"Investors have bet heavily on the U.S. economy. That’s not a great idea", by Ian McGugan
Given the concerns about the US these days (huge and increasing debt, failure of rule of law, outsized weighting in the world stock market, unhappy bond market, declining USD), should one reduce the exposure to US Indexes in a passive indexing portfolio with a long term horizon (5-10 years)?
If so, where would be a better place right now to put this money? Europe? Gold? Cash? Other?
Thanks in advance for your opinion.
We are less sure of further 'reducing' because of course the market has already reduced weightings for US investors by declining so much. One man has essentially caused the problem, and things could reverse easily (maybe unlikely in the short term, though). Valuations have adjusted, and the US will get through this pain, eventually. So rather than a wholesale shift, now, we would simply deploy new money elsewhere to get more balance. Europe looks fine, Canada is looking better than before (largely by default). We think gold still looks good amidst massive uncertainty. Cash is probably fine for now, but we would be OK deploying cash rather than accumulating. As we saw two weeks ago, the market is poised for a rally on ANY good news. We think first quarter earnings comments will be ugly, however, as tariff uncertainty will trickle through to pretty much all businesses. We would not expect much in the next three to four months. But longer term (2 years+) we think things will be OK.
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