Core Viewpoint - Developed international equities are no longer considered a "value trap" and present a fundamentally sound alternative to the concentrated U.S. market, particularly benefiting from the performance of the Magnificent 7 tech giants [1][2]. Group 1: International Market Dynamics - International markets, including Europe, Australasia, and the Far East, have found the necessary catalysts that were previously missing, attracting savvy investors [2]. - Historically low valuations in Europe and Japan were misleading, as they lacked fundamental drivers for price appreciation; this has changed as foreign companies have improved their capital allocation strategies [2][4]. Group 2: Payout Ratios and Valuations - The payout ratio for the EAFE index is now 75%, comparable to the U.S., with international payout growth over the last five years outperforming that of the U.S. [3]. - International stocks are trading at a price-to-earnings (PE) ratio of approximately 15, significantly lower than the U.S. PE ratio of 23, offering better valuation opportunities [4]. Group 3: Market Concentration Risks - The Magnificent 7 stocks constitute about 36% of the S&P 500, creating significant downside risks if the AI narrative loses momentum or if valuations become unrealistic [5]. - The current concentration in the U.S. market is at historic levels, prompting calls for diversification [4][5]. Group 4: Investment Strategy Recommendations - Instead of focusing on U.S. small caps for diversification, a "barbell" portfolio approach is recommended, balancing high-growth U.S. tech exposure with cheaper, shareholder-friendly international stocks to enhance returns and mitigate volatility [6].