The numbers, they arrive. Right now, stocks beyond our borders are…cheaper. Apollo Global Management says U.S. stocks trade at a price-to-earnings ratio 40% higher than everything else. Forty percent. It’s a big number, really. So it goes.
Until 2015, it wasn’t like this. Everything was roughly equal. Then the American tech stocks, the so-called Magnificent Seven, started to climb. They climbed and climbed, pulling the whole market along for the ride. Now, U.S. stocks average a forward P/E of 28. The rest of the world? Closer to 19. It’s like one kid hoarding all the candy.
And guess what? The other kids are starting to win. In recent months, international stocks have been doing surprisingly well. The Vanguard FTSE Developed Markets ETF (VEA +0.23%) returned 35.2%. Emerging markets, tracked by the Vanguard Emerging Markets Stock Index Fund ETF (VWO +0.24%), did even better, at 25.6%.
The S&P 500, our little proxy for the whole U.S. market—representing about 80% of it, you know—only managed 17.7%. It’s not a competition, of course. Except it is. Everything is a competition, if you look closely enough.
The Trend Continues
2026 is shaping up to be similar. VEA is up 8.7% so far this year. VWO, 7%. The S&P 500? Pretty much flat. It’s like watching a slow-motion parade, and someone forgot to tell the American floats to move.
I suspect this will continue. Europe, for example, looks promising. Goldman Sachs says strong economic growth and increased spending are helping. It’s all very logical, really. Except logic rarely has much to do with anything.
Emerging markets are also looking good. Earnings are rising in places like China and South Korea. India and Brazil are showing promise. Goldman Sachs predicts a 16% return for emerging market stocks this year. It’s a comforting thought, isn’t it? That somewhere, someone is doing well.
Now, U.S. stocks could bounce back. The Federal Reserve might ease interest rates. Inflation is falling, after all. But even if they do, they’ll still be expensive. So, a smart investor might consider looking beyond our borders. Both developed and emerging markets. It’s just a thought. A small, insignificant thought in the grand scheme of things.
We build these little boxes of numbers, these charts and graphs, and pretend they mean something. We chase returns, we worry about risk. And then we die. So it goes.
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2026-02-20 18:22