May 26, 2026

Recent performance is favorable including in international stocks

The chart below shows the annual performance for various market segments ranging from U.S. large caps, international stocks, commodities, cash and hedge funds from year end 2016 thru April 30, 2026.

Here are a few comments to aid your review –

The best performing segment each year is at the top of the column followed by the second best all the way down to the worst. The S&P 500 is shown in deep blue. In most years starting in 2019 through April 30, 2026, it outpaced the return for most other market segments. Indeed in 2019, 2023 and 2024, it was at the very top of the leader board. When that is the case, many investors decide to allocate capital aggressively into U.S. large caps. The table above shows that last year and thus far this year, returns for international stocks – both developed and emerging markets have exceeded those of the S&P 500.

The chart below shows performance (best to worst) from 2003 through 2012. As you can see, during this 10-year period Emerging Market Equity is high on the leaderboard with the exception of 2008 and 2011. In contrast, U.S. large caps (e.g. the S&P 500) was consistently in the bottom half of the performance table with the sole exception of 2010 and 2011. During those 2 years, it was in the top half but not near the very top.

As you know, we like to buy and hold meaningful allocations in all of the major equity segments. That’s because history shows that timing inflection points are inherently difficult, but buying and holding diversified allocations not only smooths the ride, but it also helps reduce capital gains recognition along the way. We firmly believe that market leadership is highly likely to change over time. Timing those inflection points is inherently challenging. Of course, we do also pay close attention to valuation measures along the way. We believe doing so can provide confidence to maintain ownership of segments that have performed relatively poorly but are attractively priced and vice versa. Indeed, valuation metrics suggest that investors may be well served to avoid the temptation to increase U.S. large cap allocations. Last but not least, I have included charts on the S&P 500 including one for the S&P 500 Shiller CAPE ratio in an end note.ⁱ

As always, we welcome any questions or comments that come to mind.

W. Richard Jones, CFA

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Source: The Motley Fool

Source: FactSet

As the chart for the S&P 500 shows, increases in and decreases in the PE ratio have a significant impact on its price over time. When the PE ratio expands, price increases are significant. When the PE multiple contracts as it did from year end 1999 thru early 2009, prices can fall precipitously. At present its PE ratio is near all-time highs. This may mean that future price gains will be modest. The same is true for other market segments. The good news is other market segments often behave differently along the way. International stock returns both developed and emerging markets have been relatively lackluster compared to the S&P 500 owing in large part to contraction in those markets PE ratios. It may be that they will provide better returns in the future that could partially or fully offset potential price declines in things like the S&P 500.

The information contained in this letter does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of W. Richard Jones and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions. Indices are not available for direct investment. Index performance does not include transaction costs or other fees, which will affect actual investment performance. Past performance is not indicative of future results.