Hacker Remix

Investors spy the dawn of a tectonic shift away from US markets

63 points by hjjkjhkj 4 months ago | 44 comments

JKCalhoun 4 months ago

Wild times we live in.

Trying to explain to my adult daughter where to invest her retirement savings ... looking like foreign stocks (VXUS) are not a bad idea after all.

MilnerRoute 4 months ago

Or, buy U.S. stocks on the dip?

I don't know how many years until your daughter retires, but it only makes sense to move out of the U.S. market if you predict it will never, ever recover from, say, a bad four years...

yareally 4 months ago

Definitely should be dollar cost averaging. One just has to look at the s&p 500 chart[0] to see where it's going over time. Looking at the charts it's way more inclusive informative than articles like this.

The market is always up eventually and unless one is close to retirement, nothing to worry about.

We get a correction like this almost every year and it's nowhere close yet to the correction we had in 2022[0]

[0] https://www.tradingview.com/x/wfl18NU5

danielhep 4 months ago

I’m not sure such a prediction is valid in a world post Pax Americana.

adventured 4 months ago

That post pax world isn't inbound anytime soon, despite the irrational hysteria going on right now. Trump has 3.x years remaining. People are acting like he's going to remain for decades. There is no next Trump, he has a unique hold over the MAGA base that was key to his election.

For now post Pax America is merely a fantasy that reveals a lot about the people that think it's happening now (they're showing their personal preference). The same things were said due to Trump's first term also. Instead the US got more powerful and far richer in the time since then.

Back in reality, the 1860s, 1930s and 1970s were worse for the US than anything going on now. The 1930s were drastically worse. The US as superpower has survived far worse than Trump and it'll do it again.

netsharc 4 months ago

If I were to bet between Dems being able to return in 2028, or the entire MAGAified (and DOGEified) system being rigged to put Vance (or some other couchfucker) there, I'd bet the latter.

Is voter disfranchisement a thing? Will the US have more of it? Will the "activist judges" brought in by the MAGA party let it happen? All of the above?

thecopy 4 months ago

Trump will go away at some point (hopefully he does not seek a 3rd term). However, i am concerned about the fact that the GOP has been mired in the MAGA culture for a decade now, and what that does to the people seeking membership and the people being promoted to leadership. When Trump leaves, the people which have been promoted and been successful in GOP under him still stays. For what virtues are you being promoted for in the GOP? The entire structure is corrupted.

exceptione 4 months ago

There is no next Trump, there will be a next Putin. America will be poor. You cannot rule out it will be in expansion wars.

It is not about MAGA, they were a tool, they are not critical anymore. You are looking at a new fascist rule, with complete state capture. It is not completely done yet, and there is still a change the coup will fail. But people are complying out of fear, the military leadership has been purged and cleansing is still going on everywhere. So the window of opportunity is closing.

Do not focus on Trump. He is a Chaos Actor and he will be disposed of when he can't deliver of is not needed anymore.

  >  post Pax America is merely a fantasy

I recommend reading the news, preferably outside of the USA.

  > they're showing their personal preference

This is an example of a binary belief trap.

zikduruqe 4 months ago

I mean it was all laid out in front of everyone...

https://www.project2025.observer

SR2Z 4 months ago

He has already screamed bloody murder about an election not going his way, and recent Supreme Court decisions about basic stuff (i.e. the government must honor its contractual obligations) have been 5-4.

All it will take is one more SC justice and we'll be in a full blown crisis. Yes, Trump isn't the worst president we've ever had - but he's kind of unique in that he clearly doesn't give a damn about the rule of law or the Republic as a government.

fullshark 4 months ago

It was never a bad idea, chasing trends based on vague "articles" like this is a bad idea though.

jdlshore 4 months ago

A balanced strategy is best. I use the advice in A Random Walk Down Wall Street, which is a mix of real estate (VGSLX), bonds (VBTLX), and stocks, with the stocks split 50/50 between US (VTSAX) and international (VTIAX and VEMAX).

