People often ask me why I invest in the US, why I put money into startups, and why — despite everything I say about Indian markets — I haven't parked all my money there. This is my answer. And it begins not in Mumbai, not in New York, but in Tokyo, in 1989.

§ 01 — The Japan Warning

The Ghost of the Nikkei

In 1989, Japan was at the absolute apex of its power. Of the fifty largest companies in the world, thirty-two were Japanese. Harvard professors were authoring breathless books proclaiming Japan as the inevitable dominant force of the twenty-first century. The land beneath the Imperial Palace in Tokyo was, by some estimates, worth more than the entire state of California. Every serious investor knew — or thought they knew — that Japan was the future.

39,000 Nikkei 225 peak, December 1989
–82% Decline from peak over the following years
34 yrs Time to recover back to 39,000
1.1% Annualised return for a 1989 investor

The Nikkei 225 index peaked at over 39,000. Then it collapsed — by eighty-two percent. It took thirty-four full years for the index to claw its way back to that same number. If you had invested in Japan's index in December 1989 and held on, your annualised return over those three-and-a-half decades would have been a humbling 1.1 percent per year. Barely above zero. Less than a savings account.

The countries that looked like certain winners almost never remained on top. Confidence is not a moat. Dominance is not permanent.

And by 2024, of the fifty largest companies in the world, Japan had not a single entry in the top thirty. The companies that defined global capitalism in 1989 had, for the most part, faded into irrelevance or stagnation. The lesson isn't that Japan failed — it's that no nation's economic dominance is permanent, and yet investors behave as if it is.

§ 02 — Cautionary Tales

China, Brazil, and the Inevitability Trap

Japan is the clearest example, but it is far from the only one. History offers a pattern: the countries that look like certain winners almost never remain on top for long. Two more recent stories illustrate this sharply.

Case Study — China The "Inevitable Superpower" That Peaked

In 2020, the Centre for Economics and Business Research predicted that China would overtake the United States as the world's largest economy. The prior two decades seemed to confirm this trajectory — unparalleled infrastructure buildout, hundreds of millions lifted from poverty, relentless GDP growth. But by February 2024, China's stock market index was sharply off its highs. Evergrande, once the country's largest real estate developer, collapsed spectacularly under a mountain of debt. Demographic trouble followed: China's birth rate fell to just 7.92 million in 2025, a record low. The story of China's "inevitable" rise had, quietly, begun to stall.

Case Study — Brazil The BRIC Dream That Dissolved

Brazil led the famous BRIC acronym — Brazil, Russia, India, China — the quartet of emerging economies that investment banks in the 2000s declared would reshape the world order. Brazil was first alphabetically, and it felt first in many other ways too. It hosted the 2014 FIFA World Cup and the 2016 Summer Olympics. In 2011, Brazil's GDP per capita stood at approximately $13,300. By 2020, it had nearly halved, falling to around $6,900. The Brazilian real collapsed against the dollar — from roughly 1.7 to the dollar in 2011 to nearly 5.4 by 2020. The BRIC dream, for Brazil at least, became a cautionary tale of overconfidence.

These aren't stories designed to frighten you. They are illustrations of a structural truth: in the last twenty-five years, no single country has consistently topped global stock market performance across consecutive years. The leader rotates. Sometimes it is the US. Sometimes India. Sometimes a smaller emerging market you barely track. No one can predict it reliably. That uncertainty is precisely the argument for diversification.

§ 03 — The India Concentration Problem

How Much of the World Are You Actually Invested In?

India's stock market represents roughly four percent of global market capitalisation. That means, if all your financial assets are in Indian markets, you are exposed to just four percent of the world's investable opportunity — and entirely cut off from the remaining ninety-six percent.

But look closer at where Indian household wealth actually sits. According to data from the Reserve Bank of India, the typical Indian household's assets break down roughly as follows:

77% Real estate
11% Gold
7% Durables (phones, appliances, etc.)
5% All financial investments combined

Everything — your fixed deposits, your Provident Fund, your mutual funds, your equity portfolio — fits inside that final five percent. And all of it is concentrated in a single country's economic future. Not because India is a bad bet. But because concentration is a risk, regardless of how good the underlying asset is.

Think about that for a moment. A Japanese investor in 1988 felt equally certain about his country's future. The fundamentals looked strong. The growth story was compelling. And yet.

§ 04 — Open Questions About India

Five Things That Keep Me Thinking

None of this is a prediction of doom for India. I am personally optimistic about this country's trajectory. But intellectual honesty demands acknowledging the open questions — the variables that could significantly alter the growth story.

