U.S. Stock Market Vs. World: Can Global Equity Markets Beat U.S.

The forecast for U.S. equity markets has not looked good in the past years. Many analysts have speculated that the United States will lose to the growing markets of other countries, such as China, India, Latin America, and many others. If you want to invest in U.S. stocks, chances are you’re now trying to find out if this is still a good option, and we cannot blame you.

Now that China is slowly reopening following strict coronavirus restrictions and that crude prices went down by 43% in the U.S., the concern is that investing in the U.S. stock market would lead to losses and that the global stock market would have a greater success rate. But is that the case? Grab a cup of coffee, and let’s find out if global equity markets can beat the U.S. in the coming years.

The U.S. Stock Market Situation

Did you know U.S. shares outperformed global shares in the last 10 years? The stock market in the U.S. looked very good, and U.S. equities could outperform without considering fund manager talent and with much lower volatility.

Since U.S. shares have been going so strong, you would believe this trend will continue in the following years. Well, it depends. Even though the U.S. is still a powerful force, international markets are growing stronger yearly, making people unsure about their investments.

Since the Great Financial Crisis until the end of 2023, U.S. stocks had 16% annualized returns. Meanwhile, developed countries outside the U.S. only have 10% of annualized returns, while China has 6%. Moreover, in 2023, there were 26% returns by the S&P 500.

Is Investing in the U.S. Stock Market Still Worth It?

U.S. stocks are currently costly. Therefore, you may expect to have a better time investing in global equities instead. But is this a wise decision? Despite their costs, U.S. stocks may still be what you’re looking for in terms of returns.

Pundits are still wrong about the U.S. performance plummeting. Sure, the economy is facing some challenges now, and things will change, but the United States is well-equipped to face these risks.

Besides, the U.S. has more stocks. There are around 1,500 U.S. stocks, whereas the German, Dutch, French, Australian, Canadian, and British indexes have less than 300. They are also more concentrated on their top ones, according to Morningstar. Japan has less volatile holdings than the U.S., but the market still had lower returns than the U.S., only getting 4.9% in annualized gains.

Will the Global Market Beat the U.S. One?

Although the U.S. market will stay strong for a long time, it’s also essential to consider that international equity markets are improving. In previous years, you may have noted that it was hard to sell international stocks due to the constant outperformance of U.S. stocks between 2009 and 2021. However, until August 2023, global stocks were able to outperform the U.S. in terms of total returns.

Historical data also shows that in more than 40% of every 10-year rolling period, the international market outperformed U.S. stocks in the last 50 years. Therefore, it may be worth diversifying your portfolio.

Conclusion

If you are looking for foreign forex brokers accepting U.S. clients, you could also try to invest in global equity markets. It seems like things are going to change, with the latter option possibly outperforming the U.S. in the future.