In the dynamic world of investment, a consistent truth emerges: US stocks have historically been, and continue to be, a powerhouse for wealth creation.
While mainstream media and many advisors recommend passive index funds, a deeper dive into the performance and drivers of the US market shows a compelling case for a more focused approach. For pre- or near-retirees with who’ve built up retirement savings, understanding this dominance and how to leverage it through active stock portfolio management can be pivotal.
Historical Outperformance
Numbers speak volumes when it comes to market performance. The S&P 500, a bellwether for US large-cap stocks, has delivered an impressive average annual return of 9.96% over the past century.
Even after adjusting for inflation, this real return stands strong at 6.69%. Looking at a more recent 50-year span, US stocks have delivered an annualized return of 11.62% (including dividends), significantly outpacing most global markets and generating real wealth for long-term investors. This consistency is unmatched by any other major market.
While there have been brief periods where international markets showed temporary outperformance, the long-term trend overwhelmingly favors the United States. Over the past decade, US equities have delivered 14.8% annualized return, dwarfing global ex-US equities at 7.0%.
This isn’t merely about raw statistics; it proves the robust economic strength and relentless innovation that underpins these returns.
Silicon Valley and Beyond
The United States, particularly Silicon Valley, stands as the global epicenter of technological advancement, especially in the burgeoning fields of artificial intelligence (AI) and cutting-edge technology. This concentration of talent, capital, and commercialization expertise ensures that the next generation of disruptive technologies will continue to emerge and fuel its stock market leadership.
Companies like NVIDIA (NVDA), a pioneer in AI computing; Meta Platforms (META), pushing the boundaries of virtual reality and social connection; Microsoft (MSFT), continually reinventing itself with cloud computing and AI integration; and Alphabet (GOOGL), dominating search and AI research.
These are not just household names; they are powerhouses of innovation, constantly developing new products and services that redefine industries and create value for customers and its shareholders.
Metric | Value | Timeframe |
|---|---|---|
S&P 500 Average Annual Return | 9.96% | Past Century |
S&P 500 Real Return (Inflation-Adjusted) | 6.69% | Past Century |
US Stocks Annualized Return (including dividends) | 11.62% | Past 50 Years |
US Equities Annualized Return | 14.8% | Past Decade |
Global ex-US Equities Annualized Return | 7.0% | Past Decade |
The list of transformative US companies keeps going: Netflix (NFLX) revolutionized entertainment; Apple (AAPL) continues to innovate in consumer electronics and services, boasting an average annual return of approximately 16% over four decades; Broadcom (AVGO) and AMD (AMD) are critical players in the semiconductor space; Amazon (AMZN) reshaped retail and cloud computing; and Tesla (TSLA) is driving the electric vehicle revolution, with a staggering +19,931% total return from 2010–2025.
This leadership in innovation directly translates into strong financial performance, as their growth, market expansion, and disruptive technologies are reflected in their rising stock prices.
Active Management and Retirement Planning
We know US stocks dominate, but the question then is: how can investors, particularly pre- and near-retirees, effectively capitalize on this trend?
While most Registered Investment Advisor (RIA) firms might steer clients towards passive index ETFs, a more rewarding approach lies in active stock portfolio management. Unlike passive strategies that simply buy and hold broad market indices and rebalance annually, active management involves meticulous selection of individual stocks and dynamic adjustments based on market cycles and company-specific factors.
Active management offers several key advantages. Firstly, it enables Alpha Generation, where rigorous stock selection uncovers undervalued leaders with significant growth potential. This allows for the capture of outsized gains, far beyond what passive index returns typically offer.
Secondly, Risk Management is enhanced through tactical shifts that limit drawdowns during periods of market stress. By actively monitoring and adjusting portfolios, financial advisors can better navigate economic uncertainties.
Lastly, active management provides Customization, ensuring that portfolios are precisely aligned with an individual’s retirement goals and risk tolerance.
For pre- and near-retirees, partnering with a certified financial planner (CFP)-led RIA who uses active stock portfolio management can be transformative. This approach offers ongoing re-evaluation of market leadership, proactive risk management, and the opportunity to outperform through selective concentration in high-potential companies.
Positioning Your Portfolio
As AI and technology continue to reshape our world, U.S. companies are poised to maintain their leadership, offering compelling opportunities for investors. For those nearing retirement, assess your current equity split and your U.S. stock exposure.
Ready to move beyond the standard advisor playbook?
At Paraiba Wealth, our focus is on building actively managed portfolios—a strategy designed for greater control, tax efficiency, and tailored to you. If you’re ready to see what this looks like, book a no-obligation initial call today.