I was prepared to take a bath after seeing the news this past week, but I’m actually up a bit—VTSAX is down, but the others are all up.

atombender 4 months ago

Note that a market-cap-weighted total market index fund like VTSAX will have a fair amount of real estate (currently about 4%). This means that if you combine VTSAX and VGSLX, you end up overweighting real estate. If you also own a home, you're further overweighting that asset class.

Such a strategy might make sense if you think real estate will outperform non-real-estate stocks in the long run (which, if you believe the Boglehead school of passive index investing, you shouldn't), or if you think the real estate market is not correlated with the stock market (which isn't the case), of course.

Ben Felix has a good video about it [1].

A 50/50 split between US and international means you're overweighting international. By market cap, the US is about 60% of the world and ex-US is 40%. (Around 1990 ago it was 30% US, 70% ex-US.) If you want a "passive" approach, the solution is to buy VTWAX (Vanguard Total World Stock Index Fund Admiral Shares), or its ETF version, VT.

[1] https://youtu.be/IzK5x3LlsUU?si=DK6AfUi_8GvroO-R

jdlshore 4 months ago

Great points, thank you. I’ll check out that video.

Salgat 4 months ago

The gains from VTSAX over the past 5 years are so high that it would have to permanently drop by 50% to match international indexes like VTIAX.

jdlshore 4 months ago

The point of passive investing and a balanced strategy is that you can’t predict what will happen. So, yes, the past five years were good for VTSAX. But if you’re investing today, then it’s the next five years that matter, not the past five years, and nobody can predict what will happen.

(Well, to be more accurate, some fund managers will predict correctly, but you can’t predict which ones. Just like you know ~50 out of 100 coins will land heads, but you can’t predict which ones, not even if you choose the one that landed heads in the last 6 throws.)

Salgat 4 months ago

I'd still stay with VTSAX if you're investing long term given the 8% expected long term returns.

PebblesHD 4 months ago

With the US seemingly entering a period of isolationist market settings, some portion of foreign investment is bound to be heading back out either to home markets or elsewhere international as those investors potentially deal with market altering policies such as tariffs etc that may make turning those investments back into products harder.

What I’m curious about is how this will affect smaller regional markets such as the ASX, if our investors who prefer American markets will return those dollars here or into larger Asian markets closer to the NYSE in volume.

adventured 4 months ago

Quasi isolationist for four years. Any Democrat elected will immediately obliterate Trump's executive orders (including those that are trade related). One would have to believe Trump's politics will rule the US for the long-term (there is no reason to believe that).

thecopy 4 months ago

>there is no reason to believe that

1. GOP has been MAGA for 10 years.

2. The electorate elected him again, even after being a felon, even after 6th Jan.

What is the reason to assume it _will_ change?

DaedPsyker 4 months ago

I don't see MAGA surviving post Trump.

I'd say it will morph, and elements will remain in the republican party but not intact.

Trump is a huge magnetising force but without him, it doesn't really have anyone else. Sure people like Vance will try to further their own ambition but none of them will succeed in taking on the mantle and keeping it as the force is today.

thecopy 4 months ago

>elements will remain in the republican party but not intact

But everyone in a position in power and/or leadership is presumably MAGA now? Who will they promote within the party?

mystified5016 4 months ago

There's no shortage of human scum to choose from. Vance is fairly popular, afaict

Amezarak 4 months ago

I don't think anyone in 2014, let alone 2013, predicted Trump would be the leader of the Republican party in 2016. It seems a little early to make the call that nobody will fill the vacuum between now and 2028.

amanaplanacanal 4 months ago

It really does seem to be a cult of personality. I'm hopeful that it dies with Trump, but I guess we will see.

lovich 4 months ago

We’re in table flipping mode in terms of what norms actually mean and you listed a whole bunch of things that are norms.

Nothings guaranteed anymore when the old order is being thrown out

pjmlp 4 months ago

Assuming elections will still be thing.

