RSSRonnie Lott
By Roger Nusbaum | September 08, 2008 | 1:37 PM | 1 Comment
Ronnie Lott was a pretty good DB in his day. Often the ball ended up going the other way when opposing quarterbacks threw in his direction; reversal.
In the last few years (and looking to the next few years too) there has been a huge slow moving reversal in the US' relationship with many other countries. The way the world has evolved the US has gone from helping other countries, financially, to needing help from other countries.
Some big holders of US debt may come as a surprise; India, Taiwan, Korea and Russia to name a few. This all serves to raise an interesting point. Over the long term do you want to own the countries that need the help or the countries strong enough to provide the help?
Practically speaking it is not an all or none situation but the big macro is powerful.
I read a little snippet about investors in New Zealand averaging 41% of their holdings in foreign stocks. In Turkey that number might be closer to 80% in foreign (that is an anecdotal number based on a question I asked a co-panelist from Turkey in 2007 at an ETF conference). I don't know what the number is for Japan but it is possible that it is a very high number too.
The general malaise of US stock markets may drive US investors to needing more foreign to get an "average" annual return from equities (I believe this will be the case).
The kindness of strangers aspect of this is not new. What is new is the post bailout US which leaves many questions still unanswered. How big will this really be? How long will this last? What comes next? What do our debt holders think? Can this devolve to impact our credit rating?
To repeat something I have mentioned before; these issues seem more systemic in nature compared to issues in other countries which seem to be more cyclical.
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