Why Do American Stocks Dominate the Global Stock Market?

The Analysis: A Gap That Defies Imagination

Between January 2009 and July 2026, the S&P 500 rose approximately +680%. Over the same period, the MSCI Europe only advanced +260%. The CAC 40 performed even worse in gross terms. And Japan? Despite the Tokyo Stock Exchange's awakening since 2023, the Nikkei index only recently recovered its 1989 levels, 35 years later.

This dominance is not an accident. It is explained by several structural dynamics that feed on each other.

Concentration in high-margin sectors. The S&P 500 is today dominated by companies like Apple, Microsoft, Nvidia, Alphabet, and Amazon, companies whose net margins exceed 20 to 30%, or more. These companies don't produce cars or cement: they sell software, digital advertising, and cloud services. The marginal cost of production is near zero. This business model has no equivalent at this scale in Europe or Asia.

Massive share buybacks. S&P 500 companies have repurchased their own shares for colossal amounts, over $800 billion per year in some years. This mechanism mechanically reduces the number of shares outstanding, which drives up earnings per share even if total profits stagnate. In France, dividend culture prevails over buybacks. In America, it's the opposite.

The dollar: shield and amplifier. As the world's reserve currency, the dollar attracts capital flows in times of uncertainty. When the world trembles, capital flees to American assets. This inflow supports prices. And conversely: a strong dollar amplifies returns for foreign investors who placed funds in USD.

The Anecdote: The Fund Manager Who Never Crossed the Atlantic

In 2013, a Lyon-based wealth manager advises his clients to invest "European." His logic is intuitive: "We understand local companies better. Valuations in Europe are cheaper than in the US." He isn't wrong about valuations, the S&P 500 was already trading at 16 times earnings, compared to 11 times for the Eurostoxx.

Ten years later, his reference client saw their portfolio grow by 140%. Another client, who had ignored this advice and invested via an S&P 500 ETF, had multiplied their capital by 3.8.

The first manager was right about valuation. He was wrong about the conclusion. Stocks that are "cheaper" can stay cheaper for a very long time, if earnings don't follow.

The Historical Fact: Buffett's 2008 Op-Ed

In October 2008, in the chaos of the subprime crisis, Warren Buffett published an op-ed in the New York Times entitled "Buy American. I Am." He simply explains that he is buying American stocks with his own money (outside Berkshire), and that those waiting for economic improvement to invest "are missing the train."

What is remarkable is the structural confidence in the American economy this op-ed expresses. Not just in one sector or another. In the entire system: entrepreneurship, innovation, the capacity to bounce back. History proved him right. Those who invested in the S&P 500 in October 2008, at the worst of the panic, multiplied their investment by 8 in ten years.

The Concept: Home Bias, the Silent Enemy

In behavioral finance, home bias refers to the tendency to overweight assets from the country where you live. French investors hold on average 60% of their portfolio in French or European assets, even though France represents less than 3% of global stock market capitalization.

This bias is not irrational in itself: we "understand" local companies better, we read their accounts in our language, we know their regulatory context. But it generates massive opportunity costs when the growth dynamic is elsewhere.

Home bias is particularly dangerous because it disguises itself as wisdom. "I invest in what I understand." This is Peter Lynch's logic, but Lynch recommended understanding the *company*, not limiting yourself to your geography.

Understanding American dominance means understanding that geographic allocation is a macro decision as much as a financial one.

The Axone Lesson

At Axone Capital, the Macro · Technical · Mindset method always starts with macro. And the macro, since 2009, has said the same thing: the United States has benefited from unprecedented conditions, low rates, dominant dollar, technological superiority, deep capital markets.

This does not mean the US will always dominate. When the rotation occurs, toward Europe, emerging markets, gold or commodities, it will be brutal. Cycles turn.

But ignoring this reality through "home bias" or conviction that "Europe is cheaper" is confusing price with value. Understanding why something has dominated is the first step toward anticipating when that changes.