Why limit your stock investments to the United States?
At the risk of being incredibly biased toward investing in America, let’s talk about our economic advantages over every other economy in the world.
In The Accidental Superpower, Peter Zeihan makes some important observations:
Our Federal Reserve structure allows the US Monetary system to react very quickly to crisis. In 2007 the Treasury Secretary Hank Paulson was able to pull every key player into one room and hammer out a deal that kept our financial system afloat. Unfortunately, the European Central Bank took months and months to address that situation.
Likewise, in the Spring of 2020 we all witnessed the Fed come to the aid of markets with a series of edicts handed down over a few weeks. The remarkable egress of our economy out of the Pandemic that we are witnessing as I write this book is already proving to be historic. Much of that is due to our globally preeminent Central Bank.
Our ability to trade with both European and Asian Trading Partners almost effortlessly is another factor in our economic superpower status. Should Europe go into a recession, we can easily pivot to working with Asian partners. All must go into a recession for us to do the same.
Regulatory and Media Scrutiny
Also, when thinking of US companies’ superiority to their foreign counterparts and investments. We cannot ignore the policing role our media and regulatory agencies play in safety. US companies have to go through rigorous reviews with regulators. Likewise, the media’s thorough inspections of potential misdeeds is sometimes misleading, as they tend to find many problems that don’t exist. But that is a better alternative than sleeping on the job.
Finally, we have a much more of an investor-friendly economy than other countries. This leads to a level of liquidity of US shares that, as was mentioned above, force the big fund complexes to have to offload large US companies shares first simply because when the global economy is frozen up, these are the easiest things to sell.
