The End of American Exceptionalism Is Not What You Think
- ACosgrove
- May 23
- 3 min read
Ted Seides (of Warren Buffett bet fame, where he wagered with Buffett that a portfolio of hedge funds would beat the S&P 500 index over the 10-year period 2008 – 2017…and lost the bet) runs a terrific podcast called Capital Allocators.
On a recent episode1, investor James Aitken perfectly summed up what we mean when we say that the period of American exceptionalism is coming to an end:
“What we’re describing is an end to U.S. exceptionalism, and to be very clear, we’re not saying the end of the dynamism and the entrepreneurship and everything else that has made America fantastic. We’re not saying that. We’re not saying it’s the end of Silicon Valley and innovation, of course it’s not. It’s going to remain a dynamic, entrepreneurial country. What we’re saying is that the marginal dollar of capital flow is gonna go somewhere else. Because it’s being told, ‘go somewhere else.’”1
We focus our work on entrepreneurs, and guess what – there are still loads of opportunities! And there are still a lot of problems to solve! And this remains one of the best places in the world to build a new business. So no – U.S. dynamism and innovation is not changing.
Indeed - we love what our clients are pursuing in and around the early-stage company and venture landscape. And the fact that venture fund raising has slowed and VCs are being more discerning and no longer throwing money at any “big TAM / hyperscale growth” concept is positive for entrepreneurs with superior ideas and execution. And we think any family office should be hunting for good entrepreneurs and capital partners in the venture space (particularly around the AI and biopharma ecosystems).
But - as we’ve been saying for many years: it so happens there are ALSO good businesses outside the U.S.! And if the “borrow Yen buy Mag 7” trade is less virulent, as it appears to be the case, then those non-U.S. businesses might finally get some attention.
James noted that the new U.S. administration is rightly calling attention to some issues. The headlines make sense:
The U.S. fiscal situation is unsustainable
The trade situation hasn’t really bothered anyone yet but perhaps some (obviously unfair) trade practices should be addressed if you want to do more for U.S. manufacturing and main street, and mitigate certain national security concerns
And some governments haven’t paid their fair share to shelter under the U.S. defense umbrella
All fair points. But “we now have an administration sending a very direct message over and over again, and I paraphrase, ‘please go away.’ And that is what we’re all dealing with now.”1
What to do now that we’re dealing with a different regime? James followed up his podcast interview with a blog post released soon after. A short but extremely useful read chock full of wisdom2…my favorite:
“…be like the 1% of market participants who are calm, confident, energized, focused, knowledgeable, anticipatory and always in control.”2
As we’ve been saying for 6 months: be prepared.
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