No. of Recommendations: 3
A number of folks on this board have advocated selling completely out U.S. stocks and especially the U.S. Dollar.
Here's what Marks writes and I think it's worth considering.
"“Should I sell my stocks?”
The problem we face isn’t a problem with the U.S. stock market or with U.S. companies. It’s a problem with U.S. fiscal management, and ultimately a potential problem with the U.S. dollar. If you sell your U.S. stocks, where will you put your money? A bank? A money market fund? Bonds? If they’re denominated in dollars, you haven’t escaped the risk under discussion here. If the U.S.’s bad habits catch up with it and investors become less happy with U.S. Treasurys, that’s likely to manifest itself through a lower opinion of the dollar. If you want to do something about that risk, you may have to move into (a) assets denominated in currencies other than the dollar, (b) non-financial assets, such as gold or non-U.S. real estate, or (c) non-U.S. companies or cryptocurrencies.
But moving into non-dollar or non-U.S. assets introduces other risks. Many companies elsewhere in the developed world have poorer growth prospects than leading U.S. companies and less scale (and thus fewer economies of scale), and many operate in jurisdictions that are more highly regulated and less business-friendly. Companies in emerging markets often appear to have good growth potential, but realizing it is much more uncertain. Most institutional investors have been heavily allocated to the U.S. to date, with great success, and the reasons for that – the free-market system, pro-business climate, economic vitality, spirit of innovation and adaptability, technological and managerial expertise, rule of law, moderate regulation, excellent higher education, strong capital markets – largely remain intact. In my opinion, no other country possesses these things to the same extent. Taking money out of the U.S. entails risks that could easily render it unsuccessful, especially if it’s done to avoid a problem whose reckoning may be so far off. (And I don’t want to give the impression that only the U.S. is running deficits. If you move out of dollar assets and into another currency that’s subject to debasement, what have you accomplished?)"
If you move everything out of the US (cleanest dirty shirt at the laundry, best looking horse in the glue factory, etc..) are you really protecting yourself?
