Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
What Happens If the US Stock Market Stops Outperforming?
Ruby Layram
3rd Jun 2026
For the best part of two decades, investing has felt remarkably simple.
- Open an investment account.
- Buy an S&P 500 ETF.
- Wait.
For many investors, that strategy has worked brilliantly.
The United States has dominated global markets. The rise of Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla has helped drive exceptional returns, turning the S&P 500 into the default choice for millions of investors around the world.
But recently, I’ve found myself asking a slightly uncomfortable question:
What happens if the US stock market stops outperforming?
Not crashes. Not collapses.
Just… stops being the world’s best-performing market.
Because if that happens, many investors may discover that their portfolios aren’t as diversified as they thought!
THE BEST EMERGING MARKETS ETFS
The Great Concentration Nobody Talks About
Many beginner investors believe they own a diversified portfolio because they invest in an S&P 500 fund.
And to an extent, they do.
The index contains 500 companies across multiple industries.
However, there’s another way to look at it.
Today, a huge percentage of the S&P 500’s value is concentrated in a handful of giant technology companies.
In fact, the so-called “Magnificent Seven” have become so dominant that they often drive the direction of the entire index.
When these companies perform well, the market performs well.
When they struggle, investors suddenly realise just how dependent their portfolios are on a relatively small group of businesses.
This isn’t necessarily a problem.
But it is a risk that many investors underestimate.
History Suggests That The Winner Changes…
One of the most interesting things to understand is that the winning investment never stays ‘the winner’ forever.
Go back far enough, and you’ll find periods where:
- Japan dominated global markets
- Emerging markets led returns
- Europe outperformed the United States
- Commodities beat equities
Every investing era tends to create a narrative explaining why the current winner will remain the winner indefinitely.
Then eventually, leadership changes.
Not because the previous winner becomes a bad investment.
But because expectations become extremely high, valuations become stretched, and opportunities emerge elsewhere.
The US market may continue outperforming for another decade.
But history suggests investors should at least consider the possibility that it won’t.#
The Valuation Question
One reason some investors are looking beyond the United States in 2026 is valuation. Many international markets remain significantly cheaper than US stocks.
The UK market, for example, trades at lower earnings multiples than the S&P 500.
Many European companies trade at discounts to their American counterparts and several emerging markets are even cheaper still.
Of course, cheap doesn’t automatically mean good value.
Markets can stay cheap for years. But when an asset class becomes significantly cheaper than another, long-term investors usually pay attention.
After all, future returns often depend on the price you pay today.
The UK Market Is Quietly Interesting
As a UK investor, I think there’s an interesting irony in today’s market.
Many people are eager to invest thousands of miles away in companies they barely understand.
Meanwhile, they completely ignore businesses operating in their own backyard.
The UK market may not have the glamour of Silicon Valley.
But it does have:
- Global pharmaceutical giants
- Major energy companies
- Leading financial institutions
- Infrastructure businesses
- Consumer staples firms
Many also pay dividends that are considerably higher than their US equivalents.
The FTSE 100 isn’t as exciting as the latest AI stock. But investing success is often more about outcomes than excitement.
Don’t Forget Emerging Markets!
Emerging markets are another area worth thinking about.
Countries such as India, Indonesia, Vietnam and parts of Latin America continue to experience economic growth that many developed economies would envy.
They also benefit from:
- Growing populations
- Rising middle classes
- Expanding consumer spending
- Increasing technological adoption
Investing in emerging markets comes with additional risks.
Political uncertainty, currency fluctuations and market volatility can all affect returns.
But these markets also offer exposure to growth that investors won’t necessarily find in mature economies.
The Main Thing to Takeaway
Here’s the perspective shift I think matters most.
This isn’t really a story about America.
It’s a story about concentration.
Many investors believe they’re diversified because they own hundreds of companies through an index fund.
Yet increasingly, they’re making a very large bet on:
- One country
- One market
- One style of investing
- One group of technology companies
Again, that may continue working wonderfully.
But true diversification means accepting that we don’t know what the future looks like.
The purpose of diversification isn’t to maximise returns when you’re right. It’s to protect yourself when you’re wrong.
What I Would Do Instead
If I were building a portfolio today, I wouldn’t abandon the US market. Far from it actually!
The United States remains home to many of the world’s most innovative companies.
But I would think carefully about balance.
Rather than putting everything into a single market, I’d consider a portfolio that includes:
- US equities
- UK equities
- International developed markets
- Emerging markets
- Alternative assets such as gold
That way, I’m not relying on a single country to drive my future wealth.
Final Thoughts
The US stock market could continue outperforming for years.
Nobody knows.
But I think asking this question is valuable because it challenges an assumption many investors have come to accept as fact.
The assumption that the S&P 500 will always be the best place to invest.
Maybe it will.
Maybe it won’t.
The investors who tend to do best over the long term aren’t the ones who predict the future perfectly.
They’re the ones who build portfolios capable of succeeding across multiple possible futures.
And in a world where uncertainty is the only certainty, that feels like a useful perspective to keep in mind.
This article is for informational purposes only and does not constitute financial advice. Investments can go down as well as up, and you may get back less than you invest.
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