Home-country bias is in our DNA as Americans—perhaps more so than anywhere else. Consider the now-ubiquitous chant, “I believe that we will win,” which featured prominently in ESPN commercials leading up to the 2014 World Cup.
It’s widely viewed as the anthem of US soccer, but its origins are even more patriotic. The chant dates back to 1998, when it was created by a student at the Naval Academy Preparatory School and later carried with him to the US Naval Academy. From there, it spread from Navy football to other collegiate sports before eventually becoming mainstream in professional soccer.¹
The chant resonates because it reflects something deeply American—a confident belief in our own success. That same mindset shows up clearly in how we invest.
And to be fair, home bias has worked extraordinarily well for US investors over the past couple of decades. The United States is the innovation capital of the world, home to companies like Apple, Amazon, Google, Microsoft, Tesla, Nvidia, Netflix, and Meta. The list goes on.
As a result, over the last 20 years the S&P 500 has delivered nearly a 700% total return, while international developed markets have returned closer to 200%.
However, despite all the tech buzz in 2025 around AI, data centers, and GPUs, international developed stocks quietly had a standout year, posting returns of over 31%, compared with roughly 16% for the S&P 500. The primary drivers were:
Valuations - Entering 2025, the S&P 500 (via SPY) traded at a forward P/E of roughly 23, while international developed markets (via EFA) traded closer to 13. In other words, US stocks were almost twice as expensive relative to expected earnings.
Fiscal Policy - Germany, the European Union’s largest economy, passed a sizable defense and infrastructure spending package in mid-2025. The ripple effects should boost financials, industrials, and the whole European economy.
Weaker Dollar - The US dollar declined by roughly 9% in 2025 against a basket of developed-market currencies. For US investors owning international equities priced in dollars (such as EFA), returns benefited not only from rising local stock prices but also from currency translation. Stripping out this currency tailwind, international developed markets were still up roughly 24%.
We’ve lived through a long period of US exceptionalism, where American innovation and capital markets dominated global investment returns. That experience makes it easy to forget that US stocks represent only about 60% of global public equity market capitalization.
So yes—you should absolutely own American companies, and they should comprise the majority of your equity portfolio. But if the goal is to maintain a truly balanced and diversified portfolio, you can’t afford to believe that the US will always win alone.
Sometimes, belief is best paired with diversification.
1. Yahoo Sports. “The Improbable Story of How the Trendiest Chant in Sports Began.” June 20, 2014.
https://sports.yahoo.com/blogs/soccer-dirty-tackle/the-improbable-story-of-how-the-trendiest-chant-in-sports-began-040228934.html