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

In this Office Hours episode from South by Southwest, Scott Galloway fields listener questions on investment trends and strategies, plus challenges facing teachers. He highlights data-driven shifts in global markets, shares his own asset allocation, and addresses education inequities amid AI and tech disruptions.

International Markets Outperforming the S&P 500

Galloway revisits his contrarian 2025 prediction that emerging markets would outperform US stocks for the first time in 17 years—a call that faced heavy criticism but has proven accurate. On a rolling one-year basis through early 2026, developed markets ex-US are up 48%, emerging markets up 55%, while the S&P 500 trails at 34%. Year-to-date, emerging markets gained 5%, developed ex-US 2.4%, and the S&P fell 3%, even after an Iran-related shock.

This edge holds across styles: international growth stocks up 5.5% vs. US down 2%; international momentum up 9.2% vs. US 1.3%. Valuations reinforce the case—emerging markets at 13.5x forward earnings, developed ex-US at 20x, S&P at 19x (down from 23x). JP Morgan forecasts 40% EPS growth for emerging markets in 2026, below their trailing PE of 18.8x, signaling potential for both multiple expansion and earnings growth.