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Did you know? American exceptionalism

American exceptionalism is the belief that the United States is inherently different from other nations, often seen as having a unique mission to spread democracy and freedom globally. Rooted in the nation's founding principles, it suggests that America's political, economic, and cultural systems are superior or exceptional compared to those of other countries. This concept has shaped American identity and foreign policy, influencing everything from international diplomacy to military interventions and economic decisions.

For investors, the notion of exceptionalism often translates into the belief that the US economy will continue to grow and innovate in ways other countries may not be able to replicate. It is reflected in the global dominance of American companies in technology, finance, and other sectors. American exceptionalism is evident in the use of the US dollar as primary global reserve currency, and reference to US Treasury bonds as the global ‘risk free’ rate. US markets also traditionally trade at a premium to other markets, reflecting investor confidence.

However, the idea of American exceptionalism can also create risks. Overconfidence in US markets can breed complacency, blinding investors to potential challenges that include overconcentration and geopolitical shifts. By fixating on US markets, investors risk ignoring key inflection points in non-US markets.

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