And just where do you think you’re going, might I ask?
Where is it that trading out of your U.S. equities has become so tempting, to you? It isn’t precious metals, judging from the soft action.
The U.S. government’s credibility is directly tied to every nation on the planet. And, thereby, it is indirectly tied to all of global trade. Standard & Poors move is ballsy, no doubt. But since they haven’t even adjusted the rating (only the outlook) I wouldn’t fret too much.
More importantly, where is it that you feel your value would be better suited? Cash? Foreign equities? Foreign bonds?
How many of those things do you think will hold up unscathed if the U.S. government starts defaulting on obligations?
By far, the best places to plant money are equities and commodities. Equities are adaptable; they can maneuver into new mediums of trade, if need be. And commodities are basic and set the whole system in motion.
But cashing out of equities, because you are worried about the credit worthiness of the U.S. government, or into markets of our creditors, seems a little silly.
Really, you should only be hanging around in cash because you believe the U.S. government is not going to default. Remember, they don’t need to borrow cash from citizens to meet their debts, so higher interest rates are not a shoe in, here.
If our credit starts to fall, everyone will suffer. PM’s will maybe come out whole (before factoring in the collapse of industry and removal of actual goods you’d want to buy). There is no safe play here, so you may as well sit put.
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Nice to have you back Mr. Thaler, also very flattered and somewhat in awe that you took the time to comment on my blog. Thanks!