2.
I find this impossible to parse without a presentation of how much business “U.S. based companies” conduct overseas. I think this is larger than Mr. Salmon implies.

3.
Mr. Salmon seems to be concluding that consumers in the U.S. are actually buying products increasingly from non-publicly traded companies. I look around and at least anecdotally, am not convinced. By far it would seem that U.S. consumers buy foods, building supplies, gasoline, many computer parts, cars, banking services and more from publicly traded companies.

4.
I get a bad feeling that this article, like so many financial articles online, is here to sell advertising via seizing, using numerology techniques, on a seemingly stunning statistic that, while interesting, portends far less profundity than the author suggests.

Furthermore, the metric of “how many listed companies” has no relation to economic reality. I could list a bunch of SPACs holding $100m in cash or even tiny penny stocks with totally speculative business plans, but to do so wouldn’t increase the amount of meaningful equity investment available to U.S. investors. JNJ and other large companies could list minority stakes in their subsidiaries, as do many international companies (Toyota, Inbev/Ambev, Santander, etc.). Felix, you can do a little better than boring counting if you engage your brain.

In the current world picture, everybody seems so focussed on today, this week, this quarter that a year seems a long time and the future…. who cares about the future? Just carry on fiddling as Rome burns as the cries for less and less regulation accelerate the process.

http://blogs.reuters.com/felix-salmon/20 10/05/10/why-volatility-means-you-should -sell-stocks/

People frequently confuse market volatility with risk. In any given year, the sum of the daily movements total more than 100% (roughly half of them positive and the other half negative). Hard for me to read that as anything more than a lot of random noise, though I guess the HFT trading algorithms are able to pull useful patterns out of it.

Active markets are inherently noisier and more volatile than slower markets. Real estate is a notoriously non-volatile market, with price expectations changing slowly. Again, lack of volatility should not be confused with lack of risk.

And which is riskier? An investment with mean annual returns of 2% and a SD of 1%? Or an investment with mean annual returns of 6% and a SD of 4%? The latter is more likely to have a “down year”, but very rarely will underperform on a five-year sample. Equities have held a small premium over the past decades, despite falling interest rates. Is it truly a stretch that they might maintain — perhaps even widen — that premium in an environment of rising interest rates?

What is an “everything bagel” anyways? It is a single bagel with at least four distinct flavors and textures, working together. I can think of a few “everything bagels” traded on the NYSE:

J&J gives you a taste of pharma (36%), medical devices (40%), and consumer products (24%). Over 50% of its sales (and the majority of its growth) outside the US. Recently seasoned with Acclarent, Crucell, Micrus, Cougar, and Mentor — in some cases removing publicly traded companies from the exchanges.

United Technologies operates in six different manufacturing segments, spanning everything from A/C and elevators to aviation (commercial and military). 55% of sales outside the US.

Or Coca Cola. While it isn’t exactly diversified (they make, bottle, and distribute drinks of various sorts), they have a worldwide footprint. Again, less than half their sales from the US.

Does it matter more where a company is incorporated or where it operates? Is there a fundamental difference between Kraft and Unilever? Between AB Inbev (formed through an international merger) and Diageo? Between J&J and Novartis? And are there “emerging market” companies ready to join in that global game?

Smaller businesses tend to be more closely tied to their home country, but the megacaps offer worldwide exposure. And in some cases a little bit of everything.

P.S. Thanks for the look back to last May. Did you exit the stock market at that time like you advocated others do? Hope you got back in time for the second-half rally last year.