Source: The David Lin Report | Date: March 03, 2026

Investment Research Summary: David Hay - The Great Rotation

Investment Thesis

The era of US market dominance is ending as foreign capital flows reverse and international equities break out of multi-decade consolidation patterns. Investors should rotate from overvalued US equities into undervalued international markets, hard assets, and selective emerging markets while avoiding crowded "value" trades that have become expensive.

Sentiment

BEARISH (on US equities relative to global markets)

Time Horizon

LONG-TERM (multi-year structural shift)

Key Takeaways

Foreign buying of US equities peaked at historic levels—historically a contrarian sell signal coinciding with market tops
International equities (MSCI World ex-US) breaking out of 17-year base, suggesting sustained outperformance ahead
Chinese equities trading at exceptionally low valuations (14x P/E for growth companies) despite recent strength
Traditional "safe haven" US Treasuries losing reserve currency status as central banks diversify into gold
Popular "value" stocks (Walmart, Eli Lilly, Caterpillar) now trade at higher multiples than Mag 7 tech—creating long/short opportunities

Market Views

Tech capex bubble concern: 2025 AI spending equals combined historical spending on Manhattan Project, moon landing, and interstate highways—may not generate promised returns
Dollar weakness: Multi-year downtrend expected despite potential counter-trend rallies (contrarian risk from bearish magazine covers)
Gold revaluation scenario: US Treasury could mark gold reserves to market ($40/oz → $5,000+), creating $1T+ windfall for fiscal stimulus
No global recession: Low probability due to fiscal stimulus from Germany, Japan military spending; US recession risk exists but government will "pull out all stops" before midterms
Correction opportunities: Japan and South Korea markets "going vertical"—profit-taking recommended; wait for pullbacks to enter

Assets Discussed

Bullish:

EWZ (Brazil ETF) - Favorite international market, strong 2025 performance
FXI (China large-cap ETF) - Trading alert issued; very cheap valuations
KWEB (Chinese internet ETF) - Avg P/E of 14 for high-growth names like Alibaba
BYD (China EV) - Not formally recommended but "quite intriguing" valuation
Emerging market debt - Outperforming US debt "like crazy" for 3-4 years
Gold/Silver miners (GDX/GDXJ) - Up 228% in 12 months; underowned despite performance; selective opportunities remain (highlighted First Majestic silver, Wheaton Precious Metals at 6x earnings)
Mid-cap US equities - Preferred over large-cap on relative basis
Amazon (AMZN) - 22x P/E, cheaper than Walmart/Lilly/Caterpillar; long candidate

Bearish/Avoid:

"Fake value" stocks - Walmart (40x), Eli Lilly (35x), Caterpillar (mid-30s), Deere (25-30x) trading at nosebleed valuations
IBM - Down 30% in month on AI obsolescence fears, though selloff may be overdone
US large-cap equities broadly - Priced for 1990s optimism amid 1930s-level macro challenges

Neutral/Tactical:

US Treasuries (short-term) - Acceptable safe haven at 3.5% yields; long-term vulnerable to fiscal dominance
Japan/South Korea equities - Strong performers but "look like meme stocks"; dangerous to chase, wait for corrections

Risk Factors

Contrarian squeeze risk: Extreme bearish sentiment on dollar (Barron's/Economist covers) could trigger counter-trend rally
Flash crash scenario: Severe equity decline could pull economy into recession via negative wealth effect; government might intervene by buying stocks directly (precedent: Hong Kong 1990s, Fed corporate bonds 2020)
Institutional cash at record lows: Bank of America fund manager survey shows lowest cash levels since 1999—historically a sell signal, suggests limited buying power for rallies

Notable Quotes

"The age of American exceptionalism may be coming to an end... It's not a prediction, it's an observation."
"With international investors really starting to decide that, hey, we not only want to quit putting money into the US, we want to start taking it out... you got a really serious flash crash type of thing."
"If you really got a flash crash, I would actually see the government intervening and coming up with a way to buy stocks... similar to what the Hong Kong monetary authority did in the late 1990s."

Source: The David Lin Report - Interview with David Hay, Haymaker Publications Performance Note: Hay's newsletter posted ~30% returns in 2024, tracking toward ~100% annualized in 2025 YTD, driven by hard assets and international equity calls.

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