Why the American stock market reigns supreme

IF YOU had invested US$10,000 in the American stock market at the end of the year 2000, you would have had about US$27,000, after adjusting for inflation, by the end of 2023. If you had invested in global equities excluding America, you would have had only about US$16,000.

Wall Street’s outperformance this century has propelled America’s stock market to a 61 per cent share of global market capitalisation. That has not surpassed the all-time high reached during the 1960s, but it is close. And it is close even though America dominates the real economy far less than it did half a century ago, before the rise of Asian emerging-market giants and the fall of the Soviet Union. America’s share of the global stock market is 2.3 times its share of gross domestic product – a ratio that has never been higher.

What accounts for the boom? In part it continues a long-running phenomenon.