U.S. Treasury intervention in bond markets last week eased yield, boosting stocks, gold, and even Bitcoin.

Nevertheless, stubborn inflation, high oil prices, geopolitical uncertainty, and surging demand for capital from both companies and governments are all clear trends. This is leading to higher bond yields and a bit of a headwind for stock markets as the U.S. Federal debt reached $40 trillion this week. The US Treasury is paying interest on the debt at a staggering rate of $25 billion each week.

Technology has gone from asset light software to asset heavy AI infrastructure. Mega tech from having huge cash positions to borrowing money by issuing bonds.

Geopolitics is leading companies around the world to duplicate supply chains at home and bulking up defense spending. This spending is causing governments to borrow more to fund growing budget deficits. About 64% of global debt is denominated in dollars.

Interest rates are rising across the globe as competition for capital to finance government debt intensifies. Japanese 30-year yields have risen above 4% for the first time in their 27-year history, while equivalent UK gilts yield their highest since 1998.

International private and government investors in our Treasury bonds are crucial and these investors seem jumpier and more attuned to risks than even just a few years ago.

The reason is that stable official foreign entities like central banks, and sovereign wealth fund hold in aggregate only 12% of U.S. Treasury securities - down from roughly 40% during and after the global financial crisis.

International traders and hedge funds have filled the gap keeping total foreign holdings of Treasuries at about $4 trillion.

It is also interesting that Bitcoin moves inversely with interest rates as it is a risk-on asset driven by liquidity. Bitcoin rallied yesterday but is down sharply over the last year and from its record high reached in October last year as well as year to date. It will be interesting to see if Bitcoin shifts to being more of an alternative to the U.S. dollar. A hedge on inflation rather than a leveraged play on bull sentiment.

At the heart of the AI tech complex is one of the most important products in the world, semiconductor chips. Chip prices are surging as AI-driven demand for chips explodes. Chips are in everything from smartphones and cars to jet fighters to laptops.

America produces only about 4% of the world’s supply and the more advanced largely come from Taiwan and South Korea. Semiconductor stocks are both outperforming and more volatile than the overall market.

Unitree Robotics, the Hangzhou-based robotics company, surged 460% in its Shanghai market debut but came back to earth this week.

European stocks continue to outperform. The companies that make up the Stoxx Europe 600 have risen by about 12% this year get almost half their revenues outside the continent. In comparison, America’s S&P 500 companies gather about 30% of their revenue from outside the United States.

I’m looking for creative ways to invest in land, one of the best hedges for inflation and the source of great wealth over many generations. The top landowner in America is Stan Kroenke owning 2.7 million acres – larger than the state of Delaware and worth about $24 billion.

NATO was formed in 1949 when the United States and 10 European nations signed the North Atlantic Treaty in Washington, D.C.

By most accounts, it has been very successful. Not one American has died defending Europe since its launch as it deterred the Soviet Union during the Cold War and up to Ukraine deterred Russia.

U.S. troop levels in Europe have declined from roughly 400,000 to 75,000 today. The annual direct cost to the U.S. taxpayer is about $40 billion, representing less than 4% of our defense budget with most local costs and infrastructure costs borne by host countries.

NATO membership and infrastructure allows America to project power not only in Europe but the Mideast and Africa. Finally, NATO members are significant buyers of U.S. defense contractors leading to greater scale, lower costs, and interoperability of defense systems from fighter jets to ammunition.

Due to the Ukraine war and constant U.S. pressure, European defense spending surged by 14% from 2024 to 2025 as NATO members bulked up military capabilities– the fastest annual increase since 1953.

Poland and Germany are leading the way due to geography, economic strength, and reputation as centers for manufacturing and engineering excellence.

Rheinmetall AG (RNMBY) provides mobility and security technologies in Germany, Europe, South America, Asia and the Near East, and internationally. Founded in 1889, Rheinmetall is a German defense company with a growing reputation as NATO’s key player. While it maintains a small civilian business, the defense division is driving the company’s growth and valuation.

Rheinmetall is the leading NATO supplier of 155mm artillery shells, a producer of tanks, air defense systems, and autonomous military vehicles, and a growing player in electronic warfare and AI-enabled battlefield systems. The company is rapidly expanding its capacity as it expands by investing in new factories and scales up operations to meet sustained military demand well into the 2030.

Unlike many cyclical industrial stocks, Rheinmetall’s robust order pipeline is funded by multi-year sovereign budgets and down-payment structures, mitigating many standard commercial risks. Furthermore, the company’s order book now exceeds €30 billion, reflecting multi-year contracts.

The company is profitable with a return on equity of 22% with annual revenues rising at a 30% rate. The ammunition division posted a 28% operating margin, significantly above industry averages.

Rheinmetall has a wide moat and is on track to capture 20%-25% of NATO Europe’s equipment spending through to 2030. The company sees significant opportunities well beyond Ukraine and operates across a wide spectrum of defense equipment and services.

I looked at this stock last year, but its valuation was quite elevated. The stock has since pulled back about 50% from its September 2025 high giving us a good price entry point.

With rising European defense budgets, NATO’s rearmament, and Rheinmetall’s expansion in high-margin ammunition and battlefield tech, the stock presents one of the strongest investment cases in the global defense sector.

In Thomas Friedman’s influential book “The World is Flat”, he argued that because of breakthroughs in technology and communications, distinctions between countries are becoming less important.

On the contrary, the world is round with America still on top. And if we take vigorous action on radically reforming our government, economy, and educational system, our best days may be ahead.

America is not just any country. Looking at the big picture of history, economics, politics, independent judiciary, education and health opportunities, free press, openness, freedom, sense of obligation and community, America is exceptional.

As head of an investment research firm, I closely follow the progress that many emerging market countries have made and applaud that a billion people have been pulled from poverty over the last twenty years.

The challenge from a rising China is real and should not be underestimated.

