U.S. Market Valuations vs. Global Equities: 30 Years of Diverging Performance

For those who appreciate insightful finance visuals, Callum Thomas of TopDownCharts continues to publish some of the most revealing market comparisons. Over the past three decades, U.S. assets have consistently outperformed international markets, but much of that edge stems from valuation expansion rather than stronger earnings growth. In simpler terms, investors have been willing to pay increasingly higher prices for every dollar of U.S. corporate profit. This distinction between price growth and earnings growth is crucial for long-term investors evaluating whether U.S. markets remain a bargain—or a bubble waiting to normalize.

This chart shows how US asset overall are at higher relative valuations:

This chart shows the relative valuation trends (US over ex-US, Growth over Value, and Large-cap over Small-cap stocks):

Find more interesting charts in their recent 10 Charts to Watch in 2025 (half-time) post.

What does this all mean? Mostly it’s just an interesting part of history to me. Roughly 2/3rds of my stock holdings are US and I’m not selling any of it, so I’m not making a contrarian bet or anything. However, I do think that remaining diversified with exposure to the rest of the world is the way to go. Nearly all Target Date Funds in 401k plans are already diversified in this manner. A lot can happen in the next 30 years.