What a less dominant America might mean for your money
I have long suggested owning companies outside the United States as part of a diversified investment portfolio. For most of that time it was unpopular advice. Americans did well betting on America, and the habit of holding primarily US stocks is deeply entrenched. Our brains are emotionally wired to buy what is familiar and hold what has increased in value.
American investors keep about 81% of their stock holdings at home, according to research from Vanguard, even though American companies make up roughly 60% of the world's stock markets.
A reason to look at that gap comes in a report by Phillips Payson O'Brien, titled "The American Age Is Over," published September 16, 2026, in The Atlantic. O'Brien, a professor of strategic studies at the University of St Andrews in Scotland, writes: "The American age that followed World War II was bound to end eventually. What's shocking is how suddenly that moment has arrived."
O'Brien builds part of his case on this year's war with Iran. In addition to the immediate costs of the war, stockpiles of the most advanced American munitions will take years to rebuild.
He also points out that longtime American partners are making their own arrangements, with Pakistan, Turkey, and Saudi Arabia signing a defense pact and South Korea warming to China. O'Brien sees this as part of a slower change that was already underway, writing, "The emergence of East Asia as the center of the world's economic output was always going to reduce American influence."
Both of these factors may affect your money. For example, China makes about 50% of the world's ships and controls about 80% of its drone manufacturing. The second and third largest shipbuilders are Japan and South Korea, while the United States does almost no civilian shipbuilding.
The other side of the case comes in a September 2, 2026, column in Directors & Boards, titled "The Shining City on a Hill," by Robert H. Rock. Rock grants that America has lost standing abroad, then writes: "Paradoxically, America's reputation abroad has weakened at the same time America's relative economic advantages have strengthened."
Only time will tell whether either O’Brien or Rock is right. In the meantime, it would not be helpful to overreact to either prediction. Neither fear nor unthinking confidence has much to do with the evidence.
What evidence does show is that a portfolio concentrated in one country does well only when that country does well into the future. The same thing is true of a nation's currency. If you earn dollars, spend dollars, and hold only dollar assets, you have taken a huge bet on the dollar, whether you intended to or not.
Let me emphasize that I am NOT suggesting the United States is finished or that you sell your American holdings. What I do suggest is that it would be worthwhile to consider what a less dominant America might mean for your money. Here are some suggestions: If you own index or target date funds, look at what is inside of them, because many hold American equities first, then international. Any additional money you add could be diversified into international companies that earn in yen, euros, and pounds. If you are close to retirement, consider holding three years of living expenses in reserves to protect against needing to sell at the bottom of a market. Above all, make any changes gradually.
Diversifying your portfolio across the globe will not completely insulate you from a bad year in equities, because global markets tend to rise and fall together. However, that diversification can help shield your retirement resources from the decline of any single country.
Rick Kahler, CFP®, CFT™, is a pioneer in financial therapy and a 2026 inductee into the Financial Therapy Hall of Fame. He is the founder of The Financial Therapy Podcast and Kahler Financial Group, and co-author of “Coupleship Inc.” and “The Financial Wisdom of Ebenezer Scrooge.
The information provided is for educational purposes only and should not be construed as investment advice. The views expressed are subject to change based on market or economic conditions. Past performance is not indicative of future results. Any reference to potential benefits is illustrative and may not apply to your individual circumstances. You should consult with your financial adviser before making any investment decisions. KFG, LLC is an SEC-registered Investment Adviser.
Photo: public domain, wikimedia commons
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