Where should investors turn in these uncertain times?
The turmoil in global markets has investors running from countries and regions that have traditionally been bastions of security and wealth creation. Where should investors turn in these uncertain times? It is my belief that the United States is and will continue to be the best place to invest for the foreseeable future. Continued strength from industries in which the US has traditionally dominated, combined with the unique American business environment create a powerful investment opportunity.
- The “decline of American manufacturing” has been a topic of concern for more than a decade. However, US industrial production has posted strong numbers recently, and many factors indicate that it stands to recover further in the near future. In the last four quarters, output grew 5.3% while productivity grew 2.3% - showing that American manufacturers are not only doing more business but doing it more efficiently. This data extends a longstanding trend. Since 1950, output per worker has increased by 645%, while real manufacturing output has gone up almost exponentially.
- Startups are high-risk, high-reward investments. Many companies without a proven concept need significant financing to make their ideas reality – and access to the necessary “risk capital” can at times be hard to find. But in Silicon Valley alone there are almost 400 Venture Capital firms betting that, by investing in many startups, the rewards from the companies that succeed will outweigh the losses on those that don’t. In exchange for an equity stake, venture capital firms provide new companies with cash – and stand to benefit greatly if they are successful.
- Intellectual property rights are vitally important for growth in private enterprise in the modern world. Ideas are becoming increasingly important assets to companies as the economy becomes more and more knowledge-based. Countries have varying degrees to which they protect this type of property, and economic prosperity is tightly linked to the strength of these laws. The United States has consistently ranked near the top in protecting these rights, and has backed them up with one of the world’s most transparent and reliable legal systems. Congress has recently taken steps to retain this position of leadership. The America Invents Act, passed late in 2011, was intended to streamline the patent approval process, and created a system of prioritized examination to help expedite applications deemed especially important.
“Productivity and Costs, First Quarter 2012, Revised” – June 6, 2012.
“Phenomenal Gains in Manufacturing Productivity” April 27, 2012.
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