US stocks have set new records this year while Australia’s benchmark S&P/ASX 200 Index (ASX: XJO) has barely risen.

The S&P 500 Index (SP: INX) is up 9% in the calendar year to date (YTD) and hit a record 7,620.9 points on 2 June.

The Nasdaq Composite Index (NASDAQ: .IXIC) reached a new peak of 27,190.21 points on 1 June, and is up 13% YTD.

The Dow Jones Industrial Average (DJX: .DJI) touched a new high of 52,281.19 points on 17 June, and has lifted 8% YTD.

Meanwhile, at the time of writing, ASX 200 shares have risen by less than 1% in 2026.

Here’s why.

US stocks are smashing ASX shares in 2026

Drew Meredith, a principal advisor at Wattle Partners, says the performance gap can be attributed to artificial intelligence (AI).

In an article on The Golden Times, Meredith explained:

The United States market is being driven by a small number of companies with outsized earnings power, almost all tied to artificial intelligence infrastructure.

Nvidia, Microsoft, Alphabet, Meta, and Amazon have delivered earnings growth that justifies, at least in part, the premium valuations US indices now carry.

Meanwhile, ASX shares are being held back by several elements that have little to do with the quality of our listed companies.

Meredith says:

The Federal Budget’s CGT reform package has weighed on sentiment in financial stocks, property, and healthcare.

The US-Iran conflict has created energy price uncertainty that hurts an economy reliant on stable commodity exports.

The Australian consumer sector is also weak, with confidence falling to one of its poorest levels in 50 years last month.

On top of that, the ASX does not have many companies exposed to the AI earnings cycle in the same way that the US markets do.

Our tech sector is pretty small. In fact, tech shares comprise just 2.1% of the ASX 200.

Should you buy US stocks?

Meredith warns against chasing performance, commenting:

If you are sitting with a predominantly Australian portfolio watching the gap widen, you are probably feeling a pull to do something.

That pull is understandable. It is also the thing most likely to cost you money.

Meredith explains a phenomenon called “recency bias”.

When one market dramatically outperforms another for two or three years, investors feel they were wrong to be diversified. That feeling is not evidence. It is recency bias.

The periods of sharpest US outperformance relative to global peers have consistently been followed by periods of mean reversion.

This happened after the dot-com peak in 2000. It happened in the early years after the GFC when US banks were recovering and Australian miners were printing money.

It does not happen on a schedule you can predict, which is precisely why systematic diversification matters more than tactical shifts.

‘Mean’ is a statistical term for ‘average’. Mean reversion is the idea that share prices don’t stay unusually high or low forever. They tend to move back toward their historical average over time.

How switching from ASX shares to US stocks will cost you

One of the biggest reasons not to switch from underperforming ASX shares into outperforming US stocks today is the tax implications.

Meredith, a retirement wealth specialist, explains it this way:

For many retirees who built their Australian equity positions over decades, switching from Australian to global exposure carries a meaningful capital gains tax cost.

Selling a long-held parcel of BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), or CSL Ltd (ASX: CSL) to buy more Vanguard MSCI Index International Shares ETF (ASX: VGS), Global X Fang+ ETF (ASX: FANG), or iShares S&P 500 AUD ETF (ASX: IVV) is not a free transaction.

If those shares have large embedded gains and you are selling them in a year where the CGT discount is already under political threat, the timing adds an additional layer of risk.

What should you do?

Meredith said investors shouldn’t sell ASX shares while they’re soft today to buy US stocks at a cyclical high.

You may end up paying a big CGT bill for what will become a diminishing performance gap as US stocks undergo mean reversion.

The most prudent step is to check how your portfolio’s composition has changed this year.

Meredith advises:

Check your allocation. Not your recent returns, your allocation.

If your target was 40 per cent Australian equities, 25 per cent global equities, 20 per cent fixed income, and 15 per cent cash two years ago, what is it now?

If market movements have drifted you significantly off target, a disciplined rebalance to target is reasonable. That is not performance chasing. It is maintenance.

If you have cash to invest and want more global exposure, a regular contribution into the plethora of global ETFs could be an option.

