Here’s the thing nobody wants to admit: American stocks have been hogging all the attention while international markets quietly crushed it this year. We’re talking 28% returns from global stocks versus 16% from the S&P 500. That’s not a rounding error—that’s a wake-up call.
Vanguard’s chief economist for Asia-Pacific, Qian Wang, recently broke down why this matters, and spoiler alert: it’s not just about luck. U.S. stocks have been riding the AI wave like it’s the only game in town. Tech giants are printing money, valuations are sky-high, and everyone’s convinced this is the future. But here’s where it gets interesting.
Wang says U.S. stocks aren’t in a bubble—yet. The companies actually deserve their premium prices because they’re generating real profits and operating in an innovation-friendly environment. Fair enough. But she also notes that valuations eventually act like gravity. They pull returns back to earth. And when that happens, international stocks might be the ones laughing.
Why? Because international companies have what Wang calls “low-hanging fruit.” AI and automation can drive massive productivity gains overseas, letting them catch up to their American cousins. Plus, if AI doesn’t deliver the hype, international markets have less to lose. They’re not as dependent on the AI narrative.
There’s more. Increased defense spending, supportive economic policies, and currency shifts could all favor international stocks. And let’s be honest—putting all your eggs in the U.S. basket when valuations are stretched is risky.
Wang’s bottom line? Don’t go all-in on either side. Diversify, and maybe tilt a bit more toward international for the long haul. Your future self might thank you.
