Why have US stocks beaten international stocks since 2010?
US stocks have outperformed their non-US counterparts by a wide margin since the global financial crisis of 2007-2009. From early 2010 to December 2022, Morningstar’s U.S. market index rose 12 percent on an annualized basis.
Compare that to the Morningstar Global ex-U.S. Index, which has only returned 4.4%.
What has driven the overperformance?
1) Currency movements: The US dollar appreciated a cumulative 33% against a broad basket of foreign currencies (reducing the return on non-US assets denominated in USD).
2) Stock-specific factors: Some of the largest US companies have had superior returns from 2010-2022:
Microsoft: +893 percent
Amazon: +669 percent
Netflix: +2768 percent
Apple: +705 percent
3) Better fundamentals: US corporate revenues have grown annually by 6 percent, almost triple the pace of emerging markets.
And no, the difference is not only due to Big Tech.
While US indices lean more towards technology, healthcare and financial services – stocks in ALL (!) sectors have outperformed their foreign counterparts.
That said, US stocks are richly valued today – and much more so at their peak. And 40% of S&P 500 companies’ revenues come from abroad.
So looking ahead – will the rebound lead to international stocks reclaiming their time in the sun?
Time will tell.
Viking’s databases include US stocks, of course. You can either
contact us directly
if you are missing this package, or you can add it yourself. Nasdaq or all the stocks listed on the
New York Stock Exchange
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