Finance professors will teach you to think of investing as a math problem about fees, index funds, and time. I think it is increasingly a geopolitics problem. When you decide where to park your money, you are placing a bet on the future power of companies in a country, and that bet looks different in a world with two superpowers and cultures than it did in a world with one.

The "S&P Always Goes Up" Story

Conventional wisdom says the S&P 500 returns 8 to 10 percent a year, forever. It has historically, but in my opinion that record owes a lot to the United States rising from a regional power to the global hegemon. A country that wants your capital has every reason to tell you its markets are a sure thing with a thumbs up and a wink. The same goes for real estate, where "homeownership is the American dream" and "renting just makes your landlord rich" nudge you into the biggest leveraged purchase of your life, on American soil, with a mortgage that keeps you working and GDP rising.

The stock market loosely tracks the economic health of a country. It can drift up or down on sentiment for a while because traders are trying to front run the real economy, but over long periods, it converges with reality, A.K.A GDP. That means choosing where to invest is, whether you like it or not, a bet on a country's future. For about a century, American investors could mostly ignore that. The US sat far from the Eurasian landmass and enjoyed slow, steady growth. With China rising and a multipolar world taking shape, I think that comfortable assumption is at real risk, and the actions of the US over the last 8 years point to much the same.

Lessons From Japan

In the 1980s, Japan looked set to overtake the United States economically. You could see the anxiety in pop culture, from the Japanese executive in Back to the Future Part II to the push for Harley Davidson in opposition to vastly superior Japanese motorbikes, to the pop band The Vapors' song Turning Japanese. Then Japan signed the Plaza Accord, a deal it had little room to refuse as a close ally of the United States, and its economy peaked. Japan went on to stagnate through its lost decades, and the Nikkei took roughly 35 years to climb back to its 1990 level. That is a developed, productive country where an investor would have gone nowhere for a generation.

The details of the accord matter less than the pattern. Japan was subordinate to the stronger power, and once it neared roughly 70 percent of US GDP, it was put in its place. I believe the United States is applying a similar logic to China as it approaches that same share. You can put a black box over the whole event; the input is which country is more powerful, and the output is that the more powerful country gets its way. It may sound cynical, but I think history backs this up, and it explains why the S&P 500 has been the strongest major index for the last few decades.

War Is Not Always Bad for Stocks

With conflict in the news, it may surprise you that the US stock market did well through both World Wars. The country was producing heavily, exporting resources to war torn markets, and GDP and the companies in the major indices reflected that. The UK's market, by contrast, collapsed in World War II while German bombs fell on its cities, and the outcome of the war eventually resulted in independence movements throughout much of Africa and Asia, dismantling The British Empire.

The difference is geography. The United States is shielded by two oceans and friendly neighbors to the north and south, and the only major attacks on its soil in the last 100 years, Pearl Harbor and 9/11, barely dented GDP. Being the safe, productive country far from the fighting is a big part of why American markets have been such a good bet.

The Chessboard: Everything Is About China

In my view, nearly every major move in US foreign policy now comes back to China. Take Venezuela. People talk about oil, but the US is largely self sufficient thanks to fracking and our massive oil reserves, so I think the bigger prize is snuffing out communism in the Western Hemisphere and gaining influence over oil shipments headed to China and Russia. Iran fits the same pattern. Whatever else is driving policy there, including relations with Israel, Iran sends most of its oil to China and Asia. Control over both would give the US pressure points over a country of 1.4 billion people that still depends heavily on imported oil to make food deliveries via Waimai.

China's weak spot is the Strait of Malacca, a chokepoint the US Navy is still strong enough to threaten due to alliances with Singapore and Indonesia. China's counter is its grip on rare earth minerals, which it can, and has, cut off in return. Tariffs, resource access, and shipping lanes are all leverage in one larger negotiation.

Greenland follows the same logic, and I do not think it is a quirk of one president. Melting ice is opening new sea lanes, Russia is building icebreakers and has a submarine fleet almost equal to the US, and Greenland holds rare earth minerals that matter for EVs, chipmakers, green energy, and satellite coverage. Those are reasons for any pro USA administration to care.

The bigger point is that the peaceful world order we took for granted rested on one undisputed authority. International law was effectively US law, enforced by the world's police. In the 1990s, when China threatened Taiwan, Bill Clinton sent a carrier group and Beijing backed down. Today, military strategists treat a Taiwan conflict as a coin flip, partly because China built an asymmetric force of short range missiles and aircraft carriers aimed at its own backyard. When there is no single authority, historically, might makes right.

That rivalry now plays out in the markets. When DeepSeek, a Chinese AI model launched, US tech sold off and China's Hang Seng Tech index rallied, with stocks like Alibaba jumping. Investors were switching teams in the AI race, and because a few giants such as Apple and Microsoft carry so much weight in the S&P 500, a tech wobble moves the whole index.

Why Not Just Buy Chinese Tech?

It is tempting to hedge by putting half your money into Chinese tech. I would not, because China has different rules. Many Chinese retail investors treat their stock market like a casino. As the Jack Ma and Ant Group expereince showed us, the state can step in with new regulations, hand subsidies to a chosen champion, or make a CEO step away from public view. That can lead to poor performance, but it also adds political uncertainty to the matrix, and the link between stock prices and economic growth is looser than in the US. It is also why Chinese households favor land and gold, which no regulator can dilute.

So what if China wins the tech race? I do not think the S&P 500 collapses while the Shanghai Composite goes to the moon. I put the odds of who wins at about 60/40, and I expect China to be practical and give the US a soft landing. America is a massive consumer market, and since China was largely a nation of farmers just 50 years ago, the country still needs time to become a consumer economy. Economic power might shift east, unequal treaties could favor China, and talent might drift from Silicon Valley toward Shenzhen. US index returns might fall from around 10 percent a year to about 5 percent, which is roughly what the UK's FTSE averages. Britain falling and handing the baton to the United States after World War II is a reasonable precedent should China come out on top.

It may also be true that the world is run less by flag waving nationalists than by a small group of very wealthy global elite families who take pride in their family name and legacy, not just their nation. It is in their interest for the great powers to keep trading with each other.

Why I Skip International Diversification

My answer is that the United States is still the best place to put your money. If the US wins the rivalry, you ride 8 to 10 percent returns. If it loses, I expect a soft landing near 5 percent, and at that point, you can decide whether to add a few Chinese winners like Huawei, Alibaba, BYD (Build Your Dreams), or Tencent. Either way, the US offers the best risk adjusted expected value in my view.

I also avoid spreading money across weaker countries. Historically, the strong tend to bully the weak, and capital flows up toward strength. The US skims the top talent from everywhere, such as the best minds in India who end up running American tech companies. Some years international funds beat the S&P 500, as they did in 2025, but I expect the S&P to win on average over time.

What about diversification and smoother risk adjusted returns? American companies already give you global exposure. Own Coca Cola, McDonald's, Yum! or Starbucks and you own a stake in strip malls from Thailand to Brazil, where local chains struggle to compete. The strong eat the weak, and big companies simply acquire or crush rising threats, the same way Meta swallowed Instagram and WhatsApp.

I also believe that widespread Western cultural influence in China plays a major role. You will find English in every major mall in China, and even their amusement parks, large corporate hubs, airports and restaurants can be navigated by a native English speaker.

This is my own view, not financial advice, and I could be wrong. Do your own homework before moving real money.

So here is my question for you: if your portfolio is a bet on a country's power, which country are you betting on, and is it a coin flip?