An article in Morningstar by John Rekenthaler looks back at American stocks over the last 50 years to assess whether the recent exceptionalism displayed in U.S. stocks goes back further than the last several years. Using Morgan Stanley Capital International’s data on 18 foreign stock-market indexes dating back to 1970, Rekenthaler comes to the following conclusions.

From January 1970 to November 2021, after accounting for the effect of inflation, the U.S. was among the leaders along with Denmark, the Netherlands, and Sweden, with a wide gap between the U.S. and those countries that lagged behind, Rekenthaler found.

But Rekenthaler questioned whether the American advantage was due to its stock market’s recent performance, so he halved the performance table, looking first at 1970-1995, and then 1995-2021. In the mid 1990s, U.S. stocks were nothing special. Even while it proclaimed its excellence during those years, it lagged behind Japan and the U.K., and was sluggish while other stock markets were spry with equity returns of only 4%.

In the period from 1995-2021, however, the story was very different. Although the U.S. still trailed Denmark and Sweden, it trounced Germany, the U.K., and Japan, and also outperformed Chinese equities. Thriving during the Great Bull Market of the late 1990s, it struggled during the 2000s, only to then soar past its competitors.

The major sector to credit for this success? Technology. It skyrocketed during the 90s, fell after the Dotcom bust, and then surged again after the 2008 financial crisis. Without technology’s 10.5% annual gain U.S. stocks would’ve remained mediocre, proving that betting on American innovation and ingenuity is still a smart play.