Peak U.S. Exceptionalism?

U.S. stocks have torched the world for 14 years. Are we nearing peak outperformance? [The Daily Reckoning] December 05, 2024 [WEBSITE]( | [UNSUBSCRIBE]( Peak U.S. Exceptionalism? Baltimore, Maryland [Adam Sharp] ADAM SHARP Dear Reader, President Trump will enter office at a very interesting time for U.S. stock markets. America is absolutely torching the rest of the world. Today American companies make up a whopping 75% of the MSCI World Index. The MSCI World Index contains shares of the largest stocks from Europe, Canada, Singapore, Australia, Japan, New Zealand, Israel, and the United States. [image 1] Source: [Albert Edwards on X]( This index is a very important one, as it forms the basis of large ETFs and other investment vehicles. Today it’s utterly dominated by American companies. Over recent history, American stocks have dramatically outperformed the rest of the world, especially Europe. Here’s a chart to demonstrate. [image 2] U.S. stocks have returned almost 4x more than European ones over the last 14 years! It’s been a historic winning spree. Now the question is… [Democrats “Trump-Proofing” The White House]( Democrats are desperately scrambling to “Trump-Proof” the White House before Inauguration Day. And this rocky “transition period” will undoubtedly have a direct and immediately impact on your retirement account. But that explains why I put together this [brand-new clip…]( Teaching you how to protect yourself – and potentially even prosper – as this new, volatile chapter in American history unfolds. [Click Here To See How To Prepare Yourself]( Can It Last? Take a look at that first chart again. Notice that in the late 1980s, Japan made up over 50% of the MSCI World Index. It was bigger than the U.S.! A tiny country with around 126 million people had a majority of the World Index. And now it’s less than 7%. We can see that during the period of Japanese exceptionalism (it peaked in 1989), the U.S. dropped from about 70% to 30% of the MSCI World Index. Times do change, eventually. I believe we’re nearing another peak of U.S. market exceptionalism. I’m not saying it’s going to be immediate, but make no mistake, stocks can’t go up like this forever. U.S. stocks have reached ridiculous valuation levels. Take a look at a simple stock like Walmart (WMT). The retail giant is currently trading at 38x earnings (a 38 P/E), while growing revenue at 5%. That’s rich. A great company, no doubt. But a very expensive valuation, especially considering the upcoming changes to American tariffs. We’re in serious bubble territory across the board. The S&P 500 has an average price/book of [over 5.2x](. The top 10 stocks in the US trade at about 49x earnings on average. [Buy this Sub-$5 Play on Elon Musk’s Final Masterpiece]( After revolutionizing space exploration and the auto industry… Elon Musk is now planning to revolutionize MONEY with this new venture. [See the details because once Elon flips the switch…]( Which could happen in the next 24 hours… It could send [this sub-$5 play skyrocketing in the coming months.]( [Click Here To Learn More]( Big Changes Coming In about 45 days, President Trump will take office. Markets are (validly) excited about this prospect. But we should tamper our expectations given the pre-existing bubbly conditions. Voters have charged him with bringing about the most ambitious reforms the country has seen in decades if not a century. Trade policy will be overhauled. Immigration policy will change dramatically. Immigration and trade alone have the potential to reshape the American workforce and economy. Add in better energy policy (drill baby, drill), lower taxes, and RFK Jr.’s Make America Healthy Again (MAHA) movement, and we have a recipe for fireworks. Trump will also enter office at a time in which U.S. tech companies are beginning to face serious foreign (mostly Chinese) competition. Take a look at Apple iPhone sales in China, which are finally facing major challengers such as Huawei And Xiaomi. In social media, companies such as TikTok parent Bytedance are cutting in on a previously US-dominated market. And in electric vehicles, Tesla is losing out to rising giants like BYD. Oh yeah, and as I’ve already mentioned, we are also in the middle of a massive stock bubble. It’s going to be an incredibly disruptive next few years. Good, great, bad, and ugly. We’re going to see it all. Investors face a daunting task preparing for such conditions. This period promises to be wild and unlike anything we’ve seen for decades. Market crashes, real reform, political clashes, buying opportunities, the deep state strikes back. All of that. As the chaos proceeds, I will be looking to our own Jim Rickards for direction. His [I-3 system]( available exclusively to subscribers of Insider Intel, is designed for exactly these conditions. I-3 is a financial intelligence engine employing AI, machine learning, and statistical pattern recognition. In today’s volatile conditions, the system is working beautifully. It’s functioning exactly as designed. [Take a look]( at Jim’s updated presentation to see what it’s all about. The world is changing, and investors’ portfolios must change along with it. Good investing, Adam Sharp for The Daily Reckoning [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:feedback@dailyreckoning.com) [Brian Maher] [Adam Sharp]( has been a financial writer and Fed watcher since 2008. He is a contrarian who specializes in non-traditional assets. Adam founded and sold Early Investing, a newsletter about alternative investments. Sharp lives in Maryland with his wife, two children, and two dogs.. [Paradigm]( ☰ ⊗ [UPDATE PREFERENCES]( [Contact Us]( © 2024 Paradigm Press, LLC. 1001 Cathedral Street, Baltimore, MD 21201. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. To end your The Daily Reckoning e-mail subscription and associated external offers sent from The Daily Reckoning, feel free to [click here,]( or manage your newsletter preferences [here.]( Please note: the mailbox associated with this email address is not monitored, so do not reply to this message. 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