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.
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Roughly 80% of U.S. outperformance came from dollar strength and valuation expansion—both unlikely to repeat.
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The Magnificent Six drove nearly all fundamental growth; the broader S&P 500 delivered historically weak results despite premium valuations.
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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?
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