, and you see Europe's equity risk premium rising pretty dramatically over the last fifteen years. And both are good stories, we believe for the future of the European market.

There's also some very interesting qualitative things going on right now. The first of which is this movement in austerity. When we had the crisis in twenty eleven, Europe went through a ten-to-fifteen-year period of austerity, pretty broadly, within Europe. Today, what's going on? Well, Germany just approved a new budget to effectively finance expansion and a fiscal stimulus and increase their debt levels. And so, after ten-fifteen years of austerity, Europe is in more of an expansion mode. What's going on in the U.S.? We've got DOGE, we have worries about the debt ceiling, and the debt, the amount of debt outstanding.

So, the U.S. seems to be moving more towards austerity, Europe moving away from austerity, which should be more positive for stocks on a relative basis. And then you have governance and regulatory improvements in Europe and around the world. Frankly, I mean if you look at what's going on in Japan and Korea, very positive shareholder-friendly government imposed changes on governance, which are positive.

And then within Europe, you know, hardly a day goes by where you don't see a news article about somebody in the UK or parliament or, or in Europe talking about making their countries more competitive. I think they've had enough of this multiple contraction and slower growth and they're trying to do something about it, and that's very important. And then corporate actions, so what are the companies we own, and, and don't own frankly, doing about this?

And we're seeing increasing corporate action. So buybacks are much higher in Europe today than they were ten years ago. Prices are better and more capitals being allocated towards buybacks. That's a great thing for future returns.