Tag Archives: 100 year

European equities are at a 100 year low relative to US stocks

This chart by Morgan Stanly has been going around on Twitter showing how badly European stocks have underperformed US stocks.

This underperformance has been going on for 100 years now although there have been short times in between when European stocks outperformed US stocks. For example in the eighties or late nineties. But since 2000 it has been one slow grind lower. This is particularly interesting because US stocks are viewed as richly valued because they have a much higher price/earnings ratio than their European counterparts.

European equities are at a 100 year low relative to US stocks
European equities are at a 100 year low relative to US stocks

According to MSCI the total return for the MSCI EMU Index (an index of equities from the 10 countries that have implemented the Euro) is just 3.73% per year. The MSCI Europe Index has done better with an average total return of 7.85% since 1987. While the MSCI USA Index has returned 10.84% per year since 1987.

MSCI EMU Index 2005 - 2020
MSCI EMU Index 2005 – 2020