The demographic dividend or demographic trap? India has an enormous youth population. The narrative is that as these young people enter the workforce, they will earn, spend, and drive consumption. That story is powerful — but it depends entirely on whether enough jobs are created. If artificial intelligence continues displacing white-collar work, if manufacturing doesn't scale fast enough, if unemployment climbs, that demographic dividend can quickly become social pressure: frustrated young people, civil unrest, and a consumption economy that never ignites.

Valuation risk. Indian markets are not cheap. For every rupee of earnings generated by a listed Indian company, investors are currently paying around twenty-three to twenty-four rupees — a Price-to-Earnings ratio that makes India among the more expensive emerging markets. By comparison, Brazil trades at roughly nine times, South Korea at eleven, and China at around fifteen. The premium is explainable, but it is real. And when markets are expensive, the margin of safety shrinks.

Foreign investor behaviour. Over the past eighteen months or so, foreign institutional investors have been consistently selling Indian equities — and domestic retail investors have been absorbing those outflows, buying steadily. This dynamic keeps markets supported, but it also raises a question: what happens if domestic retail sentiment turns? Markets need both domestic and foreign participants to stay balanced.

Regional inequality. India is not a monolith. Karnataka's GDP per capita sits around four times that of states like Uttar Pradesh. Five states contribute nearly fifty percent of national GDP. Roughly 350 million people — about 35 crore — remain in environments where economic participation is still severely constrained. Until that changes, the consumption story has a meaningful structural ceiling.

Currency erosion. The rupee has roughly halved against the dollar over the last twenty years — from around 45 to approaching 90. This is not a surprise; it reflects structural inflation differentials. But for a domestic investor, it means that even a flat return on a dollar-denominated asset would have doubled in rupee terms simply due to currency movement. Every year you keep wealth entirely in rupees, you forgo this hedge.

§ 05 — The Case for Geographic Diversification

Independent Markets, Uncorrelated Returns

Here is a fact that surprises most people: the correlation between India's Nifty 50 and the US S&P 500 is approximately 0.34. In plain English — these two indices are largely independent of each other. When the S&P 500 rises, the Nifty 50 does not necessarily follow. When Indian markets correct, American markets may be indifferent. Sixty-six percent of the time, they behave as distinct, unrelated systems.

A portfolio that owns only one country's markets is not a diversified portfolio. It is a concentrated bet dressed up as investing.

This independence is the mathematical foundation of diversification. If your Indian portfolio and your global portfolio don't move in lockstep, owning both reduces the volatility of your total wealth without proportionally reducing your expected returns. That's the core of modern portfolio theory — and it applies just as powerfully to geography as it does to sectors.

No country has dominated global stock market performance for twenty-five consecutive years. The leader rotates. In the years that India underperforms — and there will be such years — a portion of your portfolio in the US, or in other markets, will compensate. The reverse is equally true.

§ 06 — How to Actually Do It

Practical Paths to Global Exposure

The good news is that accessing global markets has never been simpler for an Indian investor. There are two broad routes.

Direct international investing. You can open an account with platforms that allow you to invest directly in US equities and funds under the Liberalised Remittance Scheme (LRS), which permits remitting up to $250,000 per year abroad. This gives you direct dollar exposure and ownership of foreign assets.

International ETFs listed in India. For those who prefer to stay within the domestic market framework, several fund houses now offer internationally-focused funds. Motilal Oswal's NASDAQ 100 Fund of Fund, for instance, has delivered annualised returns in the range of thirty to thirty-five percent over a five-year window. Their NASDAQ Q50 ETF and other international ETFs allow you to tap specific segments of global markets — US technology, international mid-caps, and so on — without remitting money abroad. These are still rupee-denominated products, but they give you economic exposure to foreign earnings and assets.

Neither path is a silver bullet. Both carry their own tax treatment, costs, and risks. But the point is that the tools exist. Geographic diversification is no longer a privilege reserved for the wealthy or the sophisticated.

§ 07 — Patriotism and Portfolio Management

Smart Money Is Patriotic Money

Here is where I want to be direct, because this is the part that gets muddled in a lot of conversations about investing in India.

Investing exclusively in India is not patriotism. It is concentration risk wearing a flag. True love for your country — if we are going to use that language — is expressed not by where you invest, but by how much you contribute to the economy. Pay your taxes. Spend your money here. Build businesses here. Employ people here.

