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  • Writer's pictureIshfaaq Peerally

Investing Outside the US

🇺🇸 The United States of America has been the best place to invest in the last 200 years with the S&P 500 $SPX500 returning about 10% per year. Why is this the case and should we invest in other countries?

💵 Warren Buffett $BRK.B says to never bet against America. No country has developed so rapidly in such a short amount of time. The main reason is because of the entrepreneurial capitalist economy the country had from its beginnings along with a robust legal system. If you're investing in a gold $GOLD miner in America, you don't have to worry about the possibility of the country nationalizing the company if gold prices go up.

The USA has a large number of public companies and it is always possible to find a stock that is undervalued and uncorrelated with the market even when they are at all time high.

🌍 However, according to Ray Dalio, the American Empire is in decline and we should look elsewhere, mainly China. Returns in developing countries can be higher. Higher returns means also that you need to discount earnings at higher rates and use bigger margins of safety for the risk. Just based on that stocks, may not look that attractive anymore.

It is a good idea to invest in other countries but I would still prefer to have the majority of my portfolio in the US. Whether you should invest outside the US or not really depends on you. If you have a currency that is strengthening with respect to the US Dollar, maybe you should not invest in America.

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