Like Mirager and Abs Max, I think “never to be trusted again” is a very hard position to take.
I’m confident the US can regain the trust of other countries but it would be a gradual process that takes time. It is not as easy as “Trump’s out of office, everything is fine now.”
Some things would be immediate: there’s not much reason to not travel to the US if due process is back, controls at the border become reasonable again (checking the inside of the phone of people at random to check if there are things not acclamatory of Dear Leader inside and turning them back if so is not ok), ICE is reined in and the tariffs are taken away.
I would say reestablishing trade routes, foreign investments inside the US, trust in the USD and US Treasuries would take more time and may never reach the level it was at again. Governments and companies have to plan on more than 4 years for their investments/trade dependencies and the US will have to prove that someone like Trump isn’t coming back to power every 4 years or so.
That being said, they remain a big single language market. They’ll be attractive to companies if companies can trust that they know the framework in which they operate and it will not dramatically change on the whims of whomever.
When it comes to US stocks, I don’t believe in a full spike recovery and then 20%+ returns years one after another, but I may be wrong. There may be some spike at first but there are real effects to the tariffs and loss of international trust that will affect the US economy moving forward. They’ll start to show up and investors may or may not reconsider their stance toward which companies they invest in (I don’t pretend to understand what investors invest in, though, I’ve been caught blindfolded with the market over-reacting on some news or investors piling in something I wouldn’t touch with a 10 foot pole before).
We should consider Trump may be more a symptom than the root cause. While Trump’s approval rates overall have started to decline recently, 90% of Republicans continue to give him the thumbs up. The fan base will be around long after he left office (although that might be a while - he‘s already publicly toying with a „3rd term“). Future presidents will have to deal with those realities.
Given this, the rest of the world would be foolish to merely bide its time - shifts will happen, slowly but surely, away from overdependence on a nation that can no longer be relied on blindly.
Imho a complete reversal to the ‚pre-Trump world‘ we all got used to is unlikely. We shall live in interesting times…
It might happen if the Trump vision is tried and fails badly and leads people to want something different. e.g. if trade tariffs go wrong, and economy ends in a deep recession and stock markets crash and people lose their jobs.
Let’s take a moment and ponder if this isn’t among the unthinkables. I’ve been to the US a few times, loved it, and had absolutely zero fear while going there, being there, or leaving. I had more nerves going and leaving from Turkey and Israel or even my wife’s Serbia (though I am Greek and we get preferential treatment because we…assisted them in doing some bad stuff). Now I just wouldn’t travel to the US and it shows that thousands around the world share the sentiment. Isn’t this unthinkable?
I also stopped travelling to the US (since first Trump term). However, I think I’m probably in the minority. Assuming a lot of the changes are rolled back, I think most people will quickly forget.
Funnily enough my last trip was on Trump’s first term, no issue. Before that it was with Obama and GW Bush. Gosh it’s been a while.
The bottom line should be that if you have no reason to fear travelling (all papers kosher, no sketchiness, no funny stuff in the luggage) you shouldn’t fear travelling.
That’s the thing , actions of current US administration has caused doubts in minds of lot of people across the spectrum
people are concerned about travelling to US because who knows if they get detained. Even if 5 people out of million travelling get detained randomly , it’s still enough to cause a doubt
until last year, people used US services as if they are home grown (Google, YouTube, Amazon, Apple etc) and always looked Chinese services with a doubt (TikTok, Temu etc). Now it’s not the case. There is a shadow of doubt about these services and how our data can be weaponised against us
Trade partners have understood while it’s great to have US as a trade partners, it’s not sustainable to be completely dependent on them (Canada, Mexico had a rude awakening). This would force countries to rethink their behaviour towards other countries. We need to remember that US only have 4% of world‘s population with huge inequality and a lot of debt, so in order for foreign companies to thrive, there is still plenty of fish outside the USA.
Weaponisation of USD already started with Ukraine war but it became even starker when US threatened to apply 100% tariffs if BRICS thought of creating their own currency. Why should countries not diversify away from USD slowly? If they don’t they will be stupid to do so.
Investments in US by foreigners are also under doubts because it seems every new govt can make their own rules. It’s okay to build in US to serve US market but I don’t think foreign companies will try to build in US to export their goods.
Talent in US universities is also under doubt with constant pressure from administration on what they should work on and what is science and what is non sense. In past all theories were up for debate but nowadays if Trump thinks coal energy is beautiful then it’s beautiful
I think there is not much to say about defence partnerships. We can clearly see the shift from being the allies based on shared values to being paid mercenaries. Who in their right mind can count on US to come to their rescue unless they are rich to pay US to do so.
