Opinion: US stocks will continue to outperform alternatives

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Last week, the US administered its 150 millionth dose of the COVID-19 vaccine. As of Friday, more than 56 million Americans had been fully vaccinated, or about 17% of the population, and four million doses were administered on Friday alone. The daily COVID death count is the lowest since last March. At the current rate, most American adults will be fully vaccinated in the summer.

But Europe, which, like the US, mishandled the early days of COVID, has handled the launch of the vaccine even worse. Less than half of Europe’s citizens are being vaccinated as Americans, and a new wave of cases is reaching their shores. In France, where the virus “spreads rapidly and spreads everywhere,” President Emmanuel Macron declared a four-week lockdown last week. Meanwhile, despite many laments over the lack of bipartisanship in Washington DC, a polarized Congress approved, and two opposing party presidents signed, $ 5.3 billion in COVID relief and economic stimulus over the past year. The US aid effort, at 27% of GDP, is greater than what all of Europe has done. This is also reflected in the economic projections. The Organization for Economic Cooperation, Development and Development (OECD) doubled its projections for US GDP growth this year, to 6.7%, which would be the fastest GDP growth since 1984. Goldman Sachs expects that grow 8% and unemployment reaches 4% by the end of the year. The March jobs report, released last Friday, showed that 916,000 new jobs were created last month, and the unemployment rate fell to 6%, although 8 million of the 22 million jobs lost from COVID have yet to return. Read: Why the unemployment rate drop to 6% doesn’t mean much What this means is that the US market is poised to outperform other major stock markets in the 2020s just as it did in the 2010s, while the European and developed market and emerging markets will continue to lag behind. You don’t even need to decide whether to buy growth or value, a fund that tracks the S&P 500 SPX Index, + 1.44%, or the Russell 2000 RUT, + 0.49%. I think buying the whole market is the best way to go because you don’t have to outsmart the pros and you can benefit from any turnover within the market itself. I am not waving the flag here or proclaiming American exceptionalism; We have screwed up a lot with COVID relief. And even as the new variants spread like crazy in states like Michigan, too many big-headed kids are partying like it‘s 1929. That and reckless total reopens like Governor Abbott’s in Texas, when all we need is for people to chill. for other. a month or so, you can reverse some of the progress we’ve made. But vaccines have been spectacularly successful, and their massive deployment has given the United States a huge competitive advantage. Meanwhile, the US market has no competitors in its range or depth. Looking for the most innovative technology and biotech companies? The United States has many of them. Consumer product giants? Idem. Airlines, cruises and hotels? Control. Some of the best capitalized banks in the world? Yes. Hundreds of small businesses quickly becoming big? They too. You can get all the diversification you need here without owning, say, European banks or Japanese automakers or oil companies operating in London, whose diversification benefit is theoretical at best. The numbers tell the story. From the bottom of the bear market in March 2009 to the peak of the bull market in February 2020, the Vanguard Total Stock Market Index ETF VTI, + 1.17% accumulated a return of 535%, while the developed market iShares MSCI EAFE ETF EFA , + 1.46% gained 203% and the iShares MSCI Emerging Markets Index ETF EEM, + 0.39% was up 181%. From the depths of the COVID bear market last March to the close of last Thursday, that developed market ETF gained 69% and the emerging market ETF 79%, pretty attractive gains. But that US ETF racked up a 91% profit. In fact, US stocks have demolished stocks in developed and emerging markets for much longer periods. According to the Credit Suisse Global Investment Returns Yearbook 2021, produced by researchers Elroy Dimson, Paul Marsh and Mike Staunton, stocks in developed international markets have posted real annual returns after inflation of 5.4% (in US dollars) since 1900 through 2020. Emerging markets had real returns of only 3.9% during those 120 years, while the US easily outperformed both, with a real annual return of 6.6%. And the US markets have been extremely consistent, with similar returns for the past 20, 50, and 120 years. Are we about to see a big turnaround? It is not probable. America’s vaccine giant and rapid economic recovery should give us a huge head start for years to come. Rates are rising here too, as is the dollar, which kills the emerging markets case. And exactly in what scenario would US stocks fall as developed or emerging markets rise? Amid today’s speculative glut, I wouldn’t be throwing money into stocks now. In fact, there are a couple of foreign markets worth investing in, and I’ll cover them in a future column. But for the money I’ve invested in stocks, I’m sticking with what was my best decision of the last decade. Because in the 2020s, just like the 2010s, American stocks will be the only game in town. Howard Gold is a MarketWatch columnist. Follow him on Twitter @ howardrgold1.