In May of last year, I wrote a piece for this newsletter titled The Dollar Dilemma, in which I detailed how American investors were increasing their holdings of global assets and non-US investors were reducing their holdings of US assets. Part of this phenomenon was the perception, among some, that so-called US “exceptionalism” was waning, and part was driven by the reality that US stocks were more richly priced than their global counterparts. Consequently, in 2025 international stocks and bonds outperformed US stocks and bonds on average by a substantial margin.
The dollar dilemma I cited was the fact that a lower dollar makes US exports more competitive, which is good, but it also makes US imports more expensive. The dollar declined by almost 10% against a basket of currencies last year. In my article, I quoted Ken Rogoff’s Our Dollar Your Problem, where he said: “…parts of the world were already moving away from the dollar. Now they’re moving faster.” The price of gold soared last year, up by more than 50% against the dollar.
According to a recent Barron’s article, “Gold’s rise is the clearest sign that investors are rethinking assumptions about the dollar.…after decades of US dollar dominance, it’s time to do some buying elsewhere.”
Fast forward from last May, when I last addressed this topic, to March of 2026. Trading in the US dollar has stabilized against major currencies so far in 2026, and both gold and silver have experienced corrections, but the outperformance of global stocks has persisted. The war in Iran has sparked a “safe harbor” rally in US stocks and the US dollar, which may or may not continue. The capitalization-weighted S&P 500 Index* has moved in and out of positive territory. Some equities, like software companies, have been in free fall, while other traditional value stocks have done better than they have in years.
The good news is that it is not a case of selling hysteria, and if this rotation is orderly and gradual, some semblance of equilibrium should remain possible. As Barron’s succinctly put it, “Think of it as quiet quitting rather than a Sell America frenzy.” It seems to be a gradual transition away from the dollar into both gold and other currencies, along with a reduction in the weightings of US-denominated assets into more global assets.
Other Article Sources:
Barrons Magazine 2/23/26 A Weaker Dollar is Here to Stay. How to Invest. Reshma Kapdia
Morningstar 2/18/26 US Stocks are falling behind. It could be the beginning of an epic shift toward global markets” by Joseph Adinolfi
SPY: https://finance.yahoo.com/quote/SPY/performance/
VXUS: https://finance.yahoo.com/quote/VXUS/performance/
Disclosures:
*During the referenced period, the MSCI All Country World Index ex-USA outperformed the S&P 500 Index by approximately 8 percentage points. Index returns are unmanaged, do not reflect fees or expenses, and are not available for direct investment. *Past performance does not guarantee future results. While early-year performance trends have favored international markets, future results are uncertain and subject to market risk. There can be no assurance that current trends will continue.
The opinions expressed in this Commentary are those of Baldwin Investment Management, LLC. These views are subject to change at any time based on market and other conditions, and no forecasts can be guaranteed. The reported numbers enclosed are derived from sources believed to be reliable. However, we cannot guarantee their accuracy. Past performance does not guarantee future results. We recommend that you compare our statement with the statement that you receive from your custodian. A list of our Proxy voting procedures is available upon request. A current copy of our ADV Part 2A & Privacy Policy is available upon request or at www.baldwinmgt.com/disclosure.
Richard K. May, Managing Director (RKM), Business Development
Richard founded his financial advisory firm in 1980, which was one of the early fee-only advisors in the industry. He received his B.A. from Princeton University and his M.B.A. from the University of Michigan.
In 2007, Richard founded the West Chester LLC, a private equity company that promoted and funded business start-ups and public projects in the Borough of West Chester. In 2011, he co-founded the Uptown! Entertainment Alliance and the Uptown! Bravo Theatre, LLC. Together they purchased and rehabilitated the National Guard Armory, and then opened the Uptown! Knauer Performing Arts Center in 2016. Richard has served on the boards of many non-profits and community service organizations over the years.