American Portfolio Leadership

If you’ve looked at your portfolio performance statements, line-by-line, you might have noticed that your U.S.-based stock ETFs and mutual funds are doing really well, but your overall portfolio is not showing quite the same generous returns.  Are you the only one?

The answer is no; we are coming off of a remarkable decade (actually a decade plus one) where the American stock market has run away from the rest of the world in terms of total return.  Look at the chart.  The green line at the top illustrates the 135% overall return on the U.S. S&P 500 index (in U.S. dollars) these last 11 years, compared with the returns on comparable broad stock market indices in Japan (+17%), Germany (+2%), France (+2%), the United Kingdom (-1%), China (-10%), Spain (-18%), Brazil (-28%), Italy (-47%) and Russia (-48%).

Will this American portfolio preeminence last forever?  Of course not.  Eventually, at least some of these international markets will outperform the U.S.  Enjoy this example of American superiority while it lasts, and stay diversified against the day when this chart turns upside down.

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