How I think about geographic diversification
I have only one maxim from a geographic point of view, and that is: I don't invest in dictatorships like China. I don't care about the rest. If I'm 95% invested in the U.S., so be it. But isn't the cluster risk too high? From my point of view, no. In the following, I explain why I see it that way:
1. no socialist or anything like that will ever come to power in the USA. I simply do not see any major political risks for American companies.
2. the USA performs better than other countries. This will remain the case for the next few years.
3. never bet against America. - Warren Buffett
4. the companies in which I invest are generally active worldwide. To me, "Where are the company's markets?" is much more important than "Where is the company headquartered?".
The whole world uses Microsoft software.
The whole world needs chips from Nvidia.
The whole world buys luxury goods from LVMH (there is still great potential, especially in emerging markets).
The whole world uses agricultural machinery from Deere.
The whole world eats at McDonald's.
The whole world needs Stryker's medical products.
The whole world is rated by S&P.
The whole world pays by Visa.
The whole world invests in iShares products.
Especially the last point is the best crisis protection. People need to NEED the products and preferably not only in ONE country.
Country diversification is overrated - at least as far as company domicile is concerned.
