So international stocks actually had a really solid year in 2025, and honestly it's worth paying attention to what's happening here.

For the longest time, U.S. stocks just dominated everything post-financial crisis. But last year we finally saw that script flip. The iShares MSCI EAFE ETF crushed the S&P 500 by a pretty wide margin - we're talking 31.6% versus 17.7%. Emerging markets went even harder at 34%. That's not a small difference.

What's interesting is this wasn't just about tech selling off. The real story was the rotation from growth into value. The dollar weakened, and suddenly all those beaten-down international names started looking attractive again. People got tired of chasing expensive mega-cap stocks and started hunting for actual value elsewhere.

Here's where the outlook for international stocks gets compelling. Look at the valuations. The S&P 500 is sitting at around 29x forward earnings - that's historically elevated. International developed markets? 19x. Emerging markets? 18x. That gap is massive.

Beyond just the numbers, there are some real tailwinds building. Europe's talking fiscal stimulus, productivity is picking up, and that weaker dollar I mentioned helps foreign companies when they report earnings back home. The earnings growth outlook for international stocks looks solid too - after basically flat growth in 2025 across most developed regions, 2026 estimates are calling for high single-digit to low double-digit growth.

Think about it this way: U.S. stocks have basically been on a 15+ year winning streak. International equities are cyclically sensitive and trade cheaper. They're also way less dependent on tech for their returns, which means different sector exposure and different economic drivers.

Now, there are real risks. Tariffs could explode, the dollar could reverse, and manufacturing slowdowns hit cyclical markets harder. But after such a long drought, the outlook for international stocks finally seems like it could shift in their favor for an extended period.

The valuation gap combined with improving earnings expectations is the kind of setup that historically rewards patient capital. Whether this is the year it finally breaks through is the question everyone's asking, but the conditions are definitely there.