But the media is overstating America’s weaknesses and missing America’s great competitive advantages. In an increasingly competitive global marketplace and in the diplomatic corridors of power, America still has the potential to lead.

Our future is in our hands.

But history shows that great countries and civilizations fail due to one or more of three shortcomings: a lack of fiscal discipline, a culture that does not promote openness, scientific innovation or the common good, and a foreign policy not grounded in the national interest and executed at the extremes of isolationism or foreign interventionism.

America has been blessed by geography, ample natural resources, and a free form of government that allows it to be strong, secure and independent even as it participates fully in the global marketplace.

But America needs a spurt of creativity and growth that resembles the period in the early 20^th century when it first became a dominant player on the global economic stage.

Here is how Charles Morris describes this era in the opening of his book “The Tycoons”:

“America was not only the most populous of industrial countries but the richest by any standard. – per capita income, natural resource endowment, industrial production, the value of its farms and factories. It dominated world markets – not just in steel and oil but in wheat and cotton. It ran huge trade surpluses in goods and was gaining preeminence in financial services. Its people were the most mobile, the most productive, the most inventive, and, on average, the best educated. …..

Attentive European elites were shocked as they came to understand the scale and speed of America’s ascendancy”

Of course, the American economy now is at a different stage of development. Some of the above quote immediately brings China to mind, but some of the above passage are still apt to the America of today.

America is still one of the fastest growing of the large, industrialized economies. Most of the Fortune Global 500 are American firms though we are again closely followed by China.

The vitality of the American economy is also highlighted by the fact that only twenty of the current Fortune 100 companies were even around in 1980.

We still have the deepest and most liquid capital markets in the world though our competitors are gaining ground.

My view is that while the world is clearly filling in and emerging competitors are catching up with us quickly due to rapid advancements in technology and communications, the American economy is more than holding its own.

And I believe that the overall performance of the U.S. stock market, and in particular certain sectors such as financial, technology, and healthcare, may very well continue to outpace global markets.

One of my favorite exchange-traded funds, the iShares S&P Global 100 (IOO), reflects this balance with exposure to the 100 largest companies in the world - of which 50% are America stocks and 50% international.

It has a 45% weighting to technology, and of its top ten holdings, only one is not an American company. I highly recommend this ETF as a core holding as it has outperformed its benchmark this year as well as during the last year, three years, five years, and ten years.

At the core of Independent Wealth’s strategy is to put America at the center but also pay close attention to international stocks and ETFs trading on U.S. markets.

This strategy could lead to higher returns, lower risk, and volatility.

Join us today by taking advantage of a special offer.

Bitcoin is in a slump, down about 25% this year and losing about half of its value since reaching a peak above $126,000 in early October.

The market is also getting impatient with the on and off Hormuz story as energy stockpiles dwindle and oil prices react to the daily news cycle.

Gold has overtaken US Treasury bonds to become central banks’ favorite investment, as faith in America’s political stability and public finances erode a bit. The share of gold in central banks’ official holdings of foreign currencies climbed to 27% last year, surpassing US Treasuries at 22%, according to a report from the European Central Bank (ECB).

The retail trading crowd has found a surprising new meme stock: IBM (IBM). As a result, the stock posted its best two-day showing in records going back to the early 1970s and shares were up 19.8% this week following last week’s 14.8% gain.

The catalyst seems to be the recent award of $1 billion for its quantum computing initiative and recognition that IBM is a sleeper AI play. AI continues to create surging demand for more data and communication infrastructure. A remarkable 61% of all venture capital last year went into AI, according to the Organization for Economic Cooperation and Development (OECD).

However, in terms of AI spending, China is still putting disproportionate sums of capital into advanced manufacturing sectors instead of AI data centers. It is integrating and deploying AI to boost manufacturing and industrial productivity.

As we turn to SpaceX, I should note that our Alphabet (GOOG) might own around $100 billion stake in SpaceX, a consequence of its 2015 investment in the rocket company. Alphabet’s holding wasn’t reported in SpaceX’s IPO registration document, which only means Alphabet doesn’t own more than 5% of the company. Nevertheless, $100 billion is a lot, even if it’s only 2% of Alphabet’s market value.

SpaceX may be one of the greatest private companies ever built. It dominates commercial launch. Starlink has become a global satellite broadband network. Reusable rockets have changed the economics of space. The global space economy is already estimated to be worth more than $600 billion as the economics of the broader space sector become more practical. Satellites are cheaper while defense and strategic rivalry is growing.

But even great companies can still make poor investments at the wrong price. Investors learned this lesson with Cisco Systems during the dot-com bubble. Cisco sold the picks and shovels during the internet boom. Yet investors who bought Cisco at the peak in 2000 spent years trying to claw back deep losses. The business was real, the potential profits were there but the valuation was - ridiculous.

Although the valuation and target price has come back a bit, this is the danger with SpaceX I’m not negative on the company and would have snapped up SpaceX shares a few years ago at venture-capital prices if I had had the chance.

Today’s space economy infrastructure includes satellite internet, launch services, space robotics, defense communications, and eventually even orbital data centers. One key driver is that launch costs are falling. When this happens, everything becomes easier.

For the space economy, that means rockets, satellites, propulsion, robotics, sensors, communications and defense systems. That is where I have been looking for alternatives to SpaceX but such stocks as Rocket Lab (RKLB), BlackSky Technology (BKSY), and AST SpaceMobile (ASTS) have already really taken off.

I also like Kratos Defense & Security Solutions (KTOS) – the maker of advanced XQ-58 Valkyrie drone aircraft that is Kratos’s marquee product.

Kratos is the primary unmanned aerial target drone system provider for the U.S. Air Force, Navy, Army and several allied defense agencies, which has led to multiple recent contracts and partnerships. The company currently holds orders for multiple Erinyes and DarkFury hypersonic vehicles – a key area of competition with China. Kratos took the stock market by storm in 2025, rising by 187%. However, Kratos shares have come way down in 2026, dropping approximately 50% from its all-time high. Still, I would prefer a better price entry point.

