By US stocks have been unusually volatile since the start of this year, mostly because of the Trump administration’s new trade policies that many believe could lead to a recession in the second half.
In comparison, European equities have attracted significant capital in recent months due to more favourable monetary policies and, more importantly, stock valuations.
However, despite this short-term underperformance, famed investor Jim Cramer does not support abandoning US stocks altogether.
Note that the benchmark S&P 500 index has recovered more than 15% over the past 7 weeks.
Why are US stocks still a better investment than European stocks?
Cramer remains selectively bullish on US stocks for the back half of 2025, primarily because they have fundamental strengths, including the size and liquidity of American companies.
US market is one of the largest and most liquid in the world. A massive number of companies listed in the US are multinationals with deep financial resources and stability.
This sheer size allows for greater flexibility in capital allocation, enabling companies to weather economic downturns more effectively.
Additionally, top US stocks have historically delivered better long-term returns compared to most other markets, including Europe.
Despite short-term fluctuations, the S&P 500 has consistently grown over decades, benefiting from innovation-driven industries such as technology, healthcare, and finance.
While European markets may offer periodic strong performance, American firms have proven their ability to generate consistent earnings and shareholder value over time, which makes them a more reliable investment for the long term, Cramer told members of his Investing Club today.
US stocks offer ample exposure to international growth
Cramer continues to favour US stocks also because they often offer indirect international exposure.
Many large American corporations, such as Apple, Microsoft, and Tesla, generate material revenue from overseas markets, which means US investors do not need to shift their portfolio entirely to foreign stocks to gain exposure to international growth.
Rather than turning his back on US stocks entirely, the former hedge fund manager advocates a more strategic approach.
He agreed that a bunch of stocks may be overpriced, but believes that high-quality American names can still offer strong investment opportunities if acquired at the right price.
By focusing on stocks with strong fundamentals, pricing power, and resilience against economic uncertainty, investors can maximize their returns while avoiding unnecessary risks, his latest report established.
Cramer’s advice for investing in the current macro environment
All in all, the Mad Money host recognized momentum in European stocks in his recent dispatch but remained committed to US equities.
Instead of shifting portfolios overseas, he continues to recommend that investors be strategic in their approach.
Jim Cramer does not support a full “sell America” trade.
Instead, he favours a selective approach to investing in the US in the current macroeconomic environment.
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