In an interesting discussion with some highly spirited investors, I found myself “defending” America (not Trump). Despite its flaws, the US is still the best house in a shaky neighborhood though even the best houses can spring a few leaks. The largest economy in the world continues to benefit from its free-market spirit, rule of law, and a deeply rooted culture of innovation.
Yet growing debt, unpredictable tariffs, and policy whiplash have begun to chip away at America’s edge. Remember that no president, Trump included, stays in office forever. Markets evolve, and so does leadership eventually. If the growing belief is that the US is no longer willing to play the role of global policeman, that might not be such a bad thing depending on how you look at it.
Reserve status? Yes. Enthusiasm? Debatable. I argued that the US dollar is going to keep its crown as the world’s reserve currency mainly because there is no other contestant with a better talent act. However, being the global default does not guarantee popularity.
Listening to media fear-mongering is often what leads investors astray and I can count a few of my own clients in that camp, especially when it comes to dollar doomsday headlines. On another note, US treasuries remain one of the deepest and most liquid markets in the world.
When it comes to investment strategy, rising short-term volatility is inevitable in the dense fog of uncertainty hanging over the global economy and markets as a result of the Trump administration’s on-again, off-again tariffs. In other words, the US markets set the tone for the rest of the world.
I’m still bullish on America but I do not wear blinders. Never bet against opportunity, no matter where it shows up. Diversification is not just a buzzword in our world, it is a survival strategy. Our global investment approach is built to chase opportunity wherever it runs.