what situation exactly?
US changing its foreign policies against its allies. Losing credibility.
How should it affect future profitability of US listed companies vs. EU listed companies?
Where I see an increased risk is the US domicile. UCITS alliviate it a bit, investing in VT creates 100% exposure to the US jurisdiction.
My view is that market doesnât always move with profitability. It moves with sentiments. Even if market in US falls 20% , the valuations will still be decent.
I have no idea on how the profit will move. But the question is if itâs wise to have 65% exposure to fortunes of companies listed in one country?
In the end UCITS or not, the underlying investments are same. Not sure how does UCITS makes difference ?
UCITS are mostly Irish domiciled entities to which Irish law applies. When you buy WEBN/G, formally you buy an Irish security.
For example, if you die, your heirs will not have to deal with the Irish tax authority, as they donât impose estate taxes. In case of VT, which is a US security, they will have to deal with the IRS.
If one imagines unimaginable, like confiscation or asset freezing, WEBG will shield your non-US holdings, while VT creates 100% exposure to the whims of the U.S.
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I just donât see why not? Everyone is entitled to his/her opinion about valuations though. I personally donât care, or better said, have learnt not to care.
Apart from political risks like confiscation i donât see reasons to tinker with the allocations.
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Countries like Serbia wonât impact your MCW by expropriation and sanctions. Russia did slightly, and the USA would eradicate more than a decade of gains.
I just donât think that local conflict compares well to this escalating conflict between imperial powers we have at hand.
Someone might make bank, which doesnât mean that you can participate.
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I donât want to enter politics, just to say that this is impossible: I did already spend it and could lose 100% (which is impossible) and still be in the green. The Spaniards have a saying for that situation: âque me quiten lo bailado!â. 
Now, after the 2nd world war U.S. companies did pay all dividends afterwards, even to German stockholders. And that is where most of my investments are.
Guys. Stay away from the news. Keeep buying VT!
All this overload of media without any real information is clouding judgement. Zoom out on the stock market charts and see this all doesnt matter in 10, 30, 30 yearsâŠ
The real danger is not beeing invested in productive assets.
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Weâll see. Personally Iâm even contemplating what should be unthinkable: whether the US Govt defaults on some of its debt (bonds), given the unhinged, all-in way the elected and unelected US leadership is acting.
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I donât see this happening at all.
The nearest we got to was maybe accidental default due to debt ceiling political brinkmanship, but a true failure to pay should never happen.
Maybe there is some increased risk with Musk poking around in systems and firing key people. Maybe a payment is not met accidentally due to people or systems being broken?
Who was the USA after WW2 and who are they feared to be this time? Do you think those two value stability and keeping promises the same? Expropriation does happen, empires do fall, the winners donât have to be democracies.
I think, we are complacent in a nothing-ever-happens dream. Even cheap downside protection, like
- shifting from VT to VTI+EXUS+EIMI (+0.01% TER, missing 3.4% World ex-US SC),
- or broker diversification,
is brushed away. It is undeniable that the risk has risen to the level of a possibility. Those are the pennies in front of the steamroller that we have been warned about. Uncompensated idiosyncratic risk.
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I read about it recently. While an outright default of US on its bonds has been so far avoided (there was a mentioning of defaulting on âgold notesâ or something similar, never heard about it), US government managed to achieve similar results by inflating away its debt.
US expropriated/froze a lot of Russian assets and also assets of a lot of people who owned Russian stocks.
As @Dr.PI already mentioned, the government can always inflate away the debt and I personally think that a US default will never happen.
I speculate that Musks team will deliver on the cost cutting and Trump will lower taxes for companies, which in turn makes the US market more attractive.
Expropriating and freezing assets are two completely different things and afaik no assets have been expropriated.
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How likely do you rate that scenario?
What happens if they default? What would be the best performing asset in such a case.
Now just hold the best performing asset in this case with the weight of this happeningâŠ
Yep, thatâs 100% how I feel about it too. I think the word âneverâ should never be uttered 
Answers in sequence of the post.
I donât know, but if the chance is at or above 25% itâs a big worry.
I reckon if they default for real (ie miss bond payments) itâll be an earthquake in global markets which could take years to fix.
I reckon gold and/or CHF would be the best thing to have, and working to bring it to 25% of the total. I donât consider VT/VWRL any more safe, actually, given the interconnectivity of the equity markets.
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From the few above posts it looks like the consensus is that VT or VWRL are equally risky (the risk being the US assets, not necessarily the US domicile).
If this is the case then we should altogether stop investing in US stocks, and many people should be already selling, crashing the market. But it doesnât seem it is happening.
I find myself a bit undecided on how I should act:
- Iâm a true believer of the Just Keep Buyingâą method, so one part of me donât want to act based on emotions
- On the other side the situation doesnât look good
But was the situation looking good during the small Covid crash? Was it looking good in 2008?
I think also part of the confusion is coming from my ignorance of what actually can happen / can they do with my shares/ETFs:
- Big crash
- Frozen
- Expropriated
- ?
For the crashing part Iâm not too worried as I have a long investing horizon.
For the freezing/expropriation of assets I have no clue about its mechanism. Can the orange man / technoking just wake up in a bad mood and poof, everything is gone?!
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In my opinion a crash and a weird bond semi-default is a possibility, the other two are not.