Debunkery

Americans are frequently villainized as too materialistic, loud, crass—so some believe. We don’t bother speaking French in France. Quelle horreur! What those Frenchies (and most others) don’t realize is we’re much more alike than they know. Almost all investors, from the US to France to Japan to Djibouti, fail to think globally. In fact, investors, as a group, are downright provincial!

Americans may say, “That’s fine for those other people, but America is huge! We don’t need to think globally. We have all the stocks we need right here in the awesome US of A.” The US is awesome! Nowhere else I’d rather live. California is problematic. But anywhere else! However, I’d never want to invest solely in the US. You shouldn’t either.

But more importantly, neither your portfolio nor your thinking should be constrained by borders—wherever you’re from. America is big (and awesome) but is just under 25 percent of total world GDP.¹ Big! But just a quarter of the world. In other words, what happens in America’s borders can be heavily influenced by the massive 75 percent of non-US world GDP.

Which means the world is much more correlated than most think. And it’s been that way not just in recent history, but for centuries—a point few appreciate. So investors who ignore the world miss powerful opportunities to better manage their portfolios. (Bunks 43, 44.)

That’s one benefit—a major one. But there are also major investor misperceptions that linger, just because folks fail to consider the broader world. Folks make investing errors frequently because they see the world perversely—you know that. You know from Part 4 that checking history is a great form of debunkery. But vision can also be cleared up more (and easily) with a little global perspective.

Folks go bonkers over debt—thinking everyone has too much, including the US government. We can bicker about how that debt is used, and why, and what level is too much, but debt fears melt instantly once you consider US debt not only in historical context, but in context of the whole globe—you’ll see that in Bunks 45, 46, 47. And of course, because the world loves to demonize the US, many folks fail to realize we have much in common with our non-US friends in terms of economic and fiscal conditions—and it’s not been disastrous for them or us. You can use debunkery to see that clearly. (Bunks 45, 48.)

Simply, American financial life—and for that matter everywhere else—is less mysterious if you can do global debunkery. It can help assuage at least one fear about global violence—that it can take down capital markets (Bunk 50)—and alleviate confusion about one very popular and frequently misunderstood economic indicator (Bunk 49).

The beautiful part of global debunkery is it requires no globe-trotting, just standard debunkery tactics—all done easily from the safety of your laptop. And if you can see the world just a bit more clearly than most, you can have a serious advantage over them—and that’s no bunk.