By Thomas Kostigen
“Buy American.” We hear it often, whether it’s to support local businesses, U.S. labor, or for environmental reasons, such as mitigating the carbon emissions associated with transporting goods from overseas. Health and safety reasons are cited, too. But what about when it comes to investing? Should you go with Made in The USA, or be geographically agnostic?
A financial advisor can help construct a good mix of domestic and international stocks. And to be sure, he or she will likely commit a good portion of capital to domestic company shares. In turn, those companies will likely be best-in-class companies that wear their Stars and Stripes proudly.
According to Fortune magazine, which, after all, created the Fortune 500 list of big companies, Walmart is the number one pick on the list of big American stocks. Next is Amazon, then Apple, CVS Heath, Unitedhealth Group, Berkshire Hathaway, McKesson, AmerisourceBergen, Alphabet, and Exxon Mobil. (The full list can be found here.)
Fortune also looked at companies through the “Buy American” prism and found the top 500 corporations on the list generate nearly $14 trillion in revenue, or about two-thirds of the U.S. economy. In other words, if you believe in the American economy, you should believe in the companies that comprise Fortune’s list.
The most profitable of the lot are an obvious place to begin. Apple, Microsoft, Berkshire Hathaway, and Alphabet, took the top spots in American profitability this year. With the technology sector’s banner twelve months, the companies listed should come as no surprise. And, well, Buffett is Buffett. JP Morgan Chase and Bank of America, also made it to the top of the list. Both are big mortgage financiers and home buying has been robust, even if commercial real estate is taking a beating.
Fortune takes its list further than just a national showcase. It also has an infographic function that allows users to see which companies are located in which state, or city, or town. That could come in handy if investors want to go hyperlocal with their investments.
The global economy is set to expand by 5.6 percent in 2021, which will be its strongest post-recession pace in 80 years, according to the World Bank. The United States and China, the world’s biggest economies, will do their jobs and contribute most, as single countries,
to that growth. Advanced economies as a whole will prop the world up. Given its economic strength and prospects for the future, the USA may be safest harbor for assets, as well. Economic recovery from the recessions due to the COVID-19 pandemic, is expected to be uneven.
Over the past 10 years, the US stock market has outperformed international stocks. Still, past performance, as it is said, is no guarantee of future results. The next 10 years may be indicative of that: some analysts believe the international markets are poised to have their time in the sun.
Stock markets are cyclical. The best hedge to those cycles is diversification. That means buying American, as well as some other countries, too.
Thomas Kostigen is a contributing writer to MyPerfectFinancialAdvisor, the premier matchmaker between investors and advisors. Thomas is a best-selling author and longtime journalist who writes about environmental, social, and governance issues.