Quick note on a topic of importance to have in mind and to include in investment assessments in the New Year.
Paul Kennedy is a famous historian and author who is perhaps best known for his books and articles in which he explores the history of, and effectively predicts the inevitability of the decline of large, globally 'hegemonic' countries. The most obvious target of his studies is, of course, the United States. Comparisons are made to former global hegemonies, such as Great Brittain, and conclusions are drawn from prior experiences, both with overreaching globally in economic realms and military commitments, namely, that decline, both relative and absolute, is all but inevitable.
Two articles worth reading that represent counter-arguments to this thesis are the following:
Back to Declinism, by Michael Auslin, on the AEI website.
The Future of American Power, by Joseph S. Nye Jr., in Foreign Affairs magazine.
What relevance does this subject have to global portfolio management and actionable trade ideas?
The 112th Congress is going to convene not too many days after the 'big ball' drops in Times Square this coming Friday night. Many of the elected officials have espoused positions on a variety of issues that are particularly inwardly focused. The policy implications of this are likely to impact US positions on (and stocks related to) military expenditures, especially in support of far-reaching global commitments, immigration policies, trade policies and spending on education and other job-training and skill-development programs.
Understanding the arguments made by Kennedy and the counter-arguments proffered by others is essential to developing investment themes for 2011.
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Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SPY, QQQQ over the next 72 hours.
Additional disclosure: Positions may change at any time without notice. I am currently long many stocks within SPX, QQQQ, VWO, and EEM.