For greater than a decade, U.S. buyers have appeared unstoppable. The tech-heavy S&P 500 has dramatically outpaced most world indices, minting fortunes for anybody disciplined sufficient to remain invested. However as 2026 unfolds, worldwide buyers might discover themselves in a novel place to catch (and even outperform) their U.S.-focused counterparts.
For these seeking to create a sturdy portfolio that may face up to potential headwinds on the horizon, but additionally see spectacular upside in a bull market atmosphere, I feel Canadian shares are an incredible place to look. Right here’s why.
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Valuations matter
The setup is as a lot about math as it’s psychology. After years of market dominance, U.S. shares at the moment are priced for perfection. The “Magnificent Seven” proceed to commerce at lofty multiples, and even high quality mid-caps look costly relative to world friends. In the meantime, in worldwide markets (notably in Canada, Europe and elements of Asia), buyers have loads of alternatives with enticing valuations that haven’t been this compelling in years.
This valuation hole might show highly effective. The MSCI EAFE Indexwhich tracks developed markets outdoors North America, trades at roughly 14 instances ahead earnings. The S&P 500? Nearer to 21. When buyers pay 50% extra for a similar greenback of earnings, future returns usually disappoint. Historical past has proven that valuation imply reversion tends to favour cheaper markets, particularly when mixed with bettering financial momentum.
Inflation readings matter, as do rates of interest
There’s proof that such momentum is constructing. Europe’s inflation has cooled sooner than within the U.S., giving the European Central Financial institution room to chop charges sooner. In the meantime, Japan’s company reforms and wage development developments have reignited investor curiosity after a long time of stagnation. Rising markets, from India to Brazil, are additionally benefiting from stronger home demand and bettering governance.
Forex dynamics might add one other tailwind. The U.S. greenback seems to be coming off its highs after years of power. A softer greenback sometimes boosts returns for non-U.S. belongings when translated again to bucks. For globally diversified buyers, that’s a quiet benefit that may compound meaningfully over time.
In fact, there are dangers
Now, diversification isn’t a assure. Geopolitical dangers, uneven development, and forex volatility all stay a part of the worldwide investing playbook. However considered via a long-term lens, spreading capital past U.S. borders seems extra like good positioning than blind optimism.
It’s price remembering that world management rotates. The U.S. took the torch from rising markets within the 2010s, simply as rising markets outpaced the U.S. within the 2000s. Traders who acknowledge the rhythm of those cycles (and act on them early) are inclined to seize one of the best alternatives.
In 2026, that rhythm might as soon as once more be altering. For buyers keen to broaden their horizons, affected person worldwide publicity might flip into one of many yr’s extra rewarding calls.