Earlier this year I read predictions that international stocks would outpace domestic stocks in the coming decade. I then came across this article, which includes a nice chart on this:
https://www.fidelity.com/viewpoints/investing-ideas/international-investing-myths
When the riots started in our cities I thought it was time to shift into international stocks. I am now about a third domestic and two-thirds international, the opposite of what most advisors would recommend. I'm also slightly under-invested overall. I might get burned for this but really feel more comfortable. I cannot reward what is going on in the country right now.
I did this because one of two things could happen this fall in our politics and both of them lead me to the conclusion that we are ready for a decade of reverse gains on domestic versus international.
I don't want to start a political discussion here except to say that the future of domestic stocks does not look that promising to me no matter which way the election goes. The reasons are different but the results are the same. We are all too young here to remember, but like Japan's economy, we did have two similar 30-year periods in U.S. history within the last century where there were no gains in stocks. I think we are poised for another.
Interest rates have hit zero, which is an indication that all bets are off. We can see what has happened when other countries reached this point.
If Biden gets elected we should see higher corporate taxes, and higher taxes on those who tend to be investors, which puts pressure on stocks. Indeed he could really hurt our domestic energy production, which would further hurt our trade imbalance. This would be especially true if the senate tips the other way politically. Other countries, Europe in particular, are already socialistic, and their stocks have shown what happens. Investors came to the U.S., but now the U.S. would become like Europe, but with a higher cliff to start.
If Trump gets elected I fear the country will descend into chaos. There is that much pent up hate right now in our cities. It is being egged on in the media, entertainment industry, and higher education. In fact CEOs are now paying homage to radicals. We even have a whole section of Seattle that has declared itself a different country, barring police and taking over the police station. Does this sound like a place you would want to invest?
So, while the rest of the world has been an economic wreck I see this happening in America. PE ratios are insane. They were out of whack before this pandemic. Now we are back to the same levels but under conditions of much lower earnings. The rise in stocks is nothing but dangerous speculation. Even Buffet is sitting on a wad of cash.
Second quarter earnings will show an economy in shambles, just as stimulus runs out. Will it be expected and markets will march on? Maybe, but we will also be that much closer to a time ripe for a crash just before the election. Investors don't like uncertainty. Many will get out in advance.
Again, I might get burned, but the risks have never seemed higher. The Fed bail out are loans that need to be paid back, so while corporate bonds are safe, they are not going to surge. Those should be more like cash over time. The loan paybacks are another huge headwind in addition to the public debt.
.... Now if i want to read the 1 or 2 legit opinions in here, I have to sift through TONS of pessimistic crap.... can you all just skip the nostradamous predictions of an upcoming "depression" and get straight to fighting with each other about how your opinion is the only right one while everyone else's opinion is "stupid" and "idiotic"? that's the most entertaining thing that comes from this thread
