The Long Term Case for Investing in America

Is America still the best place to invest for the future? In this episode of Pivot with Darryl Lyons, Darryl explains why he remains confident in the long term strength of the United States and why innovation continues to fuel its economic leadership. From artificial intelligence to the global dominance of US companies, he shares the key factors shaping his investment outlook.

Darryl also explores why his firm’s portfolios often lean toward US investments, breaking down the advantages of America’s accounting standards, political stability, and the strength of the US dollar compared to many international markets. Plus, he answers a listener question about Health Savings Accounts and whether it’s possible to save too much in an HSA.

You’ll learn:

● Whether it’s possible to save too much in a Health Savings Account

● Why the United States continues to be a leader in global investing

● How accounting standards, government stability, and currency risk impact investment decisions

● Why AI and quantum computing could shape the next era of economic growth

● The role of the US dollar in the global economy

● What long-term investors should consider when building a diversified portfolio

Whether you’re planning for retirement, investing for long-term growth, or trying to better understand today’s global markets, this episode offers valuable perspective on why America continues to stand out as a destination for innovation and investment.

Benefiting from the show? We’d appreciate it if you left a review on your favorite podcast platform.

Investing in the US markets PAX Financial Group

Transcript:

And let me talk a little bit about the future of the United States and why I still have conviction in America. You know, we are we’re killing it in terms of leading the world in business. Look at AI when I tell you these companies like Oracle or Tesla or Meta or Microsoft or Google, Apple, when I mentioned all those, Nvidia, when I mentioned all those, they’re all US companies.

So here we are in this next wave of innovation. And you’re looking at the US for leadership again. Hey, this is Darryl Lyons, co-founder of Pax Financial Group. And you’re listening to Pivot with Darryl Lyons. We’re going to talk about wealth. We’re going to talk about leadership and life through the lens of long term thinking. And our conviction is that better money decisions happen in conversation.

So this podcast is a start of a conversation about your money. And so hopefully you can continue it with your advisor or your spouse or wherever it needs to go. This information is general nature. It’s intended. It’s not intended to provide specific tax, investment or legal advice. Visit Paxfinancialgroup.com for more information. So I want to start out with a question from one of our listeners, and I’m going to call it pondering with Pax question.

So I’ll use I’ll try to every week try to have a pondering with Pax questions. So if you want to email me your questions, Darryl@paxfg.com. But the question is, is there is there such thing as too much money in an HSA? So an HSA is a health savings account, and you’re limited on the amount that you can put in each year.

But it can grow to become quite, quite large over time, maybe even several hundreds of thousands of dollars. So do you find yourself can you find yourself at, you know, point in life saying this is just too much? I, I’ve actually have some, I think, pragmatic experience working with clients in this space over the years. The answer is no, only because health care costs are so outrageous, not just acute cost.

When you’re older, the cost of a knee replacement, but chronic care, long term care, inability to eat bay dress, toilet transfer, bowel movements. It’s so expensive that you’re probably going to need the HSA money. And so having a big HSA a very large account balance is really, really helpful. So no, I don’t see it as a problem with the exception of a couple of things to consider.

First of all, if you’re funding it to the detriment of maybe some other priorities in life, such as like paying down debt or emergency fund. Although HSA could be considered emergency fund, I think you just have to make sure that, you know, there’s always a trades of cash flow. And so if you’re funding the HSA and there’s other needs for that cash flow, that could be one thing.

Usually I don’t see that as an issue. I do see this as an issue, though, where people are having a have a lot of money in their HSA and they’re not investing. You have investment options in your in your HSA. It doesn’t have to sit in cash. So if you do have a lot of money in there. Make sure it’s invested according to your risk profile.

So that would be the one thing I would consider. So to answer your question directly, no, I don’t see generally speaking a problem having a big chunk of money in an HSA if you do have it, good for you. Way to go. All right. So today the pivot. So the pivot the pivot I want you to do is I want you to move from accidentally somehow, either in your mind or in your wallet betting against America.

And I want you to pivot to having much more conviction in America. And so let me try to frame this up and build this argument for you. And I have three salient points I want to discuss. And then I want to talk about the future of America. And I’m going to do this all in just about 15 minutes.

So let’s go. So, you know, when we were talking about portfolio construction at Pax and one of the things that we landed on was that our, generally speaking, our portfolios, when we manage people’s money tilt towards the United States relative to maybe some other firms. And so there’s reasons for that. And it’s a conviction in America relative to the other countries.

Now, this does change. I mean, in 2000 and gosh, I want to say 2001, a lot of investment portfolios, including ours, were almost 5050. And that was just a function of what the market was giving us in. The international markets were very attractive during that time, and you had different currency situations going on. So a lot of them, a lot of portfolios were 50% international, 50% us.

But I think right now you’ve got a really, I think you’ve got a really a lot of momentum behind the United States. I actually want to look at this through a framework that’s never left my mind from undergraduate at Saint Mary’s University. So I went to undergraduate Saint Saint Mary’s University. And I actually won a investment conference.