That is the main risk of moonshot investing. Paying too much.

The better strategy is not to bet the farm on one stock but own a carefully chosen basket and let the winners lead the way. In the space economy, that means rockets, satellites, propulsion, robotics, sensors, communications, and defense systems.

Become a paid Independent Wealth member to find out the best one today.

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Louis Gavekal is an astute reader of markets from his perch in Hong Kong. One of his most memorable lines is that when China enters the room, profits walk out.

He also has an interesting take on asset classes dividing them into stocks, bonds, and metals. The latter is separated into industrial metals and precious metals. Louis sees gold as the new bonds and a hedge not on inflation but rather on weak currencies and geo-political risk.

We share the conviction that industrial metals are undervalued even after a strong performance over the last year. The West has finally come out of its complacency regarding China’s dominance of this sector as electrification of the grid and AI data centers all point to a sustained supply-demand imbalance.

Miners have been starved of capital for some time and the lead time to develop a new mine can be as long as two decades. All this will restrict supply as the fundamentals on the demand side seem persistent.

In addition, the momentum is strong as metals were the best-performing asset class of 2025, and this is running into the new year.

This has stretched valuations into an uncomfortable territory. However, as we have seen with the U.S. market and mega tech, this can continue for some time.

Finally, as an Asia specialist, Gavekal believes that both the Chinese currency and the Chinese stock market are undervalued. He makes the point that while the U.S. represents about 25% of global GDP and China contributes about 20%, the total market value of U.S. stocks is ten times larger than Chinese stocks. Good point.

This brings me to copper that goes into just about everything that has a connection to electricity. An EV has four times as much copper as a regular car. Copper also goes into charging stations, solar panels, and wind turbines. However, annual demand for copper in clean tech is only about 1 million tons, or just 3% of supply. Goldman thinks this could go up 5X by 2030, with all the other sources of demand, means that copper prices have room to run. Some even predict a price of $6 a pound before the end of next year.

Copper is in a lot more than clean energy tech, but it is interesting that the Iran war is boosting demand. China’s clean tech exports soared in March, and South Korea’s domestic EV sales more than doubled last month year over year. March EV sales also surged in the EU.

This week’s new recommendation gives us exposure to both precious and industrial metals with a focus on copper.

New Recommendation

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Sea Limited (SE)

Sea (SE) has long been one my favorite Southeast Asian stocks.

We have in the past been successful at finding a good entry point, taking profits along the way and exiting at an appropriate time.

Based in Singapore, Sea has three core businesses: 1) digital gaming/entertainment, 2) e-commerce, and 3) digital payments and financial services, known as Garena, Shopee, and SeaMoney, respectively.

Garena is a leading global online games developer and publisher and has been a key driver of the stock. Garena is responsible for some of the world’s most popular mobile games such as Free Fire, Call of Duty: Mobile, and EA Sports FC. It had over 633 million users during the fourth quarter of 2025

Shopee is the largest e-commerce platform in Southeast Asia and Taiwan. The company attempted to expand to other markets such as Latin America, but this proved unsuccessful. Shopee processed 13.9 billion orders worth $127.4 billion during 2025 – both record highs. Sea is deriving more revenue out of Shopee customers by selling digital ads on the platform. It’s also improving its logistics network to deliver faster in this competitive market.

Next comes Monee, a leading digital payments and financial services provider in Southeast Asia. This segment also has nice margins and is part of a rapidly growing payment ecosystem. Monee had 37 million active borrowers at the end of 2025, growth of 40% year over year. It also held $9.2 billion in loans to its members and Shopee merchants, which was up by an impressive 80%.

Now we get to financials.

Sea stock is down about 55% in last six months. Since September 1, 2025, Sea stock has gone from 194 to 83 before rising 7 points yesterday.

Sea stock is trading about 27 times forward earnings - a great entry point.

Sea has a strong balance sheet ending 2025 with $11.1 billion in cash and equivalents on hand against just $510 million in debt. The company has successfully moved to profitability through Shopee’s $881 million and SeaMoney’s $1 billion in adjusted earnings before taxes.

Recent momentum in the stock is underlined by significant stake increases by Steve Cohen and Stanley Druckenmiller. This indicates growing confidence in Sea’s long-term growth potential.

The recently issued U.S. National Security Strategy states that the United States intends to make “it harder for non-Hemispheric competitors to increase their influence in South America”. Recent action in Venezuela has also raised the strategic stakes in the broader Latin America.

It has also raised attention on the region and the question - could Mexico and South America be an investment opportunity over the long haul? Could its economy and stock market be taken to the next level by surging Chinese and American direct attention and investment?

China’s higher manufacturing labor costs are Mexico’s opportunity. According to consultant Alix Partners, Mexico has surpassed China as the cheapest country in the world for companies looking to manufacture products for the U.S. market. Next in line is Brazil.

In addition, the Alix report showed that across many industries, China’s cost advantage in producing goods and delivering them is shrinking. In addition to the cost factor, flexibility, speed of response, and quality all point to Mexico over China. Ironically, these trends have led to Chinese companies moving production to Mexico to capitalize on the trade advantages that come from geographic proximity.

The bigger prize may lie in the South American continent.

China has also made significant inroads in South America. From doing nearly no business in 2000 to bilateral trade worth more than $500 billion in 2024. China is now South America’s biggest trading partner and has actively financed infrastructure in more than 20 countries in the region have already signed on to China’s Belt and Road Initiative

From copper in Peru to lithium in Argentina, mining companies are on the prowl for commodities. China’s agricultural giants import soybeans from Brazil. Chinese utility companies electrify entire cities. China also controls much of the continent’s shipping infrastructure and about 40 ports from which goods move across the Pacific.

The European Union (EU) is also getting into the game. It just signed a trade pact with South American countries that will create one of the largest free-trade zones in the world, covering markets with more than 700 million people.

