Why Should We Invest Internationally?

May 10, 2016

 

There is a world of opportunity outside the U.S. Almost one-half of all of the world's stocks are outside our country.

 

Lately there has been a lot of focus on this question, as non-US equity investments have underperformed US ones for several years now.  It seems like bad economic news has been erupting from overseas for a while, whether it be a perceived slowdown in China, bankruptcy fears in Greece, terrorism in Europe, or natural disasters in Japan and other places.

 

It's easy to forget the so-called "Lost Decade" from 2000-2009 when Large Cap US stocks lost money and Small International and Emerging Markets stocks gained 8-10% annualized.  Currently, based on many metrics, the US is the most expensive stock market in the world.   This might be a good reason to believe future returns will be higher outside the US.

 

 

Below is a link to a well done video on why we invest internationally produced by Dimensional Fund Advisors.

 

 

 

 

Reproduced below is our annual report on the benefits of diversification.  It shows the "best" stocks to own for one and five-year rolling periods. 

 

 

 

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