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The Fallacy of Betting on the Best Stock Market

Performance chasing is not a sound investment strategy

Nicolas Rabener
10 min read
16 Dec 2024

SUMMARY

  • Many U.S.-based investors see no point in investing in international equities
  • The U.S. has outperformed over the recent decade, but underperformed in prior periods
  • There is little performance consistency with winners becoming losers, and vice versa

INTRODUCTION

Many U.S.-based investors find little value in international diversification. The appeal of investing solely in indices like the S&P 500 or the Russell 3000 is straightforward: the U.S. stock market provides access to the world’s largest economy, these indices provide exposure to international markets via the numerous American companies that generate revenue overseas, and the majority of leading tech giants are headquartered in the United States. Finally, if investors had allocated to Europe, Japan, or Emerging Markets over the last decade, they would have generated a significantly lower return.

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