The number of stocks that trade on U.S. markets is somewhat limited but also larger than you might imagine.

For Mexico, some of the stocks that Independent Wealth is following range from telecom giant America Movil ADR (AMX) to Cemex ADR (CX) is a multinational infrastructure play based in Monterrey, Mexico benefits from strong demand from firms building factories and office buildings. Banco Santander Mexico (BSMX) is a Mexican banking group and a subsidiary of Spanish bank Banco Santander (SAN), a Cabot Wealth Explorer recommendation that was up 160% last year.

For Brazil, the biggest market in South America by far, take a look at Itau Unibanco (ITUB), a large Brazilian bank, and Petrobras (PBR), the leading Brazilian multinational oil and energy behemoth. In mining, Vale (VALE) produces huge amounts of iron ore, nickel, and copper, and is one of the most valuable Latin American companies.

Beyond Brazil, I have recommended three stocks based in Panama. Copa Holdings (CPA), a Panamanian airline holding company, and Banco Latinoamericano de Comercio Exterior S.A. (BLX), better known as Bladex, a financier of multinational trade.

A great asset play in Argentina on our watch list is Cresud (CRESY). This is an Argentinian real estate investment company that sometimes trades at a discount to book value.

If you prefer a broader “shotgun approach to tapping into the growth of this region, your best bet is the iShares Latin America 40 ETF (ILF) that tracks 40 major Latin American companies. For Brazilian stocks, there is BlackRock’s iShares MSCI Brazil ETF (EWZ).

All the above stocks represent good companies, but my favorite stock right now to capture the growth of this increasingly dynamic and strategic region, I need to keep exclusive for members of Independent Wealth.

You may have noticed that the mainstream financial media is now preaching the newfound religion of international diversification.

Last year, the MSCI all-country world ex-U.S. index surged 29% in US dollar terms, posting its best performance in more than a decade and speeding past the S&P 500’s 16% gain.

Our recent adding of a Japanese ETF to the portfolio was well timed as Sanae Takaichi, Japan’s first female prime minister, gambled on snap election and achieved a landslide win with a two-thirds supermajority. The Nikkei 225 hit new records in the days following her win.

It is not just China’s central bank that is stockpiling gold. Chinese investors purchased over 400 metric tons of gold bars and coins in 2025, a 28% jump from the year before and nearly a third of global purchases in retail category, according to the World Gold Council.

Meanwhile, Beijing has been reducing its holdings of US Treasury bonds over the last decade from $1.3 trillion to about $700 billion. China is the third-largest foreign holder of Treasuries, after Japan and the UK. Japan is the top buyer, with $1.2 trillion. Foreign investors hold about 30% of total U.S. debt.

Do you still pay attention to the Dow Jones Industrial index?

You may be showing either your age or your intelligence. At the end of 2024, about $113 billion in assets was indexed to the Dow, while $13 trillion that was indexed to the S&P 500. Some are mixing ETFs that track each index for diversification which I think is a good idea.

Another trend that has dramatically changed are capital and labor markets. In 1985, tech stalwart IBM (IBM) was America’s most valuable companies and among its largest employers, with a payroll of nearly 400,000. Today, Nvidia (NVDA) is nearly 20 times as valuable, and five times as profitable as IBM was in 1985, adjusted for inflation.

Yet Nvidia employs only 10% as many people today as IBM in 1985.

Finally, another major change for IBM is that in 1985 ,about 60% of its employees were based in America, now it is estimated to be around 30% with employees based in India larger than those based in America. The crossover point appears to have occurred in 2018.

India is becoming a target for American AI giants looking to tap to the country’s savvy technology talent. The Indian government is gifting these firms a 20-year tax break on overseas revenue generated from global data services based in India. In October, Google announced a $15 billion investment in data centers in southeastern India, as well as undersea cable links, in its “largest single AI hub outside the U.S.”

Despite Alphabet’s (GOOG) ample stash of cash, it is going on a borrowing binge like many of the other hyper scalers. It is issuing a rare 100-year bond like IBM’s during the dotcom era and is issuing bonds in British pounds and Swiss francs.

Google announced last week more than 750 million monthly active users just on its Gemini App. Alphabet’s stock price has jumped around 20% in the past three months. Google Cloud turned in a record $5.3 billion in operating profit in the latest quarter, 45% higher than even Wall Street’s aggressive targets.

Finally, a performance overview of Independent Wealth ETF recommendations is way overdue. Become a member today to get the tickers for these ETFs as well as access to our stock recommendations.

XXXX is a new recommendation and is up 17.9% over the last year as the franc strengthened and the dollar weakened. A great currency hedge.

XXXX fund stands out for its sound investment process and strong management team. It was up 19.7% over the past year.

XXXX was up 13.8% over the last year plus a 4% dividend. Its screen is companies with at least 10 years of consecutive dividend growth.

XXXX has been a big winner up 48% over the past six months and 80% over the last year and offers direct exposure to both platinum and palladium.

XXXX tracks an index of top defense contractors and is up 68% over the past year.

XXXX is a relatively new addition and is up 21% over the past six months. I have known this fund for a long time, and it offers exposure to value, international, and small cap stocks.

XXXX basket of junior miners is up 93% in the last six months and 170% over the last year. You may want to take partial profits.

XXXX is up a consistent 12% over the last six months and 24% over the last year. A smart way to play emerging markets.

XXXX is up 21% in the last six months and over 14% so far in 2026.

Have you been missing opportunities in international and Asian stocks? Ms. Sanae Takaichi, Japan’s first female prime minister, gambled on a snap election last Sunday and achieved a landslide win with a two-thirds supermajority. The Nikkei 225 hit new records in the days following her win.

Below is South Korea’s stellar performance relative to the United States.

AI, a weaker dollar, and seeking a hedge on U.S. instability are just some of these market’s drivers.

