Earlier this week, we discussed the US shares that ASX investors have been buying the most heavily over the past few months.
Some familiar names were on that list, including Apple, NVIDIA, Tesla and Amazon. But there were also a couple of surprises, such as Chinese e-commerce giant Alibaba and 'meme-stock' posterchild GameStop.
But what we didn't delve too deep into at the time was just how lucrative investing in US shares has been for ASX investors.
Almost every big name on the US market has had a stunning 2024 to date.
Take Apple. Apple stock has risen by a lucrative 25.5% year to date so far.
Tesla's 2024 gains have been slightly more muted at around 6%. But saying that, the electric vehicle and battery manufacturer is still up more than 80% since late April.
Amazon stock, on the other hand, has rocketed more than 33% since the start of the year. And Nvidia, the undisputed golden child of the American markets right now, has exploded 180% higher since the beginning of January.
So it's no wonder ASX investors have been trying to get a slice of this lucrative action.
But with portfolio-altering gains like the ones we've just discussed now under the belt, is it still a good idea to buy US shares today? After all, these gains are highly unusual over such a short time span, even by the high standards of the US tech giants.
Is it too late to start buying US shares like Nvidia?
Well, one ASX expert reckons ASX investors should stick the course. That expert is Tom Stevenson, investment director at fund manager Fidelity, and he is arguing that "It has rarely been sensible to bet against Uncle Sam".
Sure, the United States is looking at a fairly tumultuous back half of 2024. There's the November Presidential Elections, of course. But the US economy is also dealing with similar concerns over inflation and interest rates as we are. The level of economic uncertainty is high 'Stateside', and that often causes uncertainty on the share market.
Indeed, Stevenson acknowledges that the stunning stock market performance we have seen this year so far is rare, as we haven't seen a major American market pullback since "last autumn". He noted that, "There has only been a handful of periods in the past 30 years when we have gone this long without such a pullback in markets".
Even so, Stevenson tells investors that "this is not by itself a reason to worry", and goes so far as to state that "to a large extent this has been justified by economic and corporate fundamentals".
For starters, he points out that:
strong first half years often set investors up for a rewarding second half too. Since the beginning of the 20th century shares have only fallen seven times in the second six months after a strong opening to the year. The last time this happened was nearly 40 years ago. The second half return after a strong first half is higher than the average for all years too.
American exceptionalism
But Stevenson also points out that the strong share market performance of the American markets has been "justified by stronger corporate earning growth":
Since the financial crisis American shares have consistently outperformed those in the rest of the world but so too has the profitability of American companies. American market exceptionalism has been a reflection of exceptional American growth.
Indeed, America's exposure to the 'growth' investment style has been a massive boon to US investors. The period from 2009 to the start of the monetary policy tightening cycle in 2022 represented the longest unbroken outperformance of growth over value in the past 50 years. Wall Street has more exposure to the world's fastest-growing sectors and companies and less exposure to its laggards.
Stevenson isn't arguing that there aren't risks with investing in US shares today. He points to the current high valuations of US stocks and the concentration of the American indexes, thanks to the massive sizes of tech giants like Nvidia and Apple, as potential trip hazards for investors.
But even so, Stevenson concludes the same way he started, by arguing that "It has rarely been sensible to bet against Uncle Sam". No doubt that will be of some comfort for ASX investors looking to top up on their winning US shares today.
