By: Larry MacDonald

One caveat often heard about “stocks for the long run” is that historical analyses of the kind summarized in the previous post look less appealing for many other countries, especially those that encountered revolutions or wars.

The last century belonged to the U.S.A. In the aftermath of World War II, it was the only major nation with a thriving economy, ample financial/human capital, growing middle class, and a rule of law supporting free markets.

But over the years since then, its success has transformed virtually the rest of the world into one integrated capitalist economy. Now it has to deal with vigorous competition from many other countries. Will the next century be theirs’ as well?

If one lives in the U.S.A. and neighboring countries, they may hope so. Yet history seems to show that countries on the periphery of turmoil and conflict are the ones that do better over the “long run.” Those at the center suffer major trauma to their financial/human capital, wealth, and other foundations necessary for growth over the long run.