Look to the countries Trump worships.

If the population doesn't react during this year, it might be too late in four years.

In Portugal it took us 30 years, and elections were happening.

4 months ago

ETH_start 4 months ago

This shift is long overdue. The EU has an economy 10 times larger than Russia's, and yet somehow is dependent on the U.S. to fund its military and its efforts to counter Russia in Ukraine.

blackeyeblitzar 4 months ago

Sensationalist headline. The US market being down (temporarily) is a good thing for America - it lowers bond rates and makes it much easier to manage the out of control national debt. This is a good thing for investor confidence in the long term.

evolve2k 4 months ago

Whatever you need to tell yourself. For those of us outside the US many of us are tired of the antics. Most of the rest of the world is long tired of Americans shouting everyday that they are the best and they should come first.

Say it enough times and we’ll look for other more relational and reliable trading partners.

sQL_inject 4 months ago

There's nothing substantive about a comment like this. The US has dominated indices for decades and the amount of money those indices have generated non-US investors is huge. Belief in the US based indices domestically and abroad is still superior, just look at the numbers.

The US has a gargantuan debt problem to handle, and reciprocity in tariffs seems far from an 'antic.'

lovich 4 months ago

That belief was based on a lot of suppositions like the gold in Fort Knox being there(had that fight with Europe already and resolved it until recently), the backing of NATO allies, the backing of long term allies like Canada and Britain who we have threatened with annexation and referenced as losers militarily, respectively in the past month, or even basic rule of law in line with our own systems.

We have become a source of absolute chaos and until we settle down into an understandable and, critically, stable set of behaviors three is no belief in us.

You can’t rely on past behavior as a source of trust for counter parties when you are simultaneously telling those counter parties that every agreement you enter into is worth nothing upon tomorrow.

evolve2k 4 months ago

Past performance is no guarantee of future performance.

The US is actively stopping honouring its international engagements and relations. It’s already starting to have an effect. Confidence once lost is hard to regain the same goes for trust.

pseudony 4 months ago

There is, actually. Instability where you win or lose based on which loony is next in driver's seat is not super appealing for folks on the outside, you know, those who get the stick.

WRT tariffs, both economists and more layman's explanations make it clear that, at the very, very least, the Trumpian view is out of touch with reality.

For example country A, having a massive trade deficit with country B, because you buy raw materials which you refine into products and sell to country C can absolutely be a good thing for country A - and it's very conceivable that imposing a tariff on the materials from B just undermines the profitable business in your country, as the margins from that industry is squeezed by the tariffs you imposed.

For an interesting walk through tariffs, subsidies and whatnot, see https://m.youtube.com/watch?v=fSXGUGFncgk&pp=ygUPcGVydW4gdHJ... (Perun on trade wars).

borgdefenser 4 months ago

The headline is what people want to read but has little to do with reality.

My non-US positions have done shockingly nothing the past few years.

Chinese equities were practically being given away a year ago.

At some point there was going to be rotation but believe what you want. Of course, news headlines about the market are never wrong!

lovich 4 months ago

> The US market being down (temporarily) is a good thing for America - it lowers bond rates and makes it much easier to manage the out of control national debt. This is a good thing for investor confidence in the long term.

Can you stop lying to yourself and to our faces? How can you claim that a this is

1: temporary

2: if it is temporary this is a good thing because it will make debt repayments easier

3: (the part you may disagree with, but I’d give you the same consideration as someone telling me the sky was actually neon pink usually) national debt payments take longer to pan out than a “temporary” down market

simne 4 months ago

I have interest and hard question for you. Please read carefully and answer very seriously.

1. It is obvious, Trump moves lead to shrink federal govt spending and with high probability could shrink national debt and lower taxes.

2. It is obvious, after market shrink could be great grow, because market economy tends to expansion, and it will be even better because lowered debt.

