Is the world jumping into US stocks?

The US market is standing out as the best in a bad lot of investment choices right now.

By Kim Peterson May 30, 2012 3:55PM
It's time to buy American stocks, writes well-known investor Doug Kass.

He's not saying this for patriotic reasons. Instead, Kass describes the U.S. stock market as the best house in a bad neighborhood, and said that foreign investors will be moving in. The rest of the world is doing so badly that U.S. stocks stand to benefit, he writes.

"In Europe there is hopelessness," he writes. "The U.S. economy is moving forward, with steady growth expected and growing signs that the domestic recovery will be self-sustaining (albeit at a muddle-through pace). In the U.S. there is hope."

Post continues below.
It's an interesting point, and one that makes more sense than Warren Buffett's 2008 exhortation to buy American. Where are global investors going to invest? European equities are a huge question mark. China's economy is slowing down, and banks aren't meeting loan targets.

Emerging markets are stumbling as well. Check out the performance of the Vanguard MSCI Emerging Markets ETF (VWO).

So where will the world put its money? U.S. government bonds are a bad bet, according to Dan Wiener, who edits the Independent Adviser for Vanguard Investors newsletter.

"Sorry, I just can't get on the Treasury bond bandwagon," Wiener said in an interview with MarketWatch senior columnist Chuck Jaffe. "Anyone who is looking at government bonds really needs to think long and hard about why they're buying them. If you are a complete chicken and you are buying it just for the full guarantee, you should know you won’t make anything after inflation, and will probably be losing money."

Which brings us back to U.S. stocks. Even with all of its problems, the U.S. economy is still superior to most of the world's economies, Kass writes.

Here are some of his other reasons why investors should get into U.S. stocks:
  • U.S. banks are pretty healthy, even after the embarrassing disclosure from JPMorgan (JPM) about its London Whale trading debacle.
  • U.S. companies have strong balance sheets and profits. They are "rock solid operationally and financially," Kass writes.
  • The U.S. consumer is stable, and household debt is down dramatically from the recent past.
  • The U.S. politically stable and a magnet for immigrants who want a better life.
  • U.S. companies have strict standards to adhere to when it comes to financial reporting. Regulators keep a close eye (relatively speaking) on companies. It's quite different from China, where you just never know if the numbers many companies issue are totally accurate.
  • The U.S. is rich in resources.
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Tags: JPM
15Comments
May 30, 2012 11:45PM
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IF we don't get our spending in order and make some serious moves in it's trajectory, the bottom will fall out of this market before 2013 or the election. Yes, it'll come back but who knows when?
May 30, 2012 5:33PM
May 31, 2012 3:14AM
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This article is more BS from MSNBC, aka Obama/Biden 2012. If the world wants US stocks so much, why did the market go down 160 today ? More brainwashing from MSLSD !!!
May 31, 2012 8:32AM
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The US is politically stable?  This is a joke, right?  We can expect another bruising debt ceiling battle and a very divided government for years to come.  Canada is more stable with a better-regulated financial system, an abundance of natural resources and less national debt.  I'd invest there or in German bonds instead.
May 31, 2012 10:25AM
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Do not self gloat. The world does not love US stocks. They are trapped. They thought it was cool and got invested heavy. If they try to get out US suddenly will crumble that will result in more loses to them. The Chinese have over $1tr in US treasury. They have no choice but to keep trading with the US to make sure their investment is sound. So is Japan, Middle East, South America and the Dictatorial African leaders. If they were to sell their interest in the US, their return will be nearly zero as the dollar will crash. It is a predicament they are caught in.

May 31, 2012 7:57AM
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Euro-jumpers accounted for most of Tuesday's increase.
May 31, 2012 12:04PM
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I think "chicken" is a pretty strong word to use about my life's savings. How about the writer is a twerp.
May 30, 2012 9:33PM
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Of course the world loves U.S. stocks; many of our companies are making $ inspite of having a Socialist President who is trying to break them.

The world is betting that Obama is a one term pres. and that when Romney takes over and eases up on the rules and regulations business is going to BOOM.

May 30, 2012 8:28PM
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Ridiculous, buy gold and hold until the inept liar in the white house is gone.
May 30, 2012 10:04PM
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the world loves our stocks because they know the american people dont run this country the corporations and the rich do.
May 31, 2012 8:46AM
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Wait until they find out the US Stock Market is a scam. They will run now if they are smart. Our DOW will be down below 4,000 inside of 18 months. Get out now people.
May 31, 2012 8:03AM
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It all comes down to one thing...are you tired of the rich getting all the bailouts and us working men getting nothing? Take a look at what I found and see why the rich are trying to hide this for themselves. G00GLE the term ' FAST STOCK BUDGET ' and click the first site. Go right to the 'PENNY STOCK' page to see what the rich don't want you to know. It is time your family lives the good life and this will help. THIS IS AMAZING!!! THIS IS A MUSSSST SEEE!!!

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

brand hasn't been damaged, but NBC/MSNBC's news department's has thanks to the selective editing of the George Zimmerman 911 tapes to try and fuel charges of racism. To pick out Rush first made me distrust the entire article...I didn't bother to

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