This metric is not found in deficit spreadsheets or debt charts. It’s measured by one question: Will the next Nvidia or Amazon be born in America?
Sure, the U.S. trade deficit widened to nearly $918 billion in 2024. The national debt? Over $36 trillion and rising. Yes – those numbers are staggering. And yes, they’re worrying. But what if there’s one metric even more important – more scary, if it starts to move in the wrong direction? Separately, see U.S. Debt Downgrade Looming – A Move To Crash S&P By 50%?
And that is America’s value creation potential!
From Argentina to Greece to Japan – anyone can worry about costs, deficits, and debt. But the real question for America is far more existential: Will the next generation of revolutionary companies still choose to be born here? Catching market leading stocks at the right time in their expansion cycle is a subset of principles we apply while constructing the High Quality portfolio, which has outperformed the S&P and clocked >91% returns since inception.
What Really Made America Rich
We talk about debt ceilings and budget cuts as though they define our economic strength. But look at the scoreboard.
Roughly 35% of the S&P 500’s market cap comes from just seven companies: Apple, Microsoft, Nvidia, Amazon, Meta, Alphabet, and Tesla.
These companies didn’t just balance the books. They rewrote the rules:
- Apple turned design into a trillion-dollar economy – and built an entire supply chain along with it.
- Amazon built the infrastructure backbone for the digital economy through AWS.
- Nvidia is powering the entire AI revolution.
They created industries, birthed ecosystems, and set cultural norms that benefit various industries. These businesses impact and define all aspects of society and civilization – from education and academia, to policies and politics. Think of the role of Twitter/X and Meta and relevance to elections around the globe.
They made deficits look irrelevant by comparison.
Now think about this: The next Bezos, Gates, Jobs, and Musk – are they more excited or less about building their business in America than they were one year ago?
That’s the only question Trump and his administration, and all future leaders of this country, need to be thinking about. Why is that? It’s simple: the work of these extraordinary doers and thinkers is what has defined American success in the last 50 years.
The Trade Deficit: A Footnote to Value
Let’s take Apple.
It manufactures much of its product line in China, contributing tens of billions to the U.S. trade deficit every year. But in doing so, it created over $500 billion in annual revenue, and nearly $3 trillion in market value.
So ask yourself: Would you rather fix the $50 billion trade deficit Apple contributes – or ensure the next Apple is built here?
Deficits are costs. Value creation is the return. And the U.S. has always led because it focused on the return. America’s greatness doesn’t come from protectionism or regulation. It comes from being the preferred launchpad for world-changing visionaries.
Manufacturing Muscle ≠ Innovation Might
Yes, we should bring some strategic manufacturing back. Chips. Ball bearings. Critical components. But let’s not confuse building hardware with building the future.
The scariest scenario isn’t a few billion more in the trade deficit. It’s this:
That the next visionary doesn’t choose America to build what’s next.
Because if we can’t tell the dreamers from the demagogues, if we lose the edge in attracting top minds and empowering risk-takers – then we lose more than just dollars. We lose the ecosystems, the cultural influence, and the generational value creation that only America has delivered at scale.
The Final Thought
So yes, worry about the trade deficit. But worry much more if the metric that really matters – America’s value creation potential – is trending downward. Because if we stop being the birthplace of the next Apple or Amazon, then no deficit fix, no tariff, no tax plan will be enough.
We use this strategic thinking in constructing Trefis High Quality (HQ) Portfolio, which is designed to look past the irrelevant noise and pick winners based on hard metrics that really matter. With a collection of 30 stocks, it has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index – less of a roller-coaster ride as evident in HQ Portfolio performance metrics.
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