3. It is not so obvious, but after great wars, like in Ukraine now, appear large demographic problems, so significant grow could begin only after demography will return to health state.

So questions are:

1. Do you think, Trump administration could so much affect demography, so it could brake market down? How this could be done in US?

2. If you are not considering significant demographic problems, please explain, from where you considering market brake?

acdha 4 months ago

> with high probability could shrink national debt and lower taxes.

Lowering taxes for at least some people is a given, but he raised the debt by $5T last time and the proposed budget this time around is similarly raising the deficit further. Serious deficit reduction is not a “high probability” without some convincing reversal.

simne 4 months ago

> he raised the debt by $5T last time and the proposed budget this time around is similarly raising the deficit further

Could you provide links to respectable non-subjective sources?

acdha 4 months ago

Even before the pandemic, he was slated to significantly increase the deficit. The CBO had predicted $2T in 2017 but even by 2018 they had updated the deficit predictions by several trillion dollars because the Republican spending increases were paired with lower growth in revenue.

https://www.cbo.gov/publication/53651

https://www.washingtonpost.com/business/2019/03/12/trump-vow...

This time around, they’re looking at additional tax cuts which would only increase the deficit rate. We don’t have a final plan yet but there’s no sign of willingness needed to restore tax rates to anything like previous levels, which is the only way to make the math work:

https://apnews.com/article/cbo-budget-outlook-treasury-26b1f...

> Trump’s proposed extension of his 2017 tax cuts that are set to expire after this year along with new cuts could easily exceed $4 trillion

simne 4 months ago

> before the pandemic

I'm sorry for misunderstanding, but I sure, asked about current Trump policy, not about nearly 10 years ago.

- 2000s was one case; 2010s was another case; 2020s are totally new case.

And what I really seen on previous Trump, and see now, he is like a burning flame, really looking like he want to do something great.

BTW, if you want to remember pandemic, I remember nearly best was Germany chancellor Merkel, but what make me curios, she retired just few months before Russia began war against Ukraine.

So I want to see considerations relevant for current case. Thank you.

acdha 4 months ago

You can’t just ignore his first term: not only is that debt still here but the reason this is coming up in every conversation now is that the 2017 tax cuts were justified on two grounds - that greater economic growth would make up for the losses (the opposite happened) and that tax rates would return to previous levels in 2025. That places Republicans in an even harder position because simply preserving the TCJA rates makes it impossible to avoid taking on trillions in new debt and they’re trying to make deeper cuts (see my previous comment). There’s no way to make those numbers work without massive cuts to Medicare and the military, or taking on huge amounts of debt.

They had originally been hoping to make this a problem for whoever became president after Trump’s second term but Biden winning in 2020 means they have to deal with it, or simply pretend they never cared about debt. Currently they’re trying to see if they can get away with new accounting methods to produce better-sounding numbers: https://www.barrons.com/articles/lutnick-government-spending...

simne 4 months ago

> You can’t just ignore his first term

I don't ignore. I just say, if you are programmer you must understand, 10 years is millennia for computers, and federal level is one of most affected fields.

So, if Biden don't use new technologies effectively, does not mean, these technologies are not valuable.

And nobody is better than trio of Musk-Bezos-Zuckerberg in using new technologies, and they agree to cooperate with federal government.

This new pivot is something very special, for some reason, Biden have not such tight relations with independent tech leaders (and Trump on first presidency also failed to do this).

https://www.newyorker.com/podcast/the-new-yorker-radio-hour/...

So, what I trying to say, President should not do all things himself, this is just direct violation of management best practices (in management such violation named micromanagement). Instead, President should hire best managers and delegate key functions to them, so they will do best possible. And that is what we exactly see now.

For about timing, scientific management also have direct answers - from change tops to begin work need at least two months, plus at least one full month of work. So adequate people with really good understanding, usually considering to see some results after first 100 days of new top executive.

simne 4 months ago

Sorry, I made typo: meaning dawn, not down. But questions still same.