(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Jamie McGeever

ORLANDO, Florida, Oct 18 (Reuters) - FOMO and TINA are

two English-language acronyms that have become common parlance

in financial markets. Together, they help explain the relentless

rise of U.S. equities - a trend that now should probably be

raising red flags.

Investors' "fear of missing out" (FOMO) on a two-year bull

run has helped the S&P 500 hit 47 record highs this year. And

this momentum shows few signs of waning because if investors

want equity exposure, "there is no alternative" (TINA) to the

United States, at least not if the relative strength of U.S.

economic data and corporate profits is your guide.

In many ways, the latter trend is feeding the former, and

the symbiotic relationship between the two only seems to be

getting stronger.

IT'S ALL RELATIVE

The S&P 500 and Nasdaq are both up more than 20% this year,

compared to 16% for Japan's Nikkei, 14% for Chinese blue chips

and Asian stocks ex-Japan, 10% for euro zone stocks, and 8% for

Britain's FTSE 100.

Wall Street's outperformance has, of course, been flattered

by a handful of Big Tech names: the FAANG index is up a whopping

34% this year. But the equal-weighted S&P 500's year-to-date

gains of 15% are still better than investors are getting almost

anywhere else.

While these lopsided returns might suggest U.S. equities are

"overbought", the underlying fundamentals suggest otherwise. The

Atlanta Fed's GDPNow model is currently projecting third quarter

annualized growth of 3.4%, the highest since the model's initial

estimate in July.

Corporate America also boasts a very positive outlook. While

earnings growth is only expected to be around 5% in the third

quarter, this figure is expected to bounce back well into double

figures in the coming quarters and settle around 15% for 2025

overall, according to LSEG I/B/E/S estimates.

Little wonder Goldman Sachs' equity strategists reckon the

S&P 500 is on course to reach 6000 points by the end of the

year. It could even reach 6270 if markets see a replication of

historical October-December election year patterns, they add.

Meanwhile, Germany - the largest economy in Europe and

fourth largest in the world - is flirting with its second

consecutive annual contraction, something the advanced

manufacturing hub hasn't seen in over 20 years.

China - the world's second-largest economy - is in the midst

of a major property crisis and flirting with deflation. This has

prompted an unprecedented policy response from Beijing that many

experts still don't think will be enough to get the economy

firing on all cylinders.

Then there's Japan, which appears to be so concerned about

stalling its economy and spooking investors that it's hesitant

to raise interest rates by more than a few basis points.

Foreign investors have clearly taken notice: their share of

the entire U.S. equity market is now a record 18%, Goldman Sachs

figures show.

BLOATED AND EXPENSIVE

Is the U.S. stock market morphing into a mirror image of the

U.S. bond market? Parallels are emerging: they are both the most

liquid markets in their respective asset classes; they offer

investors the 'safest' securities; and they dwarf all rivals by

a considerable distance.

Indeed, Wall Street has been a veritable money machine for

investors this year, especially the mega caps sitting on huge

cash piles and boasting credit ratings comparable to those of

the federal government.

It's therefore unsurprising that the U.S. share of the

global equity market cap has climbed to a record high 72%. Who

wouldn't want a slice of that pie?

This level of concentration cannot last forever, so

investors should be wary of buying U.S. equities at current

levels, right?

Maybe, but maybe not.

True, U.S. stocks are the most expensive in the developed

world by some distance, based on long-term valuations measured

by Robert Shiller's cyclically adjusted price-to-earnings

(CAPE), and are more expensive than they have been relative to

global stocks for more than two decades.

But, worryingly for U.S. bears, investors are unlikely to

dramatically reallocate any time soon. "Institutional investors

are getting forced into the market right now given 'FOMU': fear

of materially underperforming benchmark equity indices,"

Goldman's Scott Rubner wrote this week, providing investors with

yet another acronym.

And bull markets that celebrate their second birthday have

historically tended to last multiple years thereafter, Ryan

Detrick at Carson Group has found.

So U.S. bears might be correct that equity markets will

eventually mean revert, but these investors risk underperforming

and losing clients long before that happens.

(The opinions expressed here are those of the author, a

columnist for Reuters.)

(By Jamie McGeever

Editing by Christina Fincher)