Investment. An investment, I guess. Game, I don’t know. So what they did is that at the beginning of the semester, they gave you a bunch of fake money, and whoever had the most money at the end of the semester. One. And so I won that and I got a book. So, what I did, though is I put my picture.

I was so proud of me winning that investment strategy, that I put my picture all across the business school, and just a picture of me saying, investment winner. I was just being silly. And I got a call from the dean, which made me uncomfortable. And she says, I’m really proud of you, but you have to get permission before you put stuff up like that.

So. But here the reason I mentioned that is because I. I’ll never forget these three considerations whenever you allocate towards international markets. So thank you Saint Mary’s for anchoring these three things into my head even to today. So these three things that you think about when having an international allocation, first of all, the accounting standards. So we have a different set of accounting rules here.

A lot of a lot of us know as GAAP, GAAP accounting, there’s also a set of international accounting standards. So they it’s not as though there’s an absence of accounting standards. Some people talk about China having two sets of books, one set of books for the investing public and another set of books for what how they make decisions.

I can’t attest for that. But I do know there’s different accounting standards across the globe, and I do have much more conviction in the accounting standards here. And it may be a home country bias which which does exist. I think, you know, if you think about it like I got a pastor Taco the other day from, Taco Palenque, which is incredible.

And I don’t think I’d have the same confidence if I got a Al Pastor taco from somewhere in, you know, like maybe a restaurant in India or China or anywhere else. But I do have a lot more confidence that the FDA has had some quality control assurances in the manufacturing of a taco at Taco Palenque. And so there is a quality control assurance and oversight that takes place in accounting as well.

That makes me feel better about the books in the United States. The technology, the expertise, the audits, all of these things do exist in other countries, frankly. There’s especially in the emerging markets, they’re just not as developed as they are in the United States. So that’s just I really don’t want to say it’s poor overseas. I just have much more conviction about the integrity of the books here, the enforcement, the transparency, shareholder protections, audits, comparability.

The capital markets have stress, tested these things over the years. Sometimes things get exposed. But I feel much better about knowing when I look at an investment in the United States that we know what that net income and the balance sheet and the Pal and all of that has thoroughly been vetted so that when you invest overseas is different.

The second thing I want you to know about when you invest overseas is and you know this intuitively, but leadership regimes change. And I know if you’re if I, if you’re I was about to say somebody personal that I know, but many of my friends would say, wait a minute. You’re saying that the leadership here is better than what it is overseas?

We’re flawed, okay, whatever. We’re flawed. Frankly, I don’t really want to express the Florus because I think plenty of political leaders and you heard this on July 4th, talk about how talk about America. But they all started out with an apology like America’s flawed, but and I’m like, why are you starting out apologizing? That’s like me talking about how good my parents are.

Before I talk about my parents, I talk about how flawed they are. This doesn’t make sense to me. So I don’t want to talk about how flawed our leadership is. I think you already kind of know the problems intuitively. The reality is, is we don’t really juxtapose or compare to what is out there. I mean, like, how would you feel if all of a sudden, you know, you get Vladimir Putin, Putin and, and, you know, or in Argentina, you know, I mean, all these other countries that have these dictators slash communist socialist regimes.

Yes. We bump into those ideologies in the United States all the time. But man, those regime changes are much more real in Russia and other countries. I’m really thankful because years ago, there was an opportunity for me to invest in a hotel in Russia, and at the time, Russia was a hotspot. You might remember I talked a lot years ago about the brick Brazil, Russia, India and China.

That was kind of the thing for a long time. That’s where you wanted to invest. It was almost like the AI of the time. And Russia had these population growth trends, and everyone was excited about the opportunity. So there was a hotel that came to my attention and I passed on it. I passed on it for various reasons.

And I’m thankful because regime changes happen. And then all of a sudden you could own a hotel in in Russia. And then Russia says, you know what? We changed our minds. You don’t own it anymore. No, we’re not buying it. We’re just taking it. Those regime changes, the probability of those extreme changes in the international markets are higher and certainly in other places.

But I think that we oftentimes as frustrated as we get, we do have some really amazing, well thought out checks and balances that exist in the United States. Okay. The third thing that we need to think about when it comes to America, and really what I like about it that that is often discounted is when it comes to currency.

Look, we there’s no doubt we have an advantage that no one else has, that every single currency is pegged to the dollar. And so it is really extreme, unfair advantage that took place in the 60s that we got, other countries have tried to replace the dollar and they will continue to try to replace the dollar. They have utterly failed over and over.

The European Union is a good example of that. There’s been some in China and Brazil or Iran. I guess there’s been a lot of desperate measures to create an alternative to the dollar. The dollar is still standing strong, and as a result, it is a huge benefit to the United States. You would think, well, what happens if it goes away?

