Investors have had a roller‑coaster year, but U.S. stocks are still the biggest attraction worldwide.
Why U.S. stocks stay on top
Since the 2008 crisis, U.S. equities have grown about 7% more each year than markets elsewhere. Around two‑thirds of the world’s listed companies are based in the United States.
- Technology leadership – American firms dominate AI, cloud computing, chips and global platform businesses.
- Predictable rules – The U.S. has clear, enforceable regulations and a strong legal system, which makes its markets feel safe.
Signals that the foundation could shake
Recent events showed cracks. In April, new tariffs caused a “triple red” moment – stocks, bonds and the dollar all fell together, something not seen since the 1970s.
Such stress tests often precede bigger shifts, so investors watch for early signs.
Rising debt and fiscal pressure
U.S. government debt is huge. Interest payments on the debt now exceed the entire defense budget. This is the first time the so‑called “Ferguson’s Law” has been broken, a rule that says a great power should spend more on defense than on debt service.
Other rich countries face similar or worse problems: Japan, France and the U.K. all have high debt and shaky fiscal paths.
Tech still drives the returns
Even with these worries, investors keep sending money to the U.S. because tech companies deliver strong earnings growth.
- Tech makes up about 35% of the MSCI USA Index, versus only 8% in the Europe‑Asia‑Pacific index.
- Expected long‑term earnings growth for U.S. stocks is around 15% a year, compared with 11% for other developed markets.
- Only 150 U.S. stocks (about 3% of all listed firms) have generated 75% of the market’s $50 trillion value increase since 2009.
What investors are doing
Many large investors say they would like to cut U.S. exposure because of political and fiscal worries, but they see few better alternatives. The common approach is to stay invested in U.S. equities while hedging the dollar risk.
Bottom line for retail investors
U.S. markets remain attractive thanks to technology and higher returns, but the political and debt picture is getting murkier. Keep an eye on policy developments and consider protecting yourself against currency moves.
Remember, this is just one perspective, not a prediction. Do your own research before making any investment decisions.