Let’s begin in Davos, Switzerland, where the world’s financial and political bigwigs are gathering at the World Economic Forum to do deals and await the fate of Greenland. Markets rebounded yesterday as President Trump softened his position on Greenland a bit, thus raising hopes of reaching an amicable agreement.

Gold was a hot topic as investors continue to seek a hedge on uncertainty and volatility. Central banks have been significant net buyers of gold every year since 2011.

Often associated with gold, our CurrencyShares Swiss Franc Trust (FXF) position has performed well. It is up about 15% over the last year while the dollar has declined 9%.

Nice currency arbitrage.

This ETF gives us exposure to a high-quality country and currency with fiscal discipline, a trade surplus, and very little foreign debt, and a reputation as an asset haven in times of stress. Switzerland’s $700 billion economy has a substantially higher average income than America.

The average family wealth in Switzerland is $685,00 - about twice the Nordic average. The Swiss have had a functioning democracy for 500 years with a legislature that meets for only two weeks, four times a year.

It has an open international economy with 40% of its population born in other countries.

Outward looking, Switzerland has almost half of its gross domestic product attributed to exports.

With a population of only 7.2 million, Switzerland packs a punch and is a financial and multinational powerhouse. Switzerland represents the third-largest financial center in the world after New York and London.

Switzerland is home to some of the largest firms in Europe in terms of market value: UBS (UBS), Nestlé (NSRGY), Novartis (NVS), and Roche (RHHBY).

The bull market has broadened considerably over the past year around the world. One powerful trend is that almost 70% of the global index and 47 countries are close to a 52-week high, demonstrating the value of having some international stocks in your portfolio.

The second notable trend is that the Magnificent Seven have lost their luster as a plethora of other stocks outperform these mega tech companies.

Only Alphabet (GOOG) and Nvidia (NVDA) outperformed the S&P 500 in 2025. In fact, it may surprise you that 74 stocks in the S&P 500 outperformed NVIDIA in 2025.

Keep in mind that the top 10 stocks in the S&P 500 index now account for roughly 40% of the index’s total market capitalization. Therefore, if you invest $100,000 in an S&P 500 index fund, roughly $40,000 goes into just 10 companies. The remaining $60,000 gets spread across the other 490.

The recently issued U.S. National Security Strategy states that the United States intends to make “it harder for non-Hemispheric competitors to increase their influence in South America”. Recent action in Venezuela has also raised the strategic stakes in the broader Latin America.

It has also raised attention on the region and the question could Mexico’s and South America be an investment opportunity over the long haul?

Could economy and stock market be taken to the next level by surging Chinese and American direct attention and investment?

China’s higher manufacturing labor costs is Mexico’s advantage. According to consultant Alix Partners, Mexico has surpassed China as the cheapest country in the world for companies looking to manufacture products for the U.S. market. Next in line is Brazil.

In addition, the Alix partners report showed that across many industries, China’s cost advantage in producing goods and delivering them is shrinking. In addition to the cost factor, flexibility, speed of response and quality all point to Mexico over China. Ironically, these trends have led to Chinese companies moving production to Mexico to capitalize on the trade advantages that come from geographic proximity.

The bigger prize may lie in the South American continent.

China is also made significant inroads in South America going from doing nearly no business in 2000 to bilateral trade worth more than $500 billion in 2024. China is now South America’s biggest trading partner and has actively financed infrastructure with more than 20 countries in the region signing on to China’s Belt and Road Initiative

From copper in Peru and to lithium in Argentina, mining companies are on the prowl for commodities. China’s agricultural giants import soybeans from Brazil. Chinese utility companies electrify entire cities. China also controls much of the continents shipping infrastructure and about 40 ports from which goods move across the Pacific.

The European Union (EU) is also getting in the game. It just signed a trade pact with South American countries that will create one of the largest free-trade zones in the world, covering markets with more than 700 million people.

The number of stocks that trade on U.S. markets is somewhat limited but also larger than you might imagine.

For Mexico, some of the stocks that the Cabot Wealth Explorer has recommended range from telecom giant America Movil ADR (AMX) to Cemex ADR (CX) is a multinational infrastructure play based in Monterrey, Mexico that benfits from strong demand from firms building factories and office buildings.

For Brazil, the biggest market in South America by far, take a look at Itau Unibanco (ITUB), a large Brazilian bank and Petrobras (PBR), the leading Brazilian multinational oil and energy behemoth. In mining, Vale (VALE) produces hiuge amounts of iron ore, nickel, and copper, and is one of the most valuable Latin American companies.

Beyond Brazil, I have recommended three stocks based in Panama. Copa Holdings (CPA), a Panamanian airline holding company and Banco Latinoamericano de Comercio Exterior S.A. (BLX), better known as Bladex, a financier of multinational trade.

If you prefer a broader “shotgun approach to tapping into the growth of this region, your best bet is the iShares Latin America 40 ETF (ILF) that tracks 40 major Latin American companies. For Brazilian stocks, there is BlackRock’s iShares MSCI Brazil ETF (EWZ).

All the above stocks represent good companies but my favorite stock right now to capture the growth of this increasingly dynamic and strategic region, I need to keep exclusive for members of Independent Wealth.

I encourage you to join today because this exceptional dominating growth stock with an average earnings growth of well over 30% per year for a decade,is profiled below.

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As 10,000 boomers become eligible for Social Security every day, our Social Security Trust Fund has a negative cash flow and is headed for a negative balance by 2032.

When President Franklin D. Roosevelt signed the Social Security Act in 1935 (fully implemented in 1945), Americans became eligible for benefits at age 65 and the average life expectancy was 62. Today, the average life expectancy is 82.

In 1945, there were nearly 42 workers for one beneficiary but there are now only 2.8 workers per beneficiary.

Social Security needs urgent reform, and the longer Washington waits to solve this emerging cash flow problem, the easier it will be to fix it. So why do politicians continue to kick the can down the road? Because if either Democrats or Republicans even propose a Social Security reform bill, it is easy for the other party to oppose and distort it for political advantage. Because Social Security reform demands tough political choices - it must be bipartisan and there is precious little of this in Washington.

