Since the end of the financial crisis of 2008 and 2009, the U.S. stock market has provided better performance than the average international market. Of course, there always is an isolated country here or there that ends up beating the U.S., but if we look at major market indexes, the outperformance is easy to see. The chart below compares the S&P 500 Index, which represents the 500 largest domestic companies to the MSCI EAFE Index, which represents the other well-developed economies of the world.

With the last six years behind us, it is obvious why this has occurred. The U.S. has had a reasonably good recovery from the crisis with positive growth in GDP, jobs, and tax receipts. Europe, Japan and some other countries have struggled to get their recoveries going, and the lower level of stock market performance is the result.

However, one should be careful to extrapolate the results shown on the chart too far into the future. A look at history shows a pattern of periods ranging from three to seven years where the U.S. markets are either the leader or laggard compared to the rest of the world. With the U.S. leading for the last six years, it may be a good time to review your portfolio allocation and be ready for the eventual shift in leadership.

In the first quarter of this year, we saw a significant shift in trends with international equities up about 5 percent, while the S&P 500 gained around 1 percent. A one quarter reversal doesn’t necessarily qualify as a trend change, but I believe it bears watching. Particularly since the current string of annual outperformance by the U.S. is getting stretched in duration, at least from a historical perspective.

Keep in mind that as a stock market outperforms its counterparts over several years, it tends to lead to that market being over-valued compared to the other markets available for investors to deploy capital to. For example, the current price to earnings ratio for the S&P 500 Index is 18, while the average international market trades at about 15 times earnings. That may not seem like a big difference, but with the recovery abroad just gaining momentum, the earnings of foreign companies may well grow faster than here in the U.S. where we are getting into the more mature part of our economic expansion.

I don’t believe you need to abandon your ownership of U.S. companies, but I think it is time to make sure you have at least some exposure to international equities as part of your plan to take advantage of what I believe will be superior performance by foreign stock markets in the next few years.

Tom Breiter is president of Breiter Capital Management, Inc., an Anna Maria based investment advisor. He can be reached at 778-1900. Some of the investment concepts highlighted in this column may carry the risk of loss of principal, and investors should determine appropriateness for their personal situation before investing. Visit www.breitercapital.com.