American Unexceptionalism: Why U.S. Equities May No Longer Outshine Global Peers

The latest GMO Quarterly Letter by Ben Inker and John Pease challenges the assumption of U.S. equity dominance, dissecting the drivers of the S&P 500’s long outperformance.

• Roughly 80% of U.S. outperformance came from dollar strength and valuation expansion—both unlikely to repeat.

• The Magnificent Six drove nearly all fundamental growth; the broader S&P 500 delivered historically weak results despite premium valuations.

• International equities now offer more attractive valuations, comparable growth, undervalued currencies, and fewer supply-side shocks.

Could global diversification finally deliver the edge that U.S. equities no longer provide?