In the latest fiscal year, the program paid $1.6 trillion in Social Security benefits, which is 22% of federal spending and almost double the military budget.

The above chart highlights the biggest Congressional blunder of all time.

The 2020 $2.9 trillion Social Security Trust Fund surplus will go to zero in 2032.

Unless action is taken, cash flow will then go negative forcing cuts in Social Security benefits.

Time is running out. Social Security will be insolvent in six years if nothing is done. As required by law, solvency must be restored by benefit cuts, in this case, about a 24% benefit cut. This will double poverty among the elderly. Alternatively, Congress could increase the payroll tax by 27% to avoid cutting benefits. The employee and employer combined current payroll tax is already 12.4%.

Of course, the easy way out would be to just borrow the money to meet the annual shortfalls which would go on forever. This could lead to a giant 75-year unfunded accrued liability that would swell to a nominal $560 trillion. This should be a nonstarter.

Aside from some reform and some revenue, I have long advocated having a portion of the Social Security Trust Fund to incrementally invest in a broad index of U.S. stocks held in escrow for 70 years to take advantage of compounding.

This would help restore confidence amongst younger generations that benefits will be there through the power of time and compounding. If this had been done say in 1980, the debate right now in Washington could well have been about how much we could raise benefits and cut FICA taxes.

America is a stock superpower, but we squander this tremendous advantage when it comes to long-term economic security for our workers.

There is precedent. President George W. Bush and Congress allowed Railroad Trust Fund (FRRS) investments to diversify from Treasuries. Since then, the portfolio’s returns have averaged 8.9% annually and the fund now has a surplus. There are many successful state and national pension programs such as the Wisconsin Retirement System and the Canada Pension Plan that invest in stocks. According to the National Institute for Retirement Security, about 63% of receipts from these funds come from investment earnings alone.

Even’s China’s national pension fund invests in stocks.

Any university endowment, pension fund, or sovereign wealth fund would have invested a portion of the assets in stocks. Then why is the Social Security Trust Fund wholly invested in U.S. Treasury bonds?

Australia’s government pension fund has appreciated to $4.5 trillion buoyed by a balanced diversified investment strategy. Australia’s national system has amassed a $4.5 trillion complex of mostly stocks and property which translates to an astounding $300,000 per worker. The U.S. Social Security Trust Fund strategy currently has about $10,000 per worker which will be zero in 2032.

What a missed opportunity. If just 20% or $600 billion of the Social Security Trust Fund surplus of 2000 had been invested in the S&P 500, it would have appreciated to $4.7 trillion today.

It is up to all Americans to pressure Congress to take action to put our Social Security Trust Fund, and other trust funds such as the Medicare Trust Fund, on a sounder foundation with a diversified strategy worthy of a financial superpower.

A smart country has an “all of the above” strategy when it comes to energy production to make sure it generates reliable and low-cost electricity that its people and businesses need. The same goes for investors who should have stakes in oil & gas, nuclear, hydro, and geothermal as well as some renewables.

Power generation has always been important for a country’s economic growth and security, and has taken on even more importance with the emergence of AI data centers that demand an enormous amount of power.

China has built the largest power grid the world has ever seen. Between 2010 and 2024, its power production increased by more than the rest of the world combined. Last year, China generated more than twice as much electricity as America, enabling some Chinese data centers to pay half what American ones pay for electricity. Morgan Stanley projects that China will spend some $560 billion on grid projects through 2030

In the United States, while the re-emergence of nuclear power is gaining traction, two other clean technologies capable of providing reliable, round-the-clock, baseload power at prices competitive with fossil fuels are often overlooked. One would be hydroelectric projects that create power by the rapid flow of water.

The other is geothermal power.

Traditionally, geothermal power comes from drilling into naturally hot, water-rich rock formations and using that heat to generate steam, which drives a turbine to generate electricity. You can think of it as hot hydro. It’s clean, efficient, and nearly eternal. So unlike solar and wind, geothermal is highly prized baseload power plus its operating costs are minimal.

Geothermal is so steady that utilities are starting to see it as a potential replacement for retiring coal and nuclear plants because it delivers the same baseload output, minimal maintenance and zero emissions.

There are limited publicly traded stocks to tap geothermal power. Ormat Technologies (ORA) is the only pure-play geothermal power producer publicly traded in the U.S. It operates dozens of geothermal projects around the world and is expanding aggressively. While I like this stock. It is expensive stock, trading at more than 50 times expected earnings.

Instead, I have selected a hydro stock pick for this week’s new recommendation.

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Traffic jams in urban centers always prompt thoughts of the Jetsons and their flying cars whisking them to work. It is an enduring dream that is becoming a reality as America and China pursue this technology aggressively. Improvements in electric batteries and vertical takeoff technology are bringing this science fiction dream to reality.

Morgan Stanley projects that what they call urban air vertical takeoff and landing (eVTOL), like an electric helicopter, will be between a $1.5 trillion and $2.9 trillion market by 2040.

Become a member now to learn more about the best play on this exciting trend.

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In just a month, Bitcoin has fallen from its record high of about $126,000 to below $100,000, a level it last saw in June. The popular leverage Bitcoin play MicroStrategy (MSTR) is down 42% over the last six months.

With Bitcoin (see below) and crypto being volatile, there are dubious reasons to accept the widespread “Bitcoin is digital gold” argument. A better description is that it is a speculative investment driven by financial liquidity and should not be viewed as a hedge capital protection vehicle.

As you can see below, Bitcoin price movements are clearly not correlated with gold prices at all. Rather, they seem to lead flows into more risky speculative assets. This begs the question - is Bitcoin a long-term holding or merely a trading asset? Time will tell.

