Is it Time to Short America?
I've got two midterms on Monday that I've waited until the last minute to study for, so that obviously means I need to go off on a tangent.
The more time I spend going to school and/or reading about current events, the more I get the impression that America and Wall Street is never going to return to what many Americans refer to as "normal."
My question for all of you, is where do you see things heading in the 21st century for America? Are we completely screwed, or is this another bump in the road? If the economy ever does return to "normal," will Wall Street ever be the way it used to be?
The way I see it:
Pros:
- Golden age of technology (nanotechnology, robotics, artificial intelligence, etc.)
- We are the Saudi Arabia of agriculture and the world's growing population needs to eat.
- The world's largest supply of shale oil reserves.
Cons:
- Completely incompetent and inefficient government at all levels.
- The national debt. I don't care who wins the election, I don't believe either candidate has what it takes to return America to a balanced budget.
- Unfunded entitlement programs.
- China is going to be the next Super Power.
- Americans are no longer as good at math and science as we used to be and I don't think this is a problem we can just throw money at. Germany isn't going to let us steal their scientists again, like we did after WW2.
- There is something fundamentally wrong with America's youth (yes, my generation.) I don't know if we should blame Facebook, rap music, drugs or smart phones, but my generation and especially those younger than myself, do not care about school.
now make a pro/con list for every other country
I recommend you read Markets Never Forget by Ken Fisher
These guys make a good point. Now, go to your parents and ask them how they felt about their own generation and country at your age.
NOTHING HAS CHANGED.
1) US GDP peaked at 35% of global GDP after WW2. Today it is around 20%. 2) The national debt as a percentage of GDP has only been this high during the period directly after WW2. 3) Unfunded government entitlement programs mean that the national debt isn't going to decrease any time in the near future. 4) China has an aircraft carrier. Just kidding, that's not a serious threat. But they will surpass the US as the world's largest economy in the not too distant future.
I can think of quite a few more things that are different today than in the 60's, but I don't have that kind of time right now.
Immigrants in America and their children who suffer in their teens are doing very well in this country. They might not resemble how the media portrays life, but damn these people are living the dream.
Not PC to discuss, but I imagine the changing demographics in this country (whites will be a minority by 2040) is going to alter the economic situation.
Look, China has 5X as many people as us. If you take a look at per capita GDP, we're 15th and China is 90th. I take it as an insult that China is still only half our GPD, while we produce NOTHING. We write up a cool billion on some dumb camera app for our iPhones, while Chinese workers are worked to death for 75 cents an hour.
Funny thing is, I was just thinking about this topic a few days ago.
Good point, when you put it that way.
To add on to your last point about America's youth (which I 100% agree with), they appear to be more politically apathetic than ever before. So not only is our current government fucking up, but the next generation doesn't seem to give two shits about exercising their fundamental right to vote.
"My question for all of you, is where do you see things heading in the 21st century for America? Are we completely screwed, or is this another bump in the road? If the economy ever does return to "normal," will Wall Street ever be the way it used to be?"
Apparently "normal" means GDP is ridiculously high, unemployment is low, kids like to go to school, stocks just keep going up, no real global competition in production or military might, etc.
not sure if serious.
Do the words American exceptionalism mean anything to you? For the past half century, that's what "normal" was.
Only way I see that sort of thing happening is via some intense nationalism. Which, our government structure kinda mitigates.
But if you ask me what's gonna happen, that's a pretty good bet.
I mean, fuck it. You only live once, right? Someone mentioned whites being a minority by 2040, I can see a last-ditch effort being made. We've always been good in tight spots...
The old fucks (read: baby boomers) are going to milk the shit out of SS and the medical programs.
To any cynic, I invite you to read this: http://www.imf.org/external/pubs/ft/weo/2012/02/index.htm
tl;dr: LONG US and SHORT a dollar neutral basket of every other nation in the world is the trade of the next decade.
depends on the time frame but for longer periods 90% of the time i'd go long on developed nations. after all these double digit growths subside and the smoke clears people will invest where they know their money will grow and be safe at the same time. it's only a matter of time when political and country risks don't offset the returns investors expect. when that happens back to the US, Japan, German etc
Everyone missed the MOST IMPORTANT factor in the 21st century: whether of not the dollar remains a reserve currency. I can't stress how much this matters- it'd be very hard for the US to continue to be a superpower in their current state without a reserve currency and it'd be very hard for the US to fuck it up with a reserve currency.
The writing is pretty much on the wall. China is too strong and the debt is exponential. This time there are no more clear skies, imperialism/colonialism to get out of this one.
Look at the net earnings of XOM, their trailing 12 month net profit is around 44 billion. Now the government can keep printing money out of thin air, but in real economic terms, how many XOM's does the US have and how many do they need just to keep the payments going to avoid a default? In the optimal case, the US may be treading water. If just a few things go bad things can get ugly real fast.
I'm not short but I have contigency plans and I am 0% contributing to my 401k despite a very generous employee matching program.
For a while, I agreed with the notion that China could be the potential next hegemon until I actually went there. Unless they all stop having children, it will not happen, but China will rise closer to our level and we will not be too far apart. I think that assuming the US will be #1 forever is completely naïve. We will never sink to 2nd or 3rd world status, but our time is up. Every great empire has its end…the Romans, Brits, Persians, Ottomans…
You have to accept capitalism as your belief. There's always a bull market somewhere and a bear market somewhere. Kill your emotions. Now look at the market. This is a normal market.
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