Why International Stocks Are Beating the S&P + How Scott Invests his Money

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.