Two prominent figures on Wall Street have recently said that the era of globalization is over. In this article, I will discuss what this means for investors in the months ahead and how you should adjust your investment strategy.
BlackRock CEO Larry Fink Says Globalization Is Over
BlackRock Inc. (BLK) founder Larry Fink has said that the Russia-Ukraine war is bringing the era of globalization to an end.
In his latest letter to shareholders, the asset management giant’s co-founder and CEO wrote that Russia’s invasion has broken the cross-border bonds between countries, companies and people that were already strained by the pandemic:
“Russia’s aggression in Ukraine and its subsequent decoupling from the global economy is going to prompt companies and governments worldwide to re-evaluate their dependencies and re-analyze their manufacturing and assembly footprints — something that Covid had already spurred many to start doing.”
Fink, whose firm oversees nearly $10 trillion in assets under management, added:
“Access to global capital enables companies to fund growth, countries to increase economic development, and more people to experience financial well-being. But the Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades”.
Oaktree Capital’s Howard Marks echoed those fears, telling investors:
The recognition of these negative aspects of globalization has now caused the pendulum to swing back to local sourcing. Rather than the cheapest, easiest and greenest sources, there’ll probably be more of a premium put on the safest and surest.
For investors, they now need to consider what the “safest and surest” looks like and invest ahead of that premium.
The US Domestic Market Advantage
Although investors are suffering from a pendulum swing, which has turned from extreme greed to extreme fear, the US market will have advantages in the years ahead.
First of all, the US is geographically dislocated from…
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