Remember when investing in America was basically a no-brainer? Like, of course you’d put your money in US stocks – they were the cool kids at the global market lunch table. Well, plot twist: that might be changing, and the data is starting to tell a different story.
For decades, “American exceptionalism” wasn’t just a political talking point – it was an investment strategy. US markets consistently outperformed international ones, making portfolio managers look like geniuses for the obvious choice. But lately? Not so much.
The Numbers That Should Make You Go “Hmm”
Here’s where things get interesting (and by interesting, I mean potentially concerning for your 401k):
Stat #1: America’s Having Its Worst Year in Decades
The S&P 500 is lagging behind the MSCI World Index by the most in at least 30 years. That’s like being the slowest runner in a race you’ve been winning since the Clinton administration. Hedge fund manager Rob Citrone put it bluntly: out of 20 major markets, the US ranked dead last over the past year. Ouch.
Even more brutal? US gains fell about 30% short of emerging markets. That’s not a rounding error – that’s your portfolio saying “maybe I should’ve diversified more.”
Stat #2: Global Investors Are Basically Breaking Up With Us
Bank of America’s February survey revealed that global fund managers are dumping US stocks faster than you can say “sell America.” They reduced their US positions by 20 percentage points in a single month – the biggest shift since 2021. Meanwhile, they’re cozying up to European and emerging markets like they just discovered a new favorite restaurant.
Why Everyone’s Getting Cold Feet
It’s not just market performance driving this shift. Investors are eyeing some pretty legitimate concerns: inflation that won’t quit, debt levels that would make a college student blush, and geopolitical tensions that seem to multiply faster than Marvel movie sequels.
Bond king Jeff Gundlach went full contrarian, saying he’s steering clear of US investments entirely. Ron Temple from Lazard called 2025 “the last year of American exceptionalism.” Even Citrone is shorting US assets while betting on places like Mexico. (Mexico! Who had that on their 2026 bingo card?)
What This Actually Means
Look, this doesn’t mean you should panic-sell everything and move to emerging markets tomorrow. But it does suggest that the “just buy American” strategy might need some updating. The world is getting more competitive, and other markets are starting to look pretty attractive.
The takeaway? Maybe it’s time to think beyond our borders. Diversification isn’t just a fancy finance word – it’s looking more like common sense. Because if there’s one thing worse than missing out on gains, it’s realizing you put all your eggs in one basket just as that basket started looking a little wobbly.
America’s still got game, but the competition is heating up. And in investing, as in life, a little humility never hurt anyone’s returns.