By Kim Iskyan, Stansberry Churchouse Research

Since 2009, the U.S. stock market has made investors a lot of money.

Since the end of the global financial crisis, the S&P 500 has returned over 300 percent (including dividends).

But sooner or later, the good times have to end. And it looks like time is running out for this bull market…

The outperformance can’t go on forever

The graph below from JP Morgan shows the cycles of outperformance and underperformance of U.S. stocks and the rest of the world, relative to each other. For example, from 1994 to late 2000, the U.S. market outperformed global ex-U.S. by 215 percent. The reverse happened from 2000 to 2008, when global ex-U.S. outperformed by 88 percent. And most recently, since 2009 U.S. stocks have outperformed the rest of the world by nearly 100 percent.

If we look a little deeper… the S&P 500 is up 317 percent from its lowest point in March 2009 (in U.S. dollar terms, including dividend reinvestment). That’s compared with 241 percent for MSCI Asia ex Japan, 234 percent for MSCI World, 216 percent for Singapore stocks and 204 percent for Hong Kong’s Hang Seng over the same period, as the graph below shows.

We’ve seen this sort of outperformance before. Take another look at the first graph. As you can see, in the late ‘80s and early ‘90s, U.S. stocks outperformed other global markets by 100 percent. But eventually, U.S. stocks came back to earth… and over the following years, global (ex-U.S.) stocks outperformed U.S. stocks by 39 percent.

The same thing happened again in the late ‘90s… U.S stocks outperformed by 215 percent, but then global (ex-U.S.) stocks ended up outperforming U.S. stocks by 88 percent in the following years.

It’s like a rubber band… stretch it and when you let go it returns to its original shape. So after a period of rising prices, securities tend to deliver average or poor returns. Likewise, market prices that decline too far, too fast, tend to rebound. That is mean reversion, and it works over short and long periods.