My definition of patriotism in finance is simple: how much can I earn, sitting in this country, so that I spend more here, pay more in taxes here, and grow with this country? The goal is to accumulate enough wealth — globally diversified, intelligently managed — that the bulk of my consumption happens right here, in India. That is a more meaningful contribution to national prosperity than putting a hundred percent of my savings into domestic mutual funds and calling it deshbhakti.

You don't have to choose between smart investing and loving India. The two are not in conflict. What is in conflict is the instinct to confuse loyalty with concentration — and to mistake a limited financial worldview for virtue.

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Summary

Conclusion

  • Japan's Nikkei 225 took 34 years to recover from its 1989 peak — investors who entered at the top earned just 1.1% annually. No country's dominance is permanent, no matter how inevitable it looks.
  • China's growth story has materially slowed — Evergrande's collapse, demographic decline, and falling birth rates all signal that the "inevitable superpower" narrative was premature.
  • Brazil's BRIC promise evaporated within a decade — GDP per capita nearly halved between 2011 and 2020, and the currency lost more than half its value against the dollar.
  • Indian household wealth is dangerously concentrated: 77% in real estate, 11% in gold, and only 5% in all financial instruments combined — almost all of it tied to a single country's future.
  • India is just 4% of global market capitalisation. Investing only domestically means ignoring 96% of the world's opportunity set.
  • The Nifty 50 and S&P 500 have a correlation of only 0.34 — they largely move independently, which means owning both genuinely reduces portfolio risk.
  • The rupee has depreciated from ~₹45 to ~₹90 per dollar over 20 years. Dollar-denominated assets have structurally outperformed in rupee terms, even at flat nominal returns.
  • Indian markets trade at a P/E of roughly 23–24x, making them significantly more expensive than Brazil (~9x), South Korea (~11x), or China (~15x). Higher valuations compress future return potential.
  • International ETFs (e.g., Motilal Oswal NASDAQ 100, NASDAQ Q50) offer a practical, India-domiciled route to global diversification, with five-year annualised returns of 30–35%.
  • True financial patriotism is earning well, paying taxes honestly, and spending in India — not concentrating all your savings in domestic assets and calling it loyalty.

Citations & References

  1. Nikkei 225 historical data: Japan Exchange Group (JPX), Nikkei Inc. — Peak of 38,915 recorded on 29 December 1989; subsequent 82% drawdown and 34-year recovery to 2024.
  2. World's largest companies by market capitalisation (1989 vs. 2024): Fortune Global 500 historical archives; Visual Capitalist, "The Biggest Companies in the World" (2024).
  3. Centre for Economics and Business Research (CEBR): "World Economic League Table 2021" — predicted China to surpass the US as the world's largest economy by 2028.
  4. Evergrande collapse: Reuters; Bloomberg News — China Evergrande Group filed for Chapter 15 bankruptcy protection in the United States in August 2023, following its 2021 default.
  5. China birth rate data: National Bureau of Statistics of China (NBS) — 2024 birth report; 7.92 million births recorded for 2025 projection based on NBS trend data.
  6. Brazil GDP per capita: World Bank Open Data — GDP per capita (current USD): Brazil, 2011–2020 series. USD/BRL exchange rate: Banco Central do Brasil.
  7. India household asset allocation: Reserve Bank of India (RBI) — Household Finance Committee Report; RBI Annual Report, Financial Assets and Liabilities of Indian Households.
  8. India share of global market cap (~4%): World Federation of Exchanges (WFE); NSE India Market Statistics, 2024.
  9. Nifty 50 / S&P 500 correlation: Computed from monthly return data; cited in SEBI research papers on cross-market linkages and in Mirae Asset India research notes (2023–2024).
  10. INR/USD depreciation (₹45 → ₹90): Reserve Bank of India reference rate historical series, 2004–2024.
  11. India P/E ratio vs. peers: NSE Nifty 50 P/E data; MSCI Emerging Markets Index valuations; Bloomberg Terminal, as of Q1 2025.
  12. Motilal Oswal NASDAQ 100 FoF and NASDAQ Q50 ETF performance: Motilal Oswal Asset Management Company (MOAMC) — fund factsheets, five-year returns as of March 2025.
  13. Liberalised Remittance Scheme (LRS): Reserve Bank of India, Master Direction — Liberalised Remittance Scheme (Updated 2024). Annual limit: USD 250,000 per individual.
  14. India's regional GDP inequality: NITI Aayog State Statistics; MoSPI State Domestic Product data, 2023–24.