Bitcoin is nowhere close to matching gold as a haven asset. If you want to bet on resumed exuberance and a big tech rally, however, it could be just what you need.

Morgan Stanley (MS) notes that stock picking is back, with single stock activity as opposed to funds and ETFs seeing a significant rise in recent months. This is interesting as there are now more ETFs trading on exchanges than stocks. Blending the two is the optimal strategy for most.

Robotics is a sector in the headlines …

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In investing, this can be difficult since it can seem incredibly complex.

This is because there are thousands of stocks and stock markets that always seem volatile and uncertain. Even tougher is deciding when to sell a stock or fund to lock in gains or limit losses.

There are ample books and articles out there regarding the right rules such as the need for discipline, patience, and research.

All this is good advice except for two things.

First, what has worked in the past may not work in the future because the world and financial markets are constantly changing.

Second, investors are human and therefore sometimes irrational and prone to act on emotions. This leads to making the wrong moves like buying at the top and selling at the bottom.

There is also merit in legendary global investor Sir John Templeton sage advice:

“Diversify. In stocks and bonds, as in much else, there is safety in numbers”

Except that diversification, taken to the extreme, is counterproductive.

It helps to have a strategy.

For your core portfolio, I would go with low cost, tax efficient exchange-traded funds (ETFs) as building blocks. As I describe in my book, “Think Global, Grow Rich”, this core portfolio has capital preservation as its primary goal and capital appreciation as a secondary goal.

I suggest about 10-12 ETFs to build a diversified portfolio with allocations to fixed income, broad US equity markets, exposure to high quality international markets, income and dividend ETFs, gold, and even some exposure to alternative and real assets.

But if you want to go ultra simple with just one ETF, consider the Vanguard Total Stock Market Index (VTI). With an annual fee of just 0.03% and assets of over $1.3 trillion, this ETF is a basket of over 4,000 stocks.

While it’s market cap-weighted toward the largest companies in the nation, it also gives you exposure to midcap and small-cap names that are “under the radar” for most investors.

To take advantage of a weaker US dollar, invest in the big multinationals with headquarters all over the world through the iShares Global 100 (IOO) ETF that is a basket of the 100 largest multinationals in the world. This ETF is up 19.2% so far this year with technology exposure of 46% and of the 100 stocks, an amazing 80 were American companies.

On top of your ETFs could be a portfolio of individual stocks and a good share of the Independent Wealth recommendations are part of the iShares Global 100 (IOO) ETF.

It is a personal choice what proportion of your total portfolio and how many stocks should be in your stock portfolio but be careful not to have too many or too few because both come with drawbacks.

I suggest around twenty stocks that include dominating blue chips and more aggressive disruptive stocks. This where the Cabot Explorer and other Cabot Wealth products can help you make the best choices.

Finally, don’t forget to take some profits from time to time. We have all been there. Nothing is more painful than picking a great stock and watching it peak and then fall back to earth. Don’t ride the rollercoaster with your investments.

If you are fortunate enough to have a stock or fund double in value, sell some of your position to turn paper profits into real profits.

It is also a good idea to get some help in following and picking stocks.

Join Independent Wealth today to learn more about getting the right ETFs and our dominating stocks into your portfolio

Our stocks were mixed this week as Asian stocks struggled amidst increased US-China economic tensions and concern over Chinese economic growth.

Commodities are back but something to keep in mind was mentioned to me by a friend in the energy business: “America is running out of shale oil”. This has big implications for world oil markets and America’s energy mix since if we are running out of the shale oil that can be extracted at about $60/barrel, higher oil and energy prices are around the corner.

Gold stayed on a bull path this week as gold prices set records and gold ETFs continue to attract capital. Propelling prices is a mix of relentless central bank buying, ballooning U.S. debt, the search for safe-havens, and a growing distrust of fiat currencies. China’s central bank has been increasing it month gold purchases for 11 straight months. Does this represent diversification exit strategy?

China is playing hardball with rare earths as it expanded export controls on certain rare earth elements AND its processing technologies. It also will require foreign companies to get export licenses for exporting products that contain even a fraction of Chinese-sourced rare earths.

Beijing’s power move reflects that it doesn’t fear being blocked from U.S. consumer markets as much as many in Washington think. The reason is that China’s exports are very diversified as the chart below highlights.

The international trade map is being redrawn as 85% of the world’s trade does not touch America. Canada is importing more cars from Mexico than from the US, and China is buying soybeans from South American and Argentine growers instead of American farmers. Trade and capital flows are more mobile than many imagined.

Smaller economies like Peru are seeking buyers in Asia, Europe, and Africa. New Zealand, Singapore, Switzerland and the United Arab Emirates (UAE) has formed a partnership to boost trade and investment.

European countries are in the process of ratifying a pact with a common market of South American countries with 780 million consumers—a deal 25 years in the making. And in September the EU inked a free trade deal with Indonesia, the largest economy in Southeast Asia with a population of 265 million, after almost a decade of talks.

JP Morgan (JPM) is not only making big profits, it made a big splash this week as it announced it would directly invest $10 billion in companies it deems critical to U.S. economic national security. It also will “facilitate” $1.5 trillion in investments over the next decade. This initiative will focus on four key areas: advanced manufacturing, including minerals, pharma and robotics, defense and aerospace, energy independence and, strategic technologies such as AI, cybersecurity, and quantum computing.

Finally, China is increasingly seen as a clean tech leader as high coal use flattens out at a high level and solar and wind power ramp up. In Tibet, they have a solar farm seven times the size of Manhattan with the capacity of 17,000 megawatts of power. This energy costs about 40% less than its coal-fired power.

China’s annual electricity production is now 2.5X that of America and growing fast.

As about half of the Federal government shut down, stocks wavered, and gold prices rose right along with uncertainty as to how and when the budget duel might end. There are few winners in this tug-of-war scenario. This is not a good time for this showdown given weak business spending, a weak dollar, and weak job growth. The market normally takes these political fights in stride depending how long they last. Stay positive but cautious and as always look for some profits to take off the table.

