Here’s my quick visual snapshot of 60+ country share markets in 2025 in context of the past 35 years.
Key points:
- 2025 was the third straight year of good returns on most share markets.
- Although the US had another good year of above-average gains, most other countries did even better than the US in 2025, busting the common myth that this is a narrow US-led boom.
- Australia lagged the US by a big margin again for a third year running. I outline the reasons why.
- Three-year booms are not unusual. There have been plenty of examples of longer booms before a bust.
- The higher and longer the boom, the deeper and longer the bust. The US is beating Australia in the current boom, but will suffer worse in the bust to follow.
- Pricing is currently very expensive – not just US tech stocks but everywhere including and especially Australia.
- Share markets do not collapse because or when they become expensive. Over-priced booms can keep running up into even more over-priced territory for up to a decade before collapsing.
- I outline seven things we can say for sure about the current boom-bust cycle.
Today’s chart shows broad stock market indexes per calendar year in 60+ major country stock markets around the world in each of the past 35 years. Each circle represents the gain or loss for the broad stock market index in each country, for a column of circles for each year since 1990.
In each yearly column I highlight the US (S&P500 index, marked by red bars) and Australia (All Ordinaries index, marked by green bars), in order to highlight how they stack up against each other and against other global share markets.
Global market contagion
I mainly use this chart to illustrate the fact that share market booms and busts are global phenomena. As the US has the world’s largest economy and capital markets, what happens in the US echoes in other markets around the world, regardless of local conditions and pricing in each country.
When US shares are booming, global investors (which are mainly US investors) spray money around the world and virtually all markets benefit, regardless of local conditions or pricing in each country. Confidence is contagious.
Conversely, when US shares are tanking, global investors (ie US investors) panic and pull their money back to the safety of US cash and US treasuries, which drags all markets down. Pessimism is also contagious.
The current boom is being led by big US tech/Ai stocks, and the general confidence (or over-confidence) is lifting share prices around the world, regardless of local conditions or pricing.
Australian more over-priced than US
For example, I regard the Australian share market as even more over-priced than the US market in the current boom. Although the Aussie market appears less over-priced than the US on several metrics (eg lower price/earnings ratios, lower price/book ratios, higher dividend yields), our much lower profit margins, lower returns on equity, and lower profit growth rates make it even more over-priced than the US market. See -
The local share market is being lifted way above its fundamental value by a flood of global money that doesn’t know any better. When (not if) the US market crashes, that global capital inflow will quickly reverse and the local market will fall along with the US and the rest of the world.
US actually lagged most share markets in 2025
We can see in the far right column of the chart that the US posted good positive gains in 2025 (S&P500 index up +16%). Above average again, but lower than the previous two years. In 2023 and 2024 the US market beat most other share markets, but in 2025 the US was actually in the bottom one-third of the pack.
Although the media attention and investor excitement is about US big tech/ai, most other countries beat the US in 2025 including Japan, Canada, UK, Spain, Italy, Germany, Eastern European markets, Latin American markets, South Asia, East Asia, Africa, and even Russia. In fact virtually everywhere except South East Asian markets, and Australia, beat the US in 2025.
This is because the US tech stars took a breather in 2025 thanks to (justified) investor concerns over their expensive pricing, and also (justified) investor concerns that they are unlikely to get decent returns from the trillions of billions of dollars they are spending on ai models and ai infrastructure (eg chips and data centres).
Despite the more modest gains on the US market in 2025, it is still a very decent three year boom so far.
Very few negative share markets in 2025
The main exceptions to the overall bullish trend in 2025 were Denmark (Ozempic maker Novo Nordisk giving up last year’s gains to US copycat competitor Eli Lilly), Saudi Arabia (oil price down 20% in 2025), and a few smaller markets like Thailand, Philippines, Slovakia.
Australia lags
We can see from the green and red bars each year on the chart that Australia is lagging the US by a big margin again for a third year.
Miners beat banks on the local market this year but the big drag on the overall index were international problems for companies like CSL, Sonic, Cochlear, Aristocrat, Amcor, Hardie, Reece, Domino’s, Xero, Lendlease. ‘Ai’ fears dragged down REA and CarSales, plus there were more own goals from our main ‘tech’ star, Wisetech. Oooops!
Is three years of boom too long?
Three-year booms are not unusual. There have been plenty of longer booms in past cycles, including some shown on the chart.
For example, the five-year ‘dot-com’ boom in the mid-late 1990s (highlighted in the green box on the left of the chart), which ended in a three-year ‘tech-wreck’ in 2000-2 (red box). The US beat Australia in the boom years, but then suffered a deeper and longer bust than Australia.
Likewise, there was a five-year boom from 2003-7, which ended in the 2008 GFC sell-off. In that cycle, Australia beat the US in the boom years (we had a credit boom like the US, but we also had a China/commodities boom), but Australia consequently suffered more in the GFC sell-off and took much longer to recover.
The higher and longer the boom, the deeper and longer the bust.
Another example on the chart is the US leading Australia and most other markets in the three-year boom in 2019-20-21 (Trump tax cuts, rate cuts, Covid stimulus), but then suffering more heavily in the 2022 rate hike sell-off.
When will it end?
Here are seven things we can say for certain –
- First - The current speculative boom will end in a big bust like every other speculative boom in the past.
- Second - The longer and higher the boom, the longer and deeper the bust, especially when leverage is involved.
- Third – Share prices are currently very expensive on a host of different measures. Not just US tech stocks, but other shares and other share markets everywhere, including and especially Australia which has virtually no tech stocks. This is just contagious over-confidence at work, and it will quickly turn into contagious over-pessimism in the bust.
- Fourth – share markets don’t collapse because or when they become expensive. Over-priced booms can run up into even more over-priced territory for many years before collapsing – for example, the 1920s and 1990s in the US, and 1980s in Japan.
- Fifth – What turns booms to busts is usually a combination of triggers – often monetary and/or fiscal tightening, regulatory attacks, bankruptcies, military flare-ups.
- Sixth – when the speculative bubble stocks collapse, they drag down the rest of the market, including unrelated shares and unrelated share markets around the world.
- Seventh – big busts often trigger broad economic contractions, especially when leverage is involved (leverage at company level, at individual investor level, and in the banking system).
What about pricing?
On the subject of pricing - I have researched and written extensively about this, including my recent six-part series -
- World share market pricing - Part 3: Forward P/E ratios and earnings growth assumptions – The US market is actually better placed than most! (20 Aug 2025)
To put the current boom in context, see also -
For my 2025 year-end wrap-up of local & global markets for Aussie investors:
‘Till next time – safe investing!
##### Apologies in advance if I am a little slow in the next few months. I am going in for cancer surgery in early January, and then possibly follow-up surgery or treatment depending on how it goes.