Of course everything can be forgotten, forgiven and ignored because let’s face it „US is a big market“. But the era of blind trust is over. Starting a military war or starting an economic war which can destroy economy of other country are more or less the same thing because they impact lives and this gets etched in memories
And in addition, let’s not be naive. US has very high GDP but it’s all build with debt. Most US folks are indebted and it’s a matter of time when they need to stop spending and start paying off the debt. This [article](Complete Measures of U.S. National Debt — Penn Wharton Budget Model also shows other US obligations which normally doesn’t get discussed. When that happens, would 4% of the world population continue to be world‘s largest consumption market ? Time will tell.
P.S -: everyone is saying Europe has had their wake up call when it comes to their reliance on USA. What about the wake up call for global investors ?
Trust level regarding countries depends mostly on current and estimated future trustworthiness - opposed to a person, where we use past behaviour to determine trust level.
Case in point: Germany was trusted pretty quickly after WW2 in proportion to what happend.
It was literally occupied by the allies for a long time and had an extensive de-nazification program.
Lots of people tried and executeed at the Nuremberg trials as well etc.
Not comparable at all imo.
And it has been shown that it‘s very dependent on a few votes in swing states, on how trustworthy the next admin will be…
You would today but who’s to say that they would not consider the absence of social media history as suspicious enough for them?
And that’s the problem with these at whim changing policies: you can’t trust that the policy that is applied when you leave home is the one that will be applied once you reach the (US) airport. For now, as a European/Swiss person, you risk at most to be denied entry and have to return back but we don’t know how that could evolve or when.
Once you start removing long standing policies and indulge into very hard to believe they exist new ones, people’s imagination becomes the limit. There are real threats and perceived ones. I don’t think either of those is worth a tourist visit when the world is such a vast place with plenty of other destinations to go to.
As you’ve pointed out, it has also an impact on the willingness of scientist and top thinkers to establish themselves in the US (which in turn affects their ability to innovate and the competitivity of their companies).
The data are clear: diversification reduces risk while not harming returns much…unless you get mag7 ripping it for 10 years straight!
That said I am still overweight US myself by 20% above MCW, but given it’s no time to sell it’s also possible to just add more ex-US, if one’s portfolio is not massive.
Well. I think we need to start checking if MCW World ETF is really the best strategy or not. Specially talking about people who are not US residents.
And I was wondering where exactly this strategy came from when most people don’t really invest in global market weight ETFs. As per data, most investors have significant home bias (Europe, CH, IN, Canada, Japan, Australia etc) but on Reddit, I keep seeing VT & Chill.
I have a feeling that VT & chill was mainly introduced for US residents to help them diversify abroad (where it makes sense as it still have 60% US exposure) but somehow got adopted by some other foreign investors too
Did Europeans (on social media) just copy paste strategy for US investors assuming it works for them too?
Precisely. Policy has become arbitrary, with foreigners being blamed by the powers that be for the country’s problems. There is little commitment for due process, it is doubtful that even Supreme Court rulings have much weight these days. Meet an entitled-feeling border agent, you may spend hours in immigration. Have the orange one getting up with the wrong foot on the day you land, you may be sent back, or worse, for little reason. Admittedly a small risk but why would one want to take it?
After forecasting a 5% dip for inbound travel to the US this year in February, travel forecasting group Tourism Economics has revised its projections, telling CNN Travel that it now expects that figure to almost double to 9.4%.
Summer hotel bookings from European travelers for Accor properties in the US are also down a whopping 25%, CEO Sébastien Bazin said in a recent interview with Bloomberg TV. Accor hotel brands include Fairmont, Ibis, Novotel, Mercure and Raffles.
Jean-François Rial, CEO of France’s leading luxury tour operator Voyageurs du Monde, said that ever since Trump’s inauguration in late January, bookings for US travel among his wealthy French clients have dropped a “colossal” 20%. “In the 30 years I’ve been in this business, I’ve never seen anything like this for any destination. It’s huge,” he told CNN Travel.
But what has been the variable that was optimised ?
Returns or Risk?
Would be great if you can share some data because all global research I found is always talking about home bias. No one actually says buy a world ETF with all the companies. Not even Boggle or Ben Felix. In fact Bogle was not even asking for international stocks
Most of the recommendations are to diversify internationally. Which means people should not ONLY invest in domestic stocks. But it never says to simply extrapolate the S&P 500 theory to Globe. As referenced in Ben Felix‘s recent video, the research have optimal base case for 65% allocation to international stocks
By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, tu confirmes avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/
Durch das Lesen und die Teilnahme an diesem Forum bestätigst du, dass du den auf http://www.mustachianpost.com/de/ dargestellten Haftungsausschluss gelesen hast und damit einverstanden bist.
