Comment by rkomorn

9 hours ago

Yeah, I really don't know what scenario leads to the US economy not dragging down the rest with it.

Is there an argument that other economies would recover better than the US, in the long term? But at that point, one could just diversify during/after the crash.

Unfortunately, that seems to be happening already.

YTD, US equities have underperformed most other equity indexes.

The argument is that a weakened dollar, political / economic unpredictability, politicization of the fed, and big spending bills are starting to weigh on investors’ minds.

Personally, I don’t think a dramatic “crash” is the most likely outcome. I think it would look more like a slow erosion of US growth and dominance compared with other economies.

https://www.bloomberg.com/news/articles/2025-10-11/a-great-y...

  • > I don’t think a dramatic “crash” is the most likely outcome.

    There's lots of crashes, but they're over-predicted. A quote I can't remember perfectly, "we predicted 10 of the last 3 stock market crashes".

    That said, if the levers of power in the USA stop being independent, if they all become bound to the will of the President, there's a strong risk of someone — could be the President who ends their independence, could be a successor — crashing it all very hard. If whoever is in charge at the time hates intellectuals, I mean it can be Pol Pot hard; but even if the leader at that point tries to do it all right and listens to sane advisors, it can still crash as hard as the Chinese famine resulting from the Four Pests campaign.

    The USA isn't there yet. That's the direction of motion, but even with the current speed of change, there's enough independence that it's not even close to that bad yet.

    • Monarchists-esque governments arguably have a stronger incentive to preserve and generate wealth than elected officials, so it's not really a given that a dictatorship style government would be bad for equities.

      Take a look at Dubai, for instance.

      3 replies →

  • Yeah I kinda regretted writing "crash".

    Your comment lines up with my sentiment, though I don't put a ton of stock (pun somewhat intended) in mine due to "amateur" status.

    But I guess the "if not US, where?" question remains for me. Diversity "everywhere", try to be smartly selective?

    • I am not a CFA, and this is not financial advice (and I believe you learn what people really believe by what they hold, not what they say :) )

      So telling you what I hold: I’m long the market, mostly in US equities (60%), developed economy international equities 20%), and intermediate term US bonds (20%).

      My investment horizon is 20+ years, so in general, I don’t pay attention to the short term vol.

      3 replies →

Which economy would you bet on, though? To recover in the long-term. In my mind they all give me reason for pause for various reasons

  • No idea, personally.

    My question in the second paragraph was definitely not rhetorical. :)

Not investing advice.

I diversified away from the US to international equities VTI -> VSUX starting at the beginning of the year. My thesis is that trade is rearranging due to US trade policy. If you look at the S&P500, growth has been flat since 2022 for anything that isn't Big Tech AI bubble. Therefore, I believe that between go forward US economic policy and global trade reconfiguration, non US will outperform the US over the next five years.

  • I also adjusted some towards VXUS which was a great move in hindsight from fx alone. I bought property in the EU a couple years ago which is also benefiting from fx moves.

    With that said, the biggest US companies are pretty exposed internationally already. I'm not sure someone needs to or it would be prudent to say dump VOO and move to VXUS 100%.

    • Agreed; to be clear, I still have US equities exposure, but it has been reduced to <50% of my total securities portfolio. This balances, imho, potential gains with managing risk around valuations. "Be fearful when others are greedy."

  • The thing is, if you accept the Trump Tariffmania (and the associated move to balance trade and export more), then the dollar would have to continue lower, so you (as a US investor) would benefit just on that thesis alone.

    It's the reverse for EU investors, where you have to now accept pretty big currency risks to ride the A.I train (If you add in the EUR/USD rally I think you're flat to negative on your SP500 as an EU investor for example).