If all actions are reactions why are Americans hated? Well this is a finance site..so let me stick to what I know.
Almost all literature we have read on equity markets is American. The great American investors have written all this literature in the past 50-100 years. This was the time when American companies (fairly or unfairly) dominated world markets. Whether it was Boeing, Coke, McDonalds, General Motors, Citibank….so all of them sent back a lot of money home and helped the US. This meant you could have a portfolio of 80% American stocks and still look smart.
Things are changing. Obama’s 10 faces are looking like Ravana’s 10 faces! Will Narendra Modi ban Mc Donalds for filling stomachs with lousy nutrition? Will more schools ban Coke and Pepsi? Will my daughter think Pepsi can be used as a pesticide? Whatever happens American domination will reduce. Banking, Insurance, Food, Oil…
This means all of us will have to create a portfolio with European, Japanese, Chinese, Indian companies if we are talking of a world portfolio.
However all the American heavy weights still suffer from recency bias and ‘ownership’ bias. Most of them like Warren Buffet and the others are still suffering from an American hegemony bias, ignore them.
Be Indian, buy Indian will help here. Then Euro, Chinese, Brazil….you need more variety in at least 30-40% of your portfolio.
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