Warnings about the decline of the United States market may be premature, given no other region in the world has stocks performing as strongly or the regulatory regime to allow innovation, according to an economist.
Former Tiger Management managing director Todd Buchholz said despite the greater outperformance of European stocks and the downturn in the US dollar, no other markets currently offer exposure to the stocks found in the US.
“When you look at the US and Europe, you need to ask yourself which are the most successful companies in the world in technology,” Buchholz said during a recent webinar hosted by investment firm American Century.
“When you look at Nvidia and Apple and Amazon and so on, and then ask yourself who is the Nvidia or who is the Apple of Europe, it’s really hard to come up with that answer.
“Technology as a proportion of the equity market in Europe has shrunk, while in the US it has expanded. You can go through various other sectors of the world economy and see that it is US companies that are continuing to lead the way in pharmaceuticals, software and financial services.
“So I’m not concerned about the US exceptionalism. The uncertainty and chaos that has been let loose by debates over tariff policy and threats back and forth have given investors pause, but it’s given investors four months of pause and I don’t think that’s going to continue for very long.
“There’s a saying that the US innovates, Europe regulates and China imitates, but that’s a little unfair to China. It is now very innovative, but when you look at Europe and the difficulty in starting and maintaining businesses because of regulation, the Europeans themselves are saying we have to cut these binds.
“Europe may improve on that front, but they’ve got a long way to go before they can compete with Silicon Valley and other great centres of US prosperity.”
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