The problem is, the threat of it going way doesn’t seem imminent because every time the markets get scared, where do people go? They go by the dollar. So it gets stress tested all the time in down markets. And people put their money back in the dollar. So the dollar continues to be this strength that the United States have that other countries don’t have and considered unfair.

But it’s the reality. And so when you’re investing overseas, you always have that risk of bringing back the returns that you made in another country to the United States, knowing that there could be a currency fluctuation. So imagine if you’re investing in Argentina or Eastern Europe, and all of a sudden there’s a swing in their currency. And what the profits that you made in that investment overseas, by the time you bring it back and there’s a swing in the currency, you’ve lost your profits.

And so, I just, you know, overseas investments may be just fine, but you just have to account for that currency risk and, and, and the stability of the dollar, albeit always subject to being questioned, which is fair. It’s still the cleanest sheet in a dirty load of laundry, so I. Those are the three things that I think about when we talk about investing in the US versus overseas.

And it’s just much more favorable from a, from a, I would say, a pragmatic point of view when you think about, these systems in these institutions that have been tested in the capital markets. But let me talk a little bit about the future of the United States and why I still have conviction in America. Very much so.

The more I digest, you know, market environments, the more I have conviction in the United States. It’s interesting that 27% of GDP in the world, which is GDP, is like all the business sales, all the business transactions that take place in the entire world is, is is from the United States. But, you know, United States only has 4% of the population.

So, you know, we are we’re killing it in terms of leading the world in business that doesn’t account what we I mean, we lead in like sports and movies and all of these other fun things. Even when you look at energy or oil and gas, we’re we’re leaders there. You know, we we really hit a home run with fracking, which was unbelievable, innovation that really allowed us to become a global leader in energy.

And so technology and innovation is just something that we do really well, whether it’s railroads or telephones or personal computers. We’ve just been killing it. Now, this is why I want to talk about the future. Look at AI when I tell you these companies like Oracle or Tesla or Meta or Microsoft or Google, Apple, when I mentioned all those Nvidia, when I mentioned all those, they’re all US companies.

And so here we are in this next wave of innovation. And you’re looking at the US for leadership. Again. At what point are we going to say, you know what? America is pretty unique after all these years of you know, from like I said, the railroads to automobiles to computers to television to telephones to now AI, fracking, AI, at what point are we going to say, yes, there is something special in the in the, in the food.

There’s something that y’all are drinking over there that’s special. And I can, I can I can attest to that. It’s an environment that fosters innovation and rewards innovation. And, you know, I don’t want to be promissory, but it feels like it’s going to continue. It really does let me land the plane real quick. But I want to talk about the future for just a second.

But I need to talk about the future by reflecting on the past. I don’t know if you were a product of the 80s, but I. I played video games in the 80s and like, I played like you remember Frogger and, I don’t know, there was some other ones. Activision was the, the, the ones I think Donkey Kong and a few others.

Anyways, I was trying to think of a few more, but the idea is, is that imagine going to somebody in the 80s when they’re playing these Activision games and saying, hey, I just want to tell you all about the future. It’s going to be fiber optic cable. It’s going to be a gigantic network. There’s going to be satellites and radio signals.

And you’re like, man, I’m I’m just, you know, I’m just trying to jump over this alligator across the street in Frogger. What are you talking about? And the reason I want to frame that up is because quantum computing is the future. And if I were to explain it to you, you would react the same way. That sounds really weird and interesting, but I’m just trying to get my head around what I’m dealing with today.

But quantum computer computing is is happening. It is the future that in collaboration with AI, we are going to go through a very amazing next stage of innovation in our country. And you know.

The future looks really weird and hear me out. The future looks really weird before it looks obvious, but if you start paying attention, you know, the federal government signed something called the National Quantum Initiative Act in 2018. The Department of Energy has done something called Quantum Genesis Initiative. And this is where there’s this public private partnership that dynamically advances the capabilities of computation and the speed of technology.

That, frankly, will take us to a new level as, as a, as a, as a world in society. I don’t think we should be scared. And I have some theological reasons behind that. We can talk about that another time. The main point I want to say is that America is going to be the leader again, because China, in other countries that try to do this, try to do it from a state control perspective, and we do it from a public private partnership perspective.

So we reward people who are willing to risk their lives and their futures and their monies to find ways to, to improve and to participate in this. And so the the the idea of America being a leader in this next iteration, I have a lot of confidence and conviction. So here’s the pivot. The pivot is we got to stop betting against America, for lack of a better word, whether it’s in our mind or our wallets.

I think we need to to start, really. Maybe it’s just turning off the news, having conviction that America is in fact special and the future is bright. Not to say that we don’t have flaws.

But it’s still an amazing experiment. So thank you for listening again. And like I said before, I believe that money can conversations or money decisions happen better in conversation. So if you want to take this idea of having an American tilt in your portfolio, make sure you talk with your advisor about that. Lean into America and remember you think different when you think long term.