The post Why US stocks have hit record highs while ASX shares have barely risen in 2026 appeared first on The Motley Fool Australia.

More reading

• How to invest $500, $5,000, and $50,000 on the ASX
• Want a pay rise? These ASX dividend shares keep delivering
• 3 strong ASX ETFs for beginner investors
• How much passive income can I make from ASX shares?
• The retirement ETF portfolio I’d add to super

Motley Fool contributor Bronwyn Allen has positions in BHP Group and Vanguard Msci Index International Shares ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, CSL, Meta Platforms, Microsoft, Nvidia, and iShares S&P 500 ETF. The Motley Fool Australia has recommended Alphabet, Amazon, BHP Group, CSL, Meta Platforms, Microsoft, Nvidia, Vanguard Msci Index International Shares ETF, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

If you are searching for some new investment options, then it could pay to listen to what the team at Morgans is saying about the three in this article.

Does it rate them as buys, holds, or sells? Let’s find out:

Beach Energy Ltd (ASX: BPT)

Morgans hasn’t been impressed with this energy producer’s operational performance. And, unfortunately, it believes the trend will continue and suspects that it could fall short of guidance in FY 2027.

As a result, it recently downgraded Beach Energy shares to a sell rating with a reduced price target of 81 cents. This compares to its current share price of 85 cents. It said:

We mark-to-market our second half estimates for weaker spot gas prices, while also trimming our Waitsia output forecasts for FY26-28 on continuing struggles. After downgrading our Q4 estimates for daily production rates, we see potential for BPT to fall just short of its FY27 group production guidance.

While BPT’s share price has already been under pressure, its earnings outlook has declined at a faster rate, with its forward EV/EBITDA actually rising. We downgrade our recommendation to Sell (from Hold) with a revised target price of A$0.81 (was A$1.10).

Flight Centre Travel Group Ltd (ASX: FLT)

While this travel agent recently downgraded its earnings guidance, Morgans has been far more forgiving.

It appears to believe that the worst is now behind the company and that a sharp rebound in earnings and its valuation could be on the cards soon.

This has seen Morgans put a buy rating and $14.80 price target on its shares. This is meaningfully higher than the current Flight Centre share price of $11.99. It commented:

Given recent downgrades from other travel industry peers due to the conflict in the Middle East, FLT’s downgrade wasn’t a surprise. Given its balance sheet strength and depressed share price, a new up to A$200m share buyback was announced. We have made only minor changes to our forecasts given FLT’s guidance was broadly in line with our previous forecast.

While a peace agreement and eased travel restrictions are positive, we think 1H27 will still be challenging. We forecast a strong recovery in 2H27. If it wasn’t for this conflict, FLT would have had a great year given its results for the first nine months were strong. We are buyers of FLT because when operating conditions ultimately improve, both its earnings and share price will be materially higher.

Judo Capital Holdings Ltd (ASX: JDO)

Another ASX share the broker is sticking with after an earnings guidance downgrade is small business lender Judo Capital.

It thinks the selling has been overdone and has retained its buy rating with a reduced price target of $1.47. This compares to the current Judo Capital share price of 88 cents. It said:

JDO downgraded its FY26 PBT guidance by c.8% at the mid-point. Even more disappointing was first-time FY27 PBT guidance which was c.16% below expectations at the mid-point. The share price drawdown was vicious (particularly considering the decline that had already occurred since February).

While the earnings growth outlook has moderated, we still forecast c.30% EPS growth across both FY26 and FY27 with the stock now trading on a c.6.8x PER (FY27F) and 0.6x P:BV (end-FY26). A significant risk premium or probability of failure has been priced into the stock. BUY.

The post Buy, hold, sell: Beach Energy, Flight Centre, and Judo Capital shares appeared first on The Motley Fool Australia.

More reading

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• Why Beach Energy, Ioneer, Solstice Minerals, and Transurban shares are pushing higher today
• Why 4DMedical, Centuria Capital, Judo Capital, and Worley shares are dropping today
• Why DroneShield, WiseTech and Judo shares are leading the ASX 200 lower this week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The amount of money you have to invest can change the best way to approach the ASX.

