U.S. Investors Sell as Germany Soars

For a generation of American investors, buying anything outside the U.S. feels foolish.

The U.S. has outperformed just about every stock market over the past 15 years... But 15 years isn't forever.

And right now, German stocks are picking up steam. But U.S. investors want nothing to do with them.

This kind of investment setup happens all the time. An asset underperforms for years... so everyone abandons it. But then, just when folks have forgotten about it entirely, it begins to outperform.

These stories usually end the same way... with a dramatic boom that most investors completely miss.

Today, American investors hate German stocks, despite the recent breakout... And that means this rally can continue.

There's no law that says the U.S. must outperform. We've even seen extended periods throughout history where U.S. stocks underperformed foreign markets.

Still, folks have come to believe that U.S. stocks will always win. And they're making mistakes as a result... like ignoring the rally in Germany.

The iShares MSCI Germany Fund (EWG) is up 21% so far in 2025. That's a huge contrast to the S&P 500 Index, which is down 2% year to date.

Plus, EWG recently broke out to its first new all-time high since 2007. Take a look...

This should have caught the attention of investors. But because so many folks are still focused on the U.S., it hasn't...

We can see that by looking at EWG's shares outstanding. Since EWG is an exchange-traded fund, it can increase or liquidate shares to meet investor demand. So when U.S. investors want to own German stocks, EWG's share count rises in response.

The exact opposite has been happening for the past decade, though. Take a look...

EWG shares outstanding have fallen for years. They're down 89% since peaking in 2015... including a fall of more than 50% over the past two years.

In short, U.S. investors want nothing to do with German stocks. They've witnessed years of underperformance in this market... so they've completely given up on it.

This isn't a smart move. Like I said earlier, there's no law that says the U.S. will always produce the biggest gains. And so far in 2025, it hasn't.

EWG has been moving higher in recent days as the U.S. market sold off on fears around tariffs. This performance disparity will soon catch investors' attention. And that means EWG's outperformance can continue.

It's not time to give up on U.S. stocks... Pullbacks like these are common, even in a bull market. But if you don't own any stocks outside the U.S., shares of EWG are a smart bet right now.

Good investing,

Brett Eversole

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