The US stock market is dead

In case you’re not in the (very) small number of people who pay attention to my musings, I am adamant that our profession should have done a better job advising the bulk of private client investors in Australia because we’ve semi-played along with the fallacy that you only have to do 2 things to succeed at investing (FWIW, Koda Capital has not played along - we have resisted this view since the firm's founding).

The prevailing wisdom says you just have to:

1. Buy residential real estate, and

2. Buy Aussie stocks that pay fully franked dividends.

Bunkum. Absolute bunkum, on both counts. Don’t believe me? Here’s the chart that proves it.

If you want or need income, the ASX 200 might be the best market on the planet, given the tax concessions afforded to Australian tax residents. But if you need growth, the evidence is in that chart above – growth is not coming from real estate, and not from ASX stocks.

I’ve been saying this for over 2 decades now, and I’ll keep saying it until it is no longer true. Today is not that day.

Notwithstanding all that, you know what? I need to eat a little crow. It turns out the ASX 200 is handily in front of the S&P 500 YTD in 2025, as well as the Nasdaq 100.

And over the last 5 years, four of the big five Aussie banks (including Macquarie) have essentially either matched or beaten the return of the S&P 500 - the laggard is ANZ, and the underperformance has been recent (and well covered by the media). CBA is way out in front, Macquarie is out front too, with the other two banks clumped together, right around the S&P 500 return over those 5 years. Plus, the five banks have delivered around 4.00% of (almost) fully franked dividends while the S&P 500 has paid only around 1.65%, and with no tax advantages for Aussie tax payers.

Interestingly, the ASX 200 has returned only about half of what the collective banks have returned. So think about that – whilst I do have to concede the bank returns have been pretty good over those 5 years, the rest of the ASX 200 constituent returns, by definition, are just flat out awful. Those five banks are about 28% of the ASX 200.

The other big portion of the Aussie index – the big 4 miners (in order - BHP, Fortescue, Rio Tinto, Woodside) - are about 18% of the ASX 200.

They have been worse than the ASX 200. A lot worse.

Those miners are up about 15% on average. Not per year – for the whole 5 years. So that means that on a weighted basis, everything else in the ASX 200 is up around 25%. Again, not per year – for the whole 5 years.

Now, back to the banks for a second – forget that if you didn’t own CBA and Macquarie for the last 5 years you would have done poorly for growth, it’s almost the last 2 decades. Look at this little table below, and the two charts below that:

BANK	Oct 2007	Fri 23 May
ANZ	$29.86	$29.07
NAB	$41.00	$37.70
WBC	$30.33	$31.34

Seems I don't have to eat too much crow.

Again, the ASX 200 is probably the best income market in the world if you’re an Australian tax resident.

However, when you’re looking for growth, instead of trying to pick exactly the right stocks in Australia at exactly the right time (which is really hard), I personally prefer to simply go to the US.

I don’t care that Donald Trump is the President, I don’t care that tariffs are up, I don’t care that both the debt and deficit have ballooned, and I don’t care that “The Last of Us” has become borderline unwatchable. The things that have made the US the world’s growth leader didn’t just happen in a few years, so they won’t be all lost in a few years.

The US leads the world in tech, AI, pharma, healthcare, media, entertainment, sport, finance, and more. The only places it truly lags are EVs, renewables, and semiconductors. And they have a US$2T war-chest to get much better at, you guessed it, EVs, renewables, and semiconductors.

Last point - remember that investing is nothing if not relative. If you’re looking for growth and you decide against the US markets, where are you going? I have for a long time advocated for a 50-50 split between the S&P 500 and the Nasdaq 100 when crafting the US portion (by far the major portion) of your growth portfolio. Now, look at this chart below and tell me you want to be anywhere else:

The Dax is the only one that comes close. The Nikkei went sideways for 35 years between 1990 and 2025 for crying out loud. If you want growth, the answer is self-evident.

Focus on the US.

Good luck out there.