America Bashing vs. Market Reality
I am a firm advocate of investing in a globally diversified equity portfolio. Within my own investments, the United States has always been overweighted – simply because it has historically been the most reliable market when it comes to returns.
USD Depreciation during the last 25 years
However, when measured in Swiss francs (CHF), recent dollar weakness can easily test an investor’s patience. Over the past 25 years, the U.S. dollar has depreciated by nearly 40% against the Swiss franc. Today’s Neue Zürcher Zeitung even argues that an annual 4% CHF appreciation could be the “new normal” and advises investors to focus on Swiss mid-caps rather than leaving the safety of the “Swiss franc island.”
I respectfully disagree with this advice. While Swiss mid-caps are certainly an interesting investment from a diversification perspective, I believe that significantly reducing the US exposure would be a major mistake.
Let’s look at the other side of the coin.
Source: Charts from UBS investment banking
During the same 25 years, the S&P 500 gained around 350%, while the Nasdaq delivered an astonishing 475%. Against such massive value creation, a 40% currency loss suddenly looks much less threatening.
If I had invested in the Swiss Performance Index (SPI) over the same period – thereby avoiding currency risk – I would have achieved a return of about 206%. That’s not bad, but it pales in comparison. Even after accounting for the franc’s appreciation, U.S. equities have generated excess returns of more than 100% in the S&P 500 and about 220% in the Nasdaq.
We may complain about America’s politics, deficits, or economic challenges – but when it comes to investments in the stock market numbers speak for themselves.
Conclusion
While currency fluctuations are an undeniable reality for Swiss investors, long-term performance shows that avoiding U.S. equities for fear of a stronger franc can mean missing out on substantial gains. The lesson is clear: diversification remains key, but dismissing the American market entirely is a mistake. Over decades, innovation, scale, and market depth in the U.S. have consistently outweighed the drag of currency movements.