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Why a 40-Year Wall Street Vet is Telling Clients to Sell Everything American

Not long ago, I heard from an old Wall Street contact—a true market veteran who’s seen it all since the ‘80s crashes. This guy usually plays it safe, favoring steady moves over panic. But recently, he told his clients to sell every single U.S. stock they own. Yep, everything: tech giants, banks, consumer companies—you name it.

So, what’s got him sounding the alarm? Let’s dive into why this call is turning heads among some big institutional investors right now.

The Bubble That Just Won’t Quit

We all tend to get caught up in recent wins. The S&P 500 keeps hitting new highs, so it’s tempting to think the good times will roll on. But here’s the catch: most of that rally over the last year and a half comes from just a handful of mega-cap tech stocks—Apple, Microsoft, Nvidia, Alphabet—the so-called “Magnificent Seven.”

Take those out, and the market’s underlying strength looks pretty weak. Even portfolio managers who swear by diversification are admitting most of their gains rely on this tech bubble that’s looking more fragile by the day.

This vet has been around for the dotcom crash and the 2008 crisis. Each time, early warning signs showed a market led by just a few stocks, inflated valuations, and retail mania before everything came crashing down.

Interest Rates: The Elephant in the Room

There was a lot of buzz early this year that the Fed would slash rates multiple times in 2024. Markets priced in five or six cuts. But inflation hasn’t budged much, especially with wages staying high, and the Fed’s patience is wearing thin.

That’s why the “sell everything American” idea makes sense to some: if rates stay high longer, those pricey tech stocks get hit hard. Higher borrowing costs mean investors demand more from future profits, and suddenly those sky-high price-to-sales ratios matter again.

Some try to hedge by shifting to “value” or defensive sectors here in the U.S., but if a big correction hits, everything could fall together. It’s a risk that’s often overlooked.

Geopolitics and the Dollar’s Double-Edged Sword

It’s not just the market itself. Political drama, a tough election year, and record debt levels have investors questioning how strong the U.S. really is long-term.

On top of that, a resurging Middle East energy sector, ongoing supply chain headaches, and the tense U.S.-China relationship are adding to the uncertainty. The dollar’s strength helps importers but weighs on multinationals and emerging markets. Plus, it makes U.S. stocks look pricey to foreign buyers.

In fact, I’ve seen big pension funds in Europe and Asia quietly dialing back their U.S. exposure and hunting for better value elsewhere.

Why Not Just Hedge?

Some folks ask, “Why not just hedge with options or gradually reduce exposure?” The thing is, hedging isn’t free. When the market looks this stretched, the chance of a sharp drop feels bigger than usual. For many, the only way to truly lower risk is to sell outright.

That said, this isn’t a one-size-fits-all call. If you’re investing for the long haul, riding out storms is usually worth it. But if protecting your cash is a priority—think retirees or endowments—a sudden 20-30% drop could be a real blow.

Where’s the Money Heading?

The interesting twist? Those selling U.S. stocks aren’t just parking in cash. They’re looking overseas.

European markets trade at cheaper valuations. Emerging markets are pushing reforms and growing from within. Japan’s revamping corporate governance, drawing fresh global attention. I’ve seen portfolios with solid stakes in India, Brazil, and Southeast Asia outperform U.S.-focused ones on a risk-adjusted basis over the past year.

Gold and commodities are also making a comeback as inflation hedges. Bitcoin isn’t a universal pick, but alternative assets are definitely back in favor—much like in the ‘70s.

Some Real Talk on the Risks

That said, this “sell everything American” idea isn’t foolproof.

Timing markets is notoriously tough. Markets can stay irrational far longer than anyone expects. The S&P could easily climb another 10% before any big pullback. Sell too soon, and you might miss out and deal with regret while sitting on underperforming foreign stocks or cash.

Also, the U.S. market is still the most liquid and innovative in the world. A breakthrough in AI or some other tech could push valuations even higher. I’ve seen investors jump back into U.S. tech at the first sign of momentum—even after saying they’d “de-risked.” Old habits die hard.

What Should You Do?

I’m not telling you to unload your American stocks tomorrow. But it’s smart to think about how much of your portfolio hinges on a few crowded trades. True diversification goes beyond owning a couple of international ETFs. It means considering currency risks, political shifts, and where real growth might come from in the next decade.

If you’re managing money—whether for yourself or others—ask: what if the old Wall Street guard is right? Do you have a plan if U.S. stocks lag for a while?

Wrapping It Up

Too many investors fall into the trap of thinking “this time is different”—that U.S. stocks can’t lose or tech will always lead. History tells us otherwise. Nothing grows forever.

You don’t have to agree with the 40-year vet’s call to sell everything American. But it’s worth hearing him out. Don’t let hometown bias blind you to risks—and opportunities—beyond the U.S.

At the very least, it’s a wake-up call worth paying attention to. Even if you decide to stay put, it never hurts to prepare.

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