A $500 investment needs simplicity. A $5,000 investment gives more room for choice. A $50,000 investment allows investors to think more carefully about diversification, income, growth, and risk.

Here is how investors could think about putting each amount to work.

How to invest $500 in ASX shares

With $500, the most important thing is getting started sensibly.

A smaller investment does not leave much room to build a portfolio of individual shares. Brokerage costs can also impact you more when the investment amount is modest.

That is why an ASX exchange traded fund (ETF) could be a useful starting point.

A fund such as the iShares S&P 500 ETF (ASX: IVV) gives investors exposure to 500 of the largest listed companies in the United States through one trade.

That includes businesses across technology, healthcare, financial services, consumer goods, communication services, and industrials.

This can be a simple way to gain instant diversification and global exposure. It also removes the pressure of trying to choose the perfect first share.

The first $500 may not transform a portfolio overnight, but it can create momentum. Once the first investment is made, investors can add more over time and allow compounding to do more of the work.

How to invest $5,000

With $5,000, investors have more flexibility.

One option would be to split the money between a broad ETF and one or two high-quality ASX shares.

For example, an investor could use part of the money for the IVV ETF or the Vanguard MSCI Index International Shares ETF (ASX: VGS), then put the remainder into a quality ASX blue chip.

Wesfarmers Ltd (ASX: WES) could be one option. The company owns Bunnings, Kmart, Officeworks, and industrial businesses, giving investors exposure to a collection of strong brands and cash-generating assets.

Another possibility is Goodman Group (ASX: GMG), which has exposure to logistics property, industrial assets, and data centres across key global markets.

The advantage of this approach is balance. The ETF provides diversification, while the individual shares allow investors to start building positions in companies they believe can compound over time.

At this level, investors should still avoid spreading the money too thinly. Owning too many small positions can make the portfolio harder to follow and may reduce the impact of the best ideas.

How to invest $50,000

A $50,000 investment opens up more choices. At this size, investors can build a more complete ASX portfolio with a mix of ETFs, growth shares, dividend shares, and defensive holdings.

A possible structure could include a core allocation to broad ETFs such as the IVV, VGS, or the Vanguard Australian Shares Index ETF (ASX: VAS). These funds can provide exposure to large baskets of local and international companies.

From there, investors could add selected ASX shares.

For growth, companies such as Xero Ltd (ASX: XRO), Pro Medicus Ltd (ASX: PME), and Goodman could be worth considering. These businesses give exposure to cloud software, medical imaging technology, and global property infrastructure.

For income, investors may look at shares such as Transurban Group (ASX: TCL), APA Group (ASX: APA), or Rural Funds Group (ASX: RFF). These offer exposure to toll roads, energy infrastructure, and agricultural property assets.

With $50,000, risk management becomes more important. Investors can spread money across different sectors, avoid relying too heavily on one company, and keep some cash available for future opportunities.

Build the habit

The best approach will depend on an investor’s goals, time horizon, risk tolerance, and need for income.

But the broad idea is quite simple. Start with diversification when the investment amount is small, add quality shares as the portfolio grows, and build a stronger mix of growth, income, and defensive exposure once the capital base becomes larger.

The post How to invest $500, $5,000, and $50,000 on the ASX appeared first on The Motley Fool Australia.

More reading

• Why US stocks have hit record highs while ASX shares have barely risen in 2026
• Want a pay rise? These ASX dividend shares keep delivering
• 3 strong ASX ETFs for beginner investors
• 3 top ASX shares to buy for an SMSF
• The retirement ETF portfolio I’d add to super

Motley Fool contributor James Mickleboro has positions in Goodman Group, Pro Medicus, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group, Transurban Group, Wesfarmers, Xero, and iShares S&P 500 ETF. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended Apa Group, Rural Funds Group, Transurban Group, and Xero. The Motley Fool Australia has recommended Goodman Group, Pro Medicus, Vanguard Msci Index International Shares ETF, Wesfarmers, and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.