According to a comment by Peter Oppenheimer, this outperformance can be partially attributed to the country’s technological supremacy as well as the dominance of a few major corporations in the market.
“Compared to other major markets, the US equity market now carries a higher risk of concentration, and the stock market accounts for a larger portion of the US economy than it does elsewhere.” Rather, he advised investors to diversify.
With two months remaining in 2023, S&P 500 returns show a roughly 9 percentage-point advantage over international companies. The index is headed for its eighth consecutive year of positive returns over the last ten years.
The nation’s stocks were boosted by low interest rates, robust economic growth, and US supremacy in the IT sector. However, worries about the effects of the Federal Reserve maintaining higher rates for longer are increasingly growing.
The expert said, “US households also own much more equity than those in other markets.” “Increased competition from other asset classes, such as cash and fixed income, may limit further equity ownership.”
According to Oppenheimer, US stock values are much higher than in the past and in comparison to other markets. He stated, “Investors should increasingly focus on investing in exceptional companies, regardless of location, and less on regional exceptionalism.”
Several market players expressed their opinions in the same Goldman publication, and strategists David Kostin and Lily Calcagnini stated that they believe US equities would do better in the long run. US equities can outperform their international counterparts if corporate managements keep increasing return on equity, even if high valuations may prevent robust returns.