American Investors Are Quietly Dumping U.S. Stocks at Record Pace

Something strange is happening on Wall Street. While headlines fixate on Nvidia earnings and AI hype cycles, American investors are doing something they haven’t done at this scale in over 16 years: pulling their money out of U.S. stocks and shipping it overseas.

The numbers are jarring. In just the first eight weeks of 2026, U.S.-domiciled investors yanked $52 billion from domestic equity products — the largest outflow for that period since at least 2010. Zoom out six months and the total hits $75 billion, according to LSEG/Lipper data. This isn’t a trickle. It’s a full-blown rotation.

Where’s the money going? Everywhere that isn’t the S&P 500, apparently. Bank of America’s February fund manager survey showed investors switching from U.S. to emerging market equities at the fastest clip in five years. South Korea led the way with $2.8 billion in inflows, followed by Brazil at $1.2 billion. In total, $26 billion has flowed into emerging market equities since January.

The performance gap tells the story. Over the last 12 months, the S&P 500 has returned about 14%. Decent in a vacuum — but Seoul’s KOSPI has doubled. Tokyo’s Nikkei is up 43% in dollar terms. Europe’s STOXX 600 surged 26%. Even Shanghai’s CSI 300 posted 23% returns. If you were parked exclusively in U.S. equities, you missed the party happening everywhere else.

Valuations add fuel to the fire. The S&P 500 still trades at roughly 21.8 times forward earnings. Europe? Around 15 times. Japan sits at 17. China is a bargain-basement 13.5 times. When UBS’s head of European equity strategy says his U.S. wealth clients are “all talking about investing more offshore,” you know the narrative is shifting fast.

The weakening dollar — down about 10% against a basket of currencies since January 2025 — makes this rotation even more interesting. Yes, it’s more expensive to buy foreign assets. But the returns on those assets, converted back to dollars, get a nice tailwind. European bank stocks alone ripped 67% higher last year and are still climbing in 2026.

Here’s the kicker: since Trump’s inauguration, U.S. investors have poured nearly $7 billion into European equity products. During his entire first term from 2017 to 2021, they pulled out $17 billion. That’s a complete reversal in sentiment.

Does this mean you should dump your U.S. holdings tomorrow? Not necessarily. But the “buy America” trade that worked almost effortlessly since 2009 is showing cracks. The smart money isn’t panicking — it’s diversifying. And when the biggest rotation in 16 years is underway, the worst thing any investor can do is pretend it isn’t happening.