Human Capital

I recently read a publication by Goldman Sachs (GS) about its 2013 investment outlook. What I find interesting is that GS is very confident in the US economy and equities, despite many investors' concerns on political issues. In fact, GS has been bullish on US equities since the financial crisis and the call has been correct -  US equities outperformed all other major equity markets since the financial crisis in 2008/09.

GS argues that the US has structural advantages in four categories: economic, institutional, human capital, and geopolitical. I tend to agree with GS's view and would like to expand on the human capital argument. US has the strongest education in the world, as seen by the number of top universities in the US. If you take a look at any rankings of top universities in the world, schools from the US dominate the list. Hence, many top talents are attracted to student and eventually work in the US. This is at a sharp contrast to many European countries, where the troubled economy and high unemployment rate force people to leave the country and work elsewhere.

In this information age where innovation drives economic growth, I believe the US is more resilient than many investors who are bearish on the US economy due to its fiscal problems.