Turning to sport, Europe was the winner in Ryder Cup US-Europe golf competition over last weekend. While keeping tabs on the trans-Atlantic team matches, I spent the weekend thinking through the signs the trends out there and what they signal about where the economy and stock market is headed.

The evolution of the Ryder Cup itself gives us some clues. The competition for the Ryder Cup trophy began in 1927 when teams from Great Britian and United States met at just the time that America was passing the old country as the world leading industrial and economic power. In 1979, with America just too strong, the Great Britian team was expanded to include Europe, and this sparked a fierce competition that continues until this day.

In case you missed it, the American team took a drubbing early in last week’s competition and its spirited comeback on Sunday fell short. Both teams are packed with great players with incredible blend of power, precision, mental toughness but the outcome is often determined by strategy and momentum.

Strategy cannot be determined in a vacuum; it is based on how one perceives the playing field and what how your adversaries plan and react. The European visiting team seemed more aggressive, better prepared, and its early success created a momentum that was difficult for the U.S. team to stop. Then there was the “law of unintended consequences” at play as the overly raucous fans at the Ryder Cup New York venue seemed to fire up the Europeans and embarrass the Americans.

In our complex, interconnected world, unintended outcomes are everywhere.

For example, American tariffs and economic and international strategies have as designed been disruptive but have also redirected and accelerated not just trade flows but currency and capital trends as well as access to resources, partnerships, and alliances. Since the trade war with China erupted in 2017, China has made significant gains in advanced tech, leapfrogging America in some of them such as EVs and clean tech while the improving overall quality of its manufactured goods as it becomes more independent of American technology.

Chinese and Indian purchases of Russian oil in their local currencies have kept the Russian economy afloat while sharply lowering energy and electricity costs for the two biggest countries in the world. China has also pushed back against U.S. tariffs by withholding rare earths and halting soybean purchases while building up its semiconductor capacity. India’s low labor costs and Chinese capital and manufacturing are linking up on a myriad of projects while India has built 70 domestic airports in the last five years.

So capital flows are adjusting and shifting.

European countries are in a tough spot right now, but its most likely strategy is to balance America and China and to place bets on what geographers call Eurasia – a vast continent three times the size of North America encompassing Asia, Russia, Europe, the Middle East, and India comprising more than a third of the world’s landmass and all five major religions.

Eurasia is what I believe China wants to lead and dominate while also being a big player in South America and Africa. Eurasia is where the economic center of gravity and pendulum of power is headed as it already represents 70% of the world’s population, and most of the world’s economic activity while touching all the great oceans and sea lanes connecting the world’s commerce.

To me the most important major new trend is that emerging markets trade and investment with each other is accelerating faster that its trade and with the West. Scale and speed are the new game in town.

In March, India inked a free trade pact with the European bloc, slashing tariffs on nearly all trade flows with Switzerland, Norway, and Iceland. In May, Indonesia and the European Union reached agreement on their own deal, nine years in the making. The bloc of Brazil, Argentina, Uruguay, and Paraguay is in negotiations with Brussels, aiming to create one of the world’s largest free-trade areas. Meanwhile, China and ASEAN are upgrading their free trade area.

Don’t get me wrong, the United States stock market and dollar is king for good reasons and will remain so for some time, but over time emerging markets will close the gap. What America needs to figure out is how we can grow together with some of them so we can stay strong and maintain our prosperity and security.

Let me put it this way.

Globalization is not dead by any means. It has just changed its stripes and is more between regional blocs such as Southeast Asia and greater China. If I was to build a global stock portfolio right now for a 2025-2050 time frame, it would likely be balanced between America and emerging markets.

With smaller defense stocks in the limelight, we would like to highlight our micro cap maritime defense stock Kraken Robotics (KRKNF) which is up 1,055% over the last three years.

Today we add to our conservative portfolio and idea to deal with one of the most glaring concerns for many investors, the annual interest on the U.S. national debt that is rising along with higher debt as the greenback steadily declines.

Annual interest payments are now higher than our $900 billion plus defense budget and the annual interest bill paid by taxpayers to the domestic and international holders of Treasury debt now represents about 14% of the entire U.S. budget. Hopefully Washington will wake up and get spending under control before it impacts markets and sinks the value of the dollar.

But just in case, you should consider putting some portfolio hedge positions in place such as gold and bitcoin as well as diversify into some high-quality international stocks and currencies such as Switzerland.

Switzerland’s $937 billion plus economy has a substantially higher average income than America, with levels of income inequality that are comparable to those in Scandinavia. Furthermore, average family wealth in Switzerland is over $700,000 - about twice the Nordic average. Moreover, Swiss public spending accounts for 35% of GDP, versus 55% in higher tax Sweden.

It has an open international economy with 40% of its population foreign born. Outward looking, Switzerland has 40% of its gross domestic product attributed to exports.

While only 137 miles by 216 miles in size, with a population of 7.2 million, Switzerland packs a punch and is a financial and multinational powerhouse. Swiss multinational firms account for 15 of the top 100 European companies by stock market capitalization. Even so, small companies deliver two of every three jobs and only one in six Swiss work for the government, half the Scandinavian average.

Now let’s tick off some reasons I’m recommending the Swiss franc today.

The Swiss franc is backed by ample gold reserves, fiscal discipline, a trade surplus, and very little foreign debt.

Switzerland represents the third-largest financial center in the world after New York and London.

Switzerland enjoys a stable government, vibrant democracy and a reputation as an asset haven in times of stress.

The Swiss have had a functioning democracy for 500 years with a legislature that meets for only two weeks, four times a year.

You can clearly see how Switzerland and the Swiss franc fits our hedge needs nicely.

It is also home to world-beating pharmaceutical, engineering and food companies

For exposure to the Swiss franc, I recommend the CurrencyShares Swiss Franc Trust (FXF).