The historic period of American exceptionalism in the stock market is over.
That ended last year and the rest of the world had been playing catch up throughout 2025.
While the United States stock market is on pace for another epic year, it’s actually one of the worst-performing countries in the world.
That’s not so much a knock on America as it is an impressive run from foreign equities.
Foreign Investors Didn’t Get the Memo
We have the data. We see the changes in dynamics between U.S. and foreign markets.
But the investors themselves still haven’t pivoted.
Here’s a great chart from our friends over at Ned Davis Research. Foreign investors now have a record allocation to U.S. equities:
This chart shows the value of foreign-held U.S stocks as a percentage of foreign held U.S. financial assets.
It’s never been higher – now above 30%. Notice how this was just 12% 15 years ago.
Foreign investors had little to no confidence in U.S. stocks at the moment when U.S. stocks went on the most important run of global outperformance in stock market history.
Now that this run is over (in our opinion), foreign investors have never had this much faith in U.S. stocks.
Perfect.
I’m happy to take the other side of that.
China Bull
When it became obvious last fall that Donald Trump was going to win by a landslide, the question was simple: What’s the trade?
Based on consensus at the time, everyone assumed Trump 2.0 would be bad for China.
Even the Chinese didn’t want Chinese stocks.
They still don’t.
No one wants Chinese stocks.
I do.
They’re working really well. And my bet is they’ll keep working on an absolute basis and also outperform the U.S.
Just when the rest of the world finally realized how dominant the U.S. stock market has been, we’re flipping that around and letting them have it.
I’ll happily take the foreign equities, thank you.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs