This morning’s 122 point Dow rally has shown that there is still plenty of appetite for U.S. equities.
Contrary to the image promoted by some that the United States is a bumbling, peaceful giant getting trounced by more efficient rivals (China, India, Russia), we have a lot of built-in structural strength…
And a viciousness that cannot be immediately discounted.
We’re large, yes, but we are about as peaceful as an MMA fighter.
Also: there’s a reason why the world’s best companies still form and grow in America. Despite the bureaucratic and regulatory creep over the past two decades, we are still (relatively) business friendly.
A Facebook or Google could never start in the regulation-giddy EU, for example, and thrive on the same scale. Don’t believe me? Name one globally pervasive Internet brand or tech titan established in the EU.
Also, our absurdly large military and defence budget — once objects of frequent criticism — keep us from getting flushed down the drain or shown the door by trading “partners.”
The talking heads who say that U.S. dollars will soon become inflationary toilet paper, and that you should stock up on all the gold and international equities you can get your hands on… They aren’t shooting straight. America may be on a mild decline for demographic reasons, but our economy is still rock solid.
In fact, U.S. stock funds fared far better than diversified international funds in 2010. No one mentions this.
Also, America remains an empire — an economic and ideological empire. We convey a peaceful, progress-forward image, but we are every bit as aggressive as rivals like China when it comes to protecting our core interests. (Take, for example, the fact that alleged WikiLeaker PFC Bradley Manning has been rotting away in solitary confinement for the past seven months. This definitely has a chilling effect. I doubt others with access to privileged government information would be as open to leaking documents, knowing that they can be tossed into a 23 hour per day “hole” and largely forgotten by the world.)
Bet against an American recovery at your own risk.