Comments on: How Much Should I Invest Abroad

By: ObliviousInvestor

ObliviousInvestor — Mon, 18 May 2009 14:08:30 +0000

BB, you bring up a great point: It’s tricky to know exactly what level of international diversification you have just by looking at where your companies are based.

I’d caution, however, against calling it overexposure to international markets. Remember, the issue goes both ways: Many of the companies that make up international index funds have very large portions of their revenues coming from the U.S.

By: Blogging Banks

Blogging Banks — Mon, 18 May 2009 14:01:59 +0000

MN,

Did you know that the top 10 companies in the S&P 500 by market cap generate about 40% of their revenues from abroad? If this sample size tells us anything it is that by adding international funds to our stock portfolio, we are overdiversifying our international exposure.

Here’s the link to the study ( sorry to post an outside link):

http://www.dividendgrowthinvestor.com/2008/12/international-over-diversification.html

By: Slinky

Slinky — Mon, 11 May 2009 18:04:38 +0000

Good article. I agree that people should have more international investments than most do. The currency point is very valid and a good thing to consider though.

By: MoneyEnergy

MoneyEnergy — Sat, 09 May 2009 20:49:08 +0000

Exactly as MoneyNing and Oblivious said: many, many markets are stable. It’s just parochial US bias that might lead one to think otherwise. Also, any company that trades as an ADR in New York has already met the standards required for the NYSE. I would also say that Canada is a foreign market and Canada’s economy has been one of the most stable throughout the downturn, and more US investors should realize this.

By: MoneyNing

MoneyNing — Fri, 08 May 2009 22:48:58 +0000

Aaron: You may be thinking about the emerging markets when you think about international but there are actually many different markets that are quite big and stable.

Furthermore, the US market might be stable traditionally but with the S&P jumping 5+% every single week for a while now, I don’t think that’d be considered “stable” at all.

Like Oblivious Investor said, many ETFs, ADRs and funds give you international exposure and you can always opt for something like Etrade Financial (here’s an Etrade review) where they have a international broker division that lets you trade stocks in foreign markets directly.

By: ObliviousInvestor

ObliviousInvestor — Fri, 08 May 2009 20:38:05 +0000

Hi Aaron.

As to how to go about diversifying internationally, yes, any brokerage firm should give you access to plenty of international mutual funds (index or otherwise).

And, I’d argue that it’s simply our familiarity with the U.S. that makes it feel more stable to us (at least, as compared to any number of other developed countries).

By: Aaron

Aaron — Fri, 08 May 2009 20:13:38 +0000

Interesting to think about home bias. However, my question is how does one even get into international investing? Can you just go through your normal broker?

Another factor to consider is that although US has only about a 40% market cap, isn’t there something to be said for its reliability? I feel like it’s far more regulated than other markets, and hopefully means its a safer investment. So to me it doesn’t seem illogical to weight your portfolio a little more heavily towards more stable markets.