Exposure to the US: From “the only game in town” to asset freeze fears – in just two years
July 27, 2026
Exposure to the US: From “the only game in town” to asset freeze fears – in just two years
Six visualisations for investors rethinking US concentration
Since I launched Banker on Wheels in March 2020, the single biggest bias I’ve had to work against with investors was recency. From the COVID lows, the S&P 500 is up roughly 160% while a globally diversified Golden Retriever Equity portfolio is up 100%. By 2024, this culminated in investors asking: “the US is the only game in town – why bother with anything else?”.
I somewhat understood it. Over 20 years I visited most U.S. states, from New York where I spent time at NYU to my favourite, Alaska. I joined a prestigious Wall Street graduate programme in the late 2000s. I’ve long been impressed by Silicon Valley.
But cycling the world a few years ago confronted me with realities I’d underestimated. Sure, I wouldn’t bet against the U.S., but I wouldn’t underestimate the issues it’s facing either.
In 2026, investors are moving to the other extreme. Some go as far as asking me whether their U.S. assets, ETF provider or broker accounts are safe from being frozen or restricted. That’s what happens when you follow narratives rather than evidence.
Today, let’s see why a middle ground is probably best. The S&P 500 remains the engine, but is better when diversified with non-US equities.
KEY TAKEAWAYS
- The entire 80% US outperformance since 1970 was generated just in the last decade. US may have another one. But, when countries stayed on top longer – like Japan – the hangover is often brutal.
- Investing globally often means diluting expensive companies like Nvidia, Palantir, Tesla and SpaceX. By historical standards, America is expensive. In 2026, the CAPE for the US Market stands at 36.1x. That’s over 10 points higher than in 2016 or 2006.
- Over the short-term returns are mostly noise, but diversification is especially valuable in the medium term and remains useful even for long-term investors by reducing uncertainty and protecting against a U.S.-centered crisis.
- The rule of law, solid institutions, and the US dollar made America a unique place to invest. But these foundations may be questioned. AI may accelerate inequality, which feeds populism – and may ultimately test institutions.
- These are some reasons why I don’t follow Warren Buffett or Jack Bogle advice to concentrate all investments in the U.S. It may work for Americans given mild pro-home bias arguments, tax considerations and asset freeze risk of foreign assets. But, even some of those arguments cut both ways for non-US investors.
the myth of U.S. STOCK returns
Did the U.S. Market always outperform?
No, In fact all of its outperformance came in the past decade.
the U.S. vs Rest Of the World since 1969
S&P 500 vs. Rest of the World
Sources: Bankeronwheels.com compilation based on Bloomberg, MSCI, Bridgewater Associates data. U.S. equities: S&P 500 Total Return Index. International equities: MSCI EAFE (1970-87), Hypothetical globally balanced portfolio ex-US rebalanced monthly in 80% MSCI EAFE and 20% MSCI EM (1988-2001) and MSCI ACWI ex-US Index (2001-June 2026). Past performance is no guarantee of future results.
Let’s start with one of the biggest misconceptions. The U.S. Outperformance. Post Bretton Woods and since the beginning of the modern era in 1970, the U.S. Market has outperformed the rest of the world by a whopping margin of 1.15% per year. The S&P 500 returned 10.5% per year vs. 9.3% for non-US Markets. Even more impressive is the fact that it outperformed with a lower volatility of 15.3% vs 16.7% leading to higher risk-adjusted returns.
But, this isn’t patient long-term compounding. Until 2014, annual performance was 9.6% for both markets. As you see in the ▶️ animation, the entire US premium was generated in the last decade. History doesn’t crawl. It leaps. The US just had a great decade. It may get another one. But, when countries stayed on top longer – like Japan – the hangover was often brutal.
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