27-04-2025
- Business
- New Straits Times
MONEY THOUGHTS: Should intelligent investors embrace or abandon America?
THE late great novelist John Updike once wrote: "Adversity in immunological doses has its uses; more than that crushes."
Updike was born in 1932 and died in 2009, which spared him having to live through Donald Trump's first presidency, and of course, Trump's much worse second stab at the most important job in the world.
The terrifying capital market implosions in early April in the immediate aftermath of Trump's asininely miscalculated "Liberation Day" tariff announcements made relatively few prepared people wealthier, and many more much poorer.
Although Updike was referring to general forms of adversity, as I look at our world today through an intentionally chosen financial lens, it seems to me that those of us who have experienced multiple up-and-down-and-up-again market cycles, AND who have extracted the correct investment lessons from those oscillating graphs, will have gained a vaccine-like resistance against bear-market-triggered despair.
That's in contrast to the far more widespread panicked selling that less "vaccinated" market participants succumbed to recently.
We should always remember: "When emotions run high, intelligence is low."
So, do your best to stay smart, stay calm and stay optimistic. However, that doesn't mean being naive and abandoning an honest assessment of the world as it is.
You see, regardless of which side of the political or ideological divide you stand, you should recognise the recent Trump Tariff Tantrum (TTT) has destabilised global trade. And despite Trump's subsequent panicked backtracking on the worst of those tariffs for most countries — the notable exception being China which, as I write this, is facing 125 per cent tariffs on most of its imports into the United States — extreme harm has been inflicted by Trump on regular folks who rely on dependable global supply chains humming along steadily.
In case you're wondering, those "folks" I am referring to comprise most of Earth's 8.2 billion living humans. Please join me now on a brief journey back in time...
THE AMERICAN EXPERIMENT
Almost two centuries ago, a savvy, super-smart French aristocrat Count Alexis de Tocqueville (1805-1859) toured America in the early 1830s with his friend Gustave de Beaumont to research the US' early prison reforms.
Beaumont and Tocqueville dove deep into their subject. Their efforts culminated in their co-authored, two-volume French language work which translates to: On the Penitentiary System in the United States, and its Application in France.
Tocqueville was also fascinated by other things he observed about the US throughout his extensive travels there and in Canada. So much so, he later wrote a solo book, coincidentally also in two volumes (published in 1835 and 1840), entitled Democracy in America.
To his credit, Tocqueville detested the slavery he observed in the US at that time. However, he also acknowledged many American positives. In his groundbreaking book he wrote:
"Americans believe their freedom to be the best instrument and surest safeguard… to secure for themselves a government which will allow them to acquire the things they covet and which will not debar them from the peaceful enjoyment of those possessions."
Today, we look upon such expectations as basic human rights for everyone worldwide. Yet in the early 19th century, that wasn't how most of the world lived. The American experiment was just beginning back then, and it has been an overwhelming success.
Back in the 1830s, Tocqueville identified the reason for the then unparalleled vigour of the American nation. It boiled down to a widespread conviction shared by its pioneer generations that what mattered most were personal responsibility, honesty and diligence.
In other words, meritocracy.
Note: Tocqueville wasn't merely looking at early 19th century America through rose-tinted glasses. He looked squarely at its shortcomings, too. Nonetheless he observed a fascinating truth about the then young democracy:
"The greatness of America lies not in being more enlightened than any other nation, but rather in her ability to repair her faults."
ROAD AHEAD
For us, here in 2025, despite the intense dislocations the world is facing because of appalling economic policies emanating from the White House, we would be unwise, as global investors, to write off America.
Understand that despite Trump's disruptions to world trade and economic harmony, our global economy will keep growing — most years. And, predictably, that growth will generate portfolio profits and precious passive income for well diversified global investors.
Our road ahead will undoubtedly be bumpy, perhaps for most of the next 3 ½ years — for obvious reasons. However, in due course, the US will sort out its sub-par leadership issues. Till then, stay courageously invested, ideally, globally. Also stay highly liquid.
In closing, do pay heed to this fascinating statement, which is often attributed to Tocqueville even though it's precise wording is not found verbatim in any of his writings: "America is great because she is good. If America ceases to be good, America will cease to be great."
I'm certain America will regain its footing in due course. Till then, as the world's greatest investor Warren Buffett once explained: "It's never paid to bet against America. We come through things, but it's not always a smooth ride."
So, dear reader, be wise: Buckle up!
