ETF Store Insight

Follow the Money with ETFs

September 28th, 2010 by Joe Massman

Whenever a US investor wonders whether they have too much exposure to markets outside this country, they would do well to take a look at this commentary at the Dorsey Wright Blog based on an interview with famous investor Mark Faber….They can also learn how ETFs can help them take advantage of investment opportunities all over the globe….

Money Goes Where It Is Treated Best

Seeking Alpha recently published an interesting interview with noted speaker and best selling author, Dr. Marc Faber.  I found the following interchange particularly insightful:

HRN: Given the poor prospects for US economic growth, do you foresee a flight of capital from the United States?

Dr. Marc Faber: You would be out of your mind, with health care reforms and with the government interventions and the uncertainty about future taxes in the US, to even consider expanding in the US and this is a problem. I mean people say that loan demand is down because banks are not lending, but maybe nobody wants to borrow any money in the US and nobody wants to expand in the US but they are expanding in China, India, Vietnam, Bangladesh, Africa and Brazil. The business world is an international place today, and if you run a corporation, whether you employee 50 people or 10,000, you can choose where you invest your money in terms of capital spending. Where do you want to expand factories? If I employed people in the US, I would rather think of reducing the 50 employees maybe to only 20.

As Marc Faber stated, “The business world is an international place today.”  I am not sure that many U.S. investors have fully grasped the ease with which they can have a global multi-asset class portfolio.  It could be a serious mistake for investors to limit their asset allocations to just a sliver of assets in such areas as emerging market equities, commodities, and currencies.  While I don’t necessarily agree with Marc Faber’s pessimism for U.S. economic growth, I also willingly admit that it is a concern.  However, U.S. investors have no need to feel trapped in their asset allocations. With exchange traded funds, U.S. investors can invest in U.S. equities, international equities, inverse equities, currencies, commodities, real estate, and fixed income with equal facility.  It is no wonder that a large number of investors have embraced our Global Macro separate account strategy, which provides a logical framework for allocating among each of those asset classes and seeks to find profitable investments wherever they may be found in the world.