Thinking About Leaving the Country
Only From an Investment Perspective
This post is not going to go into what happened in DC yesterday, not because I don’t have an opinion on it, but because this space is for markets and I will keep my comments squarely focused on them.
Everyone was concerned about the election outcome and it was a non-event for the market, this did not surprise me in the least. That the protests in DC, and the fact that protesters actually stormed the Capitol Building and made it to the Senate floor, did not cause the market to sink is a surprise to me.
The simple fact of the matter is there probably isn’t scope for a massive increase in taxes to the point where it would be a detriment to the market or the economy. We are still in the midst of a pandemic and debating how much money we should give people, just give it to them, so they can spend it, so the economy gets better. Why would anyone want to derail that with more taxes? The taxes will come, but probably not in the immediate future, at least that’s how I see it. And that’s good because markets are mostly efficient…and everything is a market, including where we choose to live and work. Here is an article about taxes in this country. Here are the states with the highest and lowest personal income tax rates:
And guess what? People from the technology and finance industries are fleeing New York and California and for Austin and Miami. The mayor of Miami, Francis Suarez, has this as his pinned tweet on Twitter. @jack is Jack Dorsey, the CEO of Twitter and Square.
Entire companies are are leaving Silicon Valley and moving to Texas. Why, because markets are efficient and capital flows to where it is treated the best. In this case, capital is more than just money, there is human capital. We all have a choice and we can all, in theory, pick up and move anywhere that we want. We can all go to where our human capital will be treated the best.
Back to investing and capital flowing to where it is treated best. Completely unrelated to the elections and the comments from some people that are usually along the lines of “if (insert name here) is elected, I am leaving the country”, I have been thinking more and more about opportunities outside the US. For a long time, our markets were the best game in town, I am not sure that that will be case going forward. There are countries / regions that handled COVID better than we did (China / Asia). There are countries with better demographics than we have (India). There are countries who are more leveraged to the rise in oil prices that are likely if my inflation theme plays out (Brazil and Russia).
I like China and I have exposure through the iShares China Large Cap ETF (FXI). But let’s be honest, this is still very much a communist country. They pulled the IPO for Ant Group, a Chinese financial services company co-founded by Jack Ma, the billionaire entrepreneur behind Alibaba because they did not like some comments that Ma made in a public forum. But China is growing and there is opportunity so a small investment makes sense to me.
I like India a lot for demographic reasons laid out in the video linked above. The chart looks good as well. This seems like a good way to take advantage of a country with a rising middle class. At the same time, there is potential for India to benefit should relations between the US and China not improve.
It’s a big world, and there are opportunities all around it.
Thank you taking the time to read my thoughts each day. If you are interested in a more in depth view of what I am thinking, head over to this link.