Wall Street’s Hunt for Cheaper Stocks Goes Global
High valuations and a weakening dollar are boosting bets that America’s lead over other global markets will shrink
- Investors are increasingly moving funds into international markets, anticipating a narrowing of the U.S. lead in global equities.
- The MSCI all-country world ex-U.S. index surged 29% last year, outperforming the S&P 500’s 16% gain.
- A weakening U.S. dollar, down approximately 10% from its 2022 highs, has boosted returns on foreign equities.
Last spring, it was “Sell America.” Now Wall Street’s hot trade is buy everywhere else.
After years making outsize bets on the largest U.S. companies, investors are moving more money into international markets, wagering that America’s wide lead on the rest of the world will shrink. For years, money managers say, the U.S. stock market was viewed as the only game in town. Now that perception is starting to shift.
Their optimism has been boosted by a number of developments abroad, from fiscal stimulus in Japan to a boom in European military spending. Some traders are simply hunting for better deals than the richly priced shares offered at home. Others are hoping to diversify out of major domestic indexes dominated by just a handful of names in the tech industry.
“Right now, we’re in a global bull market,” said Keith Lerner, chief investment officer at Truist Advisory Services. “It’s no longer just a U.S. story.”
Several global indexes have pulled ahead of major U.S. benchmarks so far in 2026, including the Stoxx Europe 600, Korea’s Kospi and the MSCI Emerging Markets Index. On Monday, Japan’s Nikkei 225 notched a fresh record after Prime Minister Sanae Takaichi’s decisive victory in a snap parliamentary election.
And last year, the MSCI all-country world ex-U.S. index surged 29% in dollar terms, logging its best performance in more than a decade and blowing past the S&P 500’s 16% gain.
“It feels like we’ve gone through an inflection point,” said Alex Guiliano, the chief investment officer at Resonate Wealth Partners in Ridgewood, N.J. Guiliano has allocated more funds toward equities in Europe and Japan this year, he said, attracted in part by lower valuations. “There seems to be many ways to win internationally.”
The move abroad is accelerating. Investors poured a net $51.6 billion into international equity exchange-traded funds in January, according to Morningstar Direct data. Monthly inflows have jumped since the end of 2024.
Investors have intermittently sung the praises of global diversification, though stocks elsewhere languished for years while American equities reliably pulled ahead. Despite a tech slump that racked markets in recent sessions, domestic stocks still hit fresh records this past week, with the Dow Jones Industrial Average clearing the 50,000-point threshold for the first time.
Michael Rosen, chief investment officer at Angeles Investments, said he still believes in the pre-eminence of American firms. For most of the past decade, his portfolio was concentrated in the biggest U.S. tech names. But in the past year, Rosen said, he has rotated funds into a mix of small-cap and value stocks across the globe, with a focus on Europe and China.
“For us, that’s a very big move,” Rosen said.
It is a switch he started to consider last April, he said, as the value of the U.S. dollar sank during the tariff turmoil that rattled markets.
“It was a signal that we were in a very different type of environment,” he said, noting that tariffs typically boost a country’s currency. “That, to me, demonstrated something like less confidence in the U.S. economy and U.S. markets.”
A weakening greenback has played a significant role in the heightened allure of investing abroad. The dollar is down roughly 10% from its highs in 2022, juicing returns on foreign equities by boosting the value of those companies’ earnings relative to American companies.
That trend has revved up since last spring, when global investors dumped U.S. stocks, Treasurys and other dollar-denominated assets—the “Sell America” trade, as it was dubbed at the time.
But money managers were quick to caution that the recent wave of foreign stock-buying is no Sell America, Part Two. Most still believe the U.S. will lead global equity markets higher—perhaps just not by as wide a margin as in recent years.
“If the ‘Sell America’ trade gave me a 16% return, I would do that all day long,” said Don Calcagni, chief investment officer at Mercer Advisors, referencing the S&P 500’s double-digit annual gain last year. “We still think the U.S. is very exceptional.”
Even so, like others, Calcagni has concerns about the future of U.S. markets, including the swelling national debt and the political and economic volatility introduced by President Trump.
“There is some strong evidence—not necessarily for selling America—but for beginning to rebalance out of the United States and take a more equal-weighted approach,” he said.
Investors have also been rotating out of domestic stock-market leaders for some time. After three years of back-to-back blockbuster returns for U.S. equities—powered, for the most part, by the artificial-intelligence investing boom—traders are starting to look for the next wave of gains elsewhere. Foreign equities aren’t the only beneficiary: Small-cap and blue-chip stocks have also outperformed major benchmarks in recent weeks.
Not everyone on Wall Street is rushing to send their money beyond U.S. borders. But Calcagni said investors’ tunnel vision on the red, white and blue is starting to broaden.
“Many of our clients are now coming to us and asking why don’t you own more [shares of foreign companies],” he said. “There is probably a newfound religion investors may have found in international diversification.”