Investing in Foreign Stocks

Investing in Foreign Stocks

Should you invest invest in foreign stocks?

Isn't it enough if I invest in international companies like IBM?

How much, if any, should you invest overseas?

Should you invest in foreign stocks?

By putting some of your money in foreign companies, you can increase your total return and reduce your risk

Look for markets that zig when the US market zags

The Canadian and British stock market are closely correlated with the US market and won't offer much diversification

The German and Japanese markets offer greater opportunities for true diversification

Thirty years ago the American stock market was by far the world's largest

Now US equities represent only about a third of the world's stock investment opportunities

To diversify into industries like consumer electronics and natural resources, you need to invest abroad

Isn't it enough if I invest in international companies like IBM?

No

For some reason, stocks move up and down in synch with the market where they're traded, regardless of where the company does business

One American company makes almost all of its money in Japan yet its stock tracks the US market rather than the Japanese market

How much, if any, should you invest overseas?

Studies have shown that if you invest 20 percent of your equity money overseas you

• Increase your total return by about 2 percent over an all-American stock portfolio
• Have even less risk (volatility) than an all-American portfolio