Through gritted teeth in my best Dirty Harry voice:
"With the U.S. - the most powerful country on earth - dropping in global competitiveness, you have to ask yourself a question. Do you feel lucky today? Well . . . do ya PUNK!"
US Falls Down Competitive Ladder
I for one am looking for ways to hedge the decline of America and broaden my investment portfolio to incorporate a more global strategy. Most investors have the majority of their retirement savings pinned to the hopes of the homeland for fear of what the rest of the world might be hiding. It's a safe bet, sure enough. There's more transparency of information here, we have a stable government, monetary system and strong property rights.
On the downside however, we have a HUGE deficit, complicated tax code and massive legacy payouts due under social entitlement programs. The US dollar, once the bedrock for international trade and finance, has now come under question to remain the world's currency standard.
In the short-term, I'm extremely cautious with my domestic investments. President Obama has proposed some sensible solutions to get the economy rolling again. We would have been much better served, however, if he did so a year ago and not now when the chances of passage before the mid-term elections are desperate at best. Allowing the write off of investments by corporations and extending research and development tax breaks could, if passed, get the unemployment rate down and revive consumer confidence.
Think of the US like a blue chip stock. Sure you need it in your portfolio. But it's more likely to have enormous contingency issues - lawsuits against it, huge pension liabilities, etc. Growth and opportunities are better abroad.
How To Build A Global Investment Portfolio
I'm still a believer in keeping my cash in dollars with plenty still sitting on the sidelines. But my equity exposure will be by country and not by asset class (i.e. large cap, small cap) or industry (i.e. mining, consumer discretionary). Think of each country like a company and invest in those that are run the best and that offer the best value. For my money, the US is just not one of them.
