U.S. investors have been well-served by staying home, but Warren Buffett’s purchases of Japanese stocks and the cheaper relative valuations have sparked interest in international stocks. While global companies are more inexpensive, the valuation gap is less than meets the eye.

Berkshire Hathaway increased its holdings in five Japanese trading companies to an average ownership interest of 8.5%. So far, the results of these investments have been spectacular for shareholders. Berkshire’s Japanese trading companies still sell at a sizable discount to U.S. and Japanese market…

A forgotten part of the stock market, midcap stocks, has recently seen a revival after a moribund period. Midcap stocks have outperformed the S&P 500 over the long term, and the current relative valuation makes an allocation more attractive.

After significant underperformance, small-cap stocks recently began to shine. Valuation makes a small-cap allocation more attractive. With the high risk of recession and many profitless small companies, properly implementing an allocation is crucial.

Puzzlingly, stocks rallied despite a strong jobs report. But the details left a mixed picture, which leaves the Fed enough room to pause the rate hikes in June. Optimism for a soft landing increased and fueled a stock rally beyond just the AI-related bull market.