For many years after World War II, the United States dominated the world economy. Today, the international markets have become a much more dynamic and multifaceted place for investors than they were in the past. Many new opportunities have emerged overseas, but finding them requires the resources and experience to conduct a truly global search.
- Stock Investment Opportunities Abroad
- Foreign Stocks Can Enhance Return Potential
- Risks of Foreign Stock Investing
- Building Your International Stock Portfolio
Today, more than half (58%) of the world’s stock investment opportunities, as measured by capitalization, are outside the U.S.
9 of the 10 largest automobile companies
8 of the 10 largest metals and mining companies
8 of the 10 largest diversified telecommunications companies
7 of the 10 largest electronic equipment and instruments companies
6 of the 10 largest household durables companies
If you focus your portfolio solely within the U.S., you’re excluding a major portion of the world’s investment opportunities, not to mention some fast-growing and innovative companies.
International stocks allow you to invest in some of the best-performing stock markets in the world.
Despite posting solid long-term gains, the U.S. is rarely the leading individual market in any given year. Even during the bull markets of the late 1990s, the U.S. was out-performed by markets in other countries. Investing in foreign stocks lets you benefit from bullish markets overseas.
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Click here to see how foreign and domestic stocks have outperformed each other on a rotating basis. Allocating a portion of your assets to international stocks could allow you to take advantage of these varying market cycles. |
Like U.S. stocks, foreign stocks are subject to fluctuations based on earnings, interest rates, and the outlook for inflation. Stocks from emerging markets are vulnerable to political and economic instability as well. But they’re also exposed to a risk that is unique to international investing—the volatility of currency exchange rates. Additionally, while accounting practices are becoming more uniform among developed markets, financial information about specific companies in emerging markets can still be harder to obtain.
This section will help you determine a sound international investment strategy based on your goals and investment time frame.
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