Some charts that caught my eye this week:
1. Retirement savings are better than expected. Here’s something I wrote in Everything You Need to Know About Saving For Retirement:
My only retirement rule of thumb is that your savings rate should be in the double digits as a percentage of income. If you do nothing else in your financial life than setting a high savings rate you’ll be alright. Ten percent is a nice goal while 15% to 20% of your income would be even better.
Guess what?
We’re there.
The Wall Street Journal had a story this past week that shows retirement savers are saving close to 15% of their earnings:
Workers are putting away a record share of their income for retirement.
The average savings rate in 401(k) plans rose to a record high 14.3% of income in the first three months of this year, according to a Fidelity Investments analysis of the millions of accounts it manages.
Here’s the chart:
Investor behavior has improved and savers are increasing their savings rates over time.
This is great news!
Would it be nice if the average balance were higher than $127,100?
Yeah it would but let’s focus on the positives here.
2. International stocks have been outperforming for longer than you think. Foreign stocks are crushing the U.S. stock market this year:
Some countries are doing even better:
Stocks around the globe are finally winning by a large margin.1
It feels like this is a recent phenomenon but Jeffrey Kleintop has a chart that shows foreign stocks have been outperforming for longer than you think. This chart shows European stocks versus U.S. stocks going back to the bottom of the 2022 bear market:
We’re now looking at nearly three years of outperformance for international equities.
This is an interesting development.
Will it last?
I don’t know.
AI might have something to say about this cycle.
3. AI might be unstoppable. Here’s a chart from Mary Meeker’s most recent deck on the state of tech:
AI adoption is happening at light speed pace. As the technology improves it’s only going to become more entrenched in our everyday lives.
Maybe everyone is getting ahead of themselves on the potential for this technology. It wouldn’t be the first time tech titans have promised us the world is going to change and then it doesn’t.
But I don’t see how you stop this train.
At this point, I would be more surprised if we don’t see an AI bubble.
Michael talked about these charts, bubbles and much more on this week’s Animal Spirits video:
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Now here’s what I’ve been reading lately:
- Status (Seth Godin)
- The trick to enjoying a vacation (Oblivious Investor)
- Lost decades are rare (Of Dollars & Data)
- Life is a fatal disease (A Teachable Moment)
- Don’t take candy from strangers (The Big Picture)
- Everyone is running their own race (Abnormal Returns)
- What makes Europe better than America (The Free Press)
Books:
1I’ll have a follow-up post on the reasons for international outperformance.
