Why International Stocks Are Beating the S&P + How Scott Invests his Money
Episode
21 min
Read time
2 min
Topics
Productivity, Personal Finance, Investing
AI-Generated Summary
Key Takeaways
- ✓International stock rotation: Developed markets outside the US are up 48% on a rolling one-year basis, emerging markets up 55%, versus the S&P's 34%. Year-to-date in 2026, the S&P is down 3% while international markets remain positive. Every international style category — growth, momentum, quality — is outperforming its US equivalent, making global allocation a portfolio differentiator right now.
- ✓Valuation gap as opportunity: Emerging markets trade at 13.5x forward earnings versus developed markets at 20x and the S&P at 19x. JPMorgan forecasts 40% earnings-per-share growth in emerging markets for 2026. This combination of cheap valuations plus strong earnings growth creates simultaneous multiple expansion and earnings expansion — a dual tailwind most investors rarely capture together.
- ✓S&P concentration risk: Investors holding SPY are not diversified. The top 10 S&P 500 stocks now represent 40% of the index — more than double their 19% share in 2015 and the highest concentration since 1972. By contrast, the top 10 stocks in the international MSCI index represent only 13%, making global diversification a structural risk-reduction move, not just a return chase.
- ✓Galloway's personal investment framework: His portfolio operates on three pillars — long-hold public stocks like Apple and Amazon placed in a trust, private deals only where he has a structural edge (board seat, fee-free tier-one VC access, or equity kickers), and real estate concentrated in five ultra-wealthy cities: London, New York, Palm Beach, Aspen, and Dubai. Angel investing is explicitly excluded.
- ✓Education inequality by spending: US private schools spend roughly $72,000 per student annually versus $10,000–$15,000 in low-income public schools. Over 12 years, that gap compounds to $900,000 versus $180,000 per child. This spending disparity translates directly into a 370-point SAT score advantage for high-income students, and Galloway argues income-based affirmative action — not race-based — is the targeted policy response.
What It Covers
Scott Galloway answers three audience questions from South by Southwest covering his contrarian 2025 prediction that international stocks would outperform the S&P 500 (now confirmed), his personal three-pillar investment strategy across public stocks, private deals, and real estate, and the structural challenges facing underpaid teachers in an AI-disrupted classroom.
Key Questions Answered
- •International stock rotation: Developed markets outside the US are up 48% on a rolling one-year basis, emerging markets up 55%, versus the S&P's 34%. Year-to-date in 2026, the S&P is down 3% while international markets remain positive. Every international style category — growth, momentum, quality — is outperforming its US equivalent, making global allocation a portfolio differentiator right now.
- •Valuation gap as opportunity: Emerging markets trade at 13.5x forward earnings versus developed markets at 20x and the S&P at 19x. JPMorgan forecasts 40% earnings-per-share growth in emerging markets for 2026. This combination of cheap valuations plus strong earnings growth creates simultaneous multiple expansion and earnings expansion — a dual tailwind most investors rarely capture together.
- •S&P concentration risk: Investors holding SPY are not diversified. The top 10 S&P 500 stocks now represent 40% of the index — more than double their 19% share in 2015 and the highest concentration since 1972. By contrast, the top 10 stocks in the international MSCI index represent only 13%, making global diversification a structural risk-reduction move, not just a return chase.
- •Galloway's personal investment framework: His portfolio operates on three pillars — long-hold public stocks like Apple and Amazon placed in a trust, private deals only where he has a structural edge (board seat, fee-free tier-one VC access, or equity kickers), and real estate concentrated in five ultra-wealthy cities: London, New York, Palm Beach, Aspen, and Dubai. Angel investing is explicitly excluded.
- •Education inequality by spending: US private schools spend roughly $72,000 per student annually versus $10,000–$15,000 in low-income public schools. Over 12 years, that gap compounds to $900,000 versus $180,000 per child. This spending disparity translates directly into a 370-point SAT score advantage for high-income students, and Galloway argues income-based affirmative action — not race-based — is the targeted policy response.
Notable Moment
Galloway warns that calling teachers "heroes" is actually a signal they are being exploited — underpaid by roughly 30% compared to similarly educated workers while working ten hours beyond their contracted weekly hours — and argues the label substitutes for fair compensation rather than delivering it.
Episode Transcript
What to Make of a Life is the new book from Jim Collins, best selling author of Good to Great. Based on ten years of research, What to Make of a Life offers transformative teachings on what it takes to navigate your way through periods of fog, make it past life's inevitable cliffs, and keep the inner fire burning bright long and late. Step into frame with What to Make Up a Life, the instant New York Times bestseller by Jim Collins. Available from Harper Edge wherever books are sold. More and more Americans are finding themselves taking care of their kids and their parents at the same time. Well, you know, I I joke that there's a dark game, which I was playing. Which family member will I disappoint today? How to care for others without burning out in the process. That's this week on explain it to me. Find new episodes Sundays wherever you get your podcasts. Hi. I'm Sally Helm. Inflammation. It is something I've been seeing a lot of people talk about, especially on TikTok. And according to them, inflammation is basically the whole problem with our health. It causes heart problems, anxiety, acne. It is maybe even the root of all diseases. So how accurate is that? That's this week on Unexplainable. Welcome to Office Hours with Prop G, where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. Today's episode includes questions from our time in Austin, specifically South by Southwest, which I really enjoy. These are questions presented to us from our listeners back in March at South by Southwest. Question number one. Scott, thanks for coming to s, South by Southwest. My question is related to you, last year, you had recommended to diversify away from emerging markets and international markets. And I know with everything happening in The Middle East, there's been a big, plummet in in those indices. Do you still recommend diversifying away from the international mark markets? And do you still see a value there based on their energy reliance and and things like that? Thanks for coming. So every year, we make a series of predictions. And the one I'm most proud of is that last year we predicted that for the first time in, what, seventeen years, there'd be a rotation out of US stocks into emerging market stocks and emerging markets who would outperform US stocks. And we got a ton of shit for this. Never bet against The US. US is the home of AI. And look what's happened. If you watched our most recent PropG pod or listened, with Josh Brown, who's one of our kind of fan favorites and a friend of the pod, Here's some data from that episode. On a rolling one year basis, developed markets outside of The US are up 48%. Emerging markets, up 55%, and the S and P 500 is up 34%. Year to date in 2026, emerging markets …
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