As a result of the worldwide financial crisis, the US has been a target market from many investors. Many organizations around the world have opted to secure the US market. The main objective of commercial administrations is to maximize profits. Therefore, the most favorable environment is one which encourages high revenue creation while minimizing cost of operation. `There are a number of challenges in the US economy that undermines the objective of revenue maximization. Some policies in the business environment do not encourage foreign organizations to invest in the economy. There are numerous motives why a potential investor should not consider the US as one of the options (Ashbee 67).
Financial advisors often advise long-term investors to invest in stocks. Most middle-income individuals have invested in the liquid portfolio of the stock market. Some invest in invest in index funds while others consider individual issues such as GE and Wal-mart. It is not advisable for one to invest in a security that is not clear. The first factor that one and consider is the law of demand and supply. Fundamentals such as expected earnings do not necessarily provide proper explanation for market behavior. Supply and demand are the best clarifications for long-term market movement beyond fundamentals. A good investor needs to read them mind of the public to notice any projected change in demand and supply. It is unfortunate that the US stock market is very unpredictable. One might make huge losses if the trade of securities does not produce favorable results. In addition, the skewed population ratio implies that there will be few young investors to purchase future securities (Arestis and Elias 145).
One can also explain the limitation of investing in the US economy in the perspective of globalization. Globalization is widely spreading, and many investors are joining the US market as it is the main market by the fact that it is the world economic superpower. In the next 30 years, the US will be the biggest loser of globalization. Investors will shift to countries with a high rate of growth such as Brazil, India, South Africa, and China. As a result of globalization, many countries are eying the US, and that has the effect of increasing competition in the region. The reduced threat of entry in the country encourages might investors. In a few years to come, the companies in the US will experience high competition because many companies shall have established themselves. The disadvantage of investing in emerging markets is because they attract millions of investors that alter the industries (Ashbee 67).
Interest rates are another factor that investors need to consider is interest rates. The effects of variations in interest rates in the US are not very promising. It is impossible for the rates to be near zero. The US government will compel itself to inflate because of debts. Consequently, rates will not go low; instead, they are likely to rise. Rising interest rates would be unfavorable for investors as costs of production will be high. It is also evident that long-term gains taxes are always low. However, the taxes are not likely to go down further over the next 30 years. Unfortunately, the taxes might be on the rise. The factors above are the reasons why one should not prioritize investing in the US (Lankford 78).
Work cited
Arestis, Philip, and Elias Karakitsos. The Post-Bubble Us Economy: Implications for Financial Markets and the Economy. New York: Palgrave Macmillan, 2004. Print.
Ashbee, Edward. The Us Economy Today. Manchester: Manchester University Press, 2010. Print.
Lankford, Ronald D. What Is the Future of the Us Economy?Farmington Hills, Mich: Greenhaven Press, 2013. Print.
