“Don’t bet against the United States” or “The U.S. is the global epicenter of capitalism.”
Whenever I say the same things, some silly person always comes out of the woodwork and asks, “What about the Nikkei 225 stock index of Japan? After three decades, it still hasn’t reached its 1989 high! Huh? Huh!”. As if the investor in the U.S. isn’t making regular investments or dollar-cost averaging into the U.S. markets (not to mention, reinvested dividends — and lower inflation in Japan’s case). And because of globalism, if the U.S. goes down, there would be a long-term global downturn.
While it’s possible that the U.S. market will end up like Japan, you shouldn’t invest in mere possibilities. You also shouldn’t just seek to avoid losses; instead, you should also seek to maximize gains. By the way, imagining something doesn’t entail that it’s conceivable. With even greater force, imagination doesn’t entail possibility.
Also, I don’t know how the U.S. is anything like Japan. That’s not to say that the U.S. couldn’t end up like Japan. But the person who cites Japan needs to give us reasons to think the U.S. is similar to Japan. Simply screaming that they are similar is not an argument.
We know that it’s possible for the U.S. to have a long-term downturn because it has happened to the U.S. before — The Great Depression (i.e. whatever is actual is possible). So, a better comparison would be to compare the U.S. to the U.S. of the past: a worse comparison would be to compare the U.S. to Japan. Recently, adjusted for inflation, the U.S. markets didn’t go anywhere from 2000–2015.
There are advantages to investing domestically. You don’t have to worry about currency risk, taxes, information asymmetry, etc. But, if one were to go all-in on one’s own country, they need to do their research. And, again, they need to dollar cost average, reinvest dividends, and diversify across asset classes (e.g. bonds, stocks, cash, real estate, commodities, etc.).