Why invest in international stocks?

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?
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jbonne84
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Why invest in international stocks?

Post by jbonne84 »

I know I should for diversification but there has never been a time as far as I can tell where in a fiscal year when the US got hit that international didn't get hit harder. So this leaves just the upside as a reason. Less than 10% of the time does international outperform the US in the last 10 years.

On top of all that europe is still highly unstable, asia is mostly-ok and south america is also unstable. What's the reason for investing international today?
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AltaRed
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Re: Why invest in international stocks?

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Take a look at this periodic table for some reasons to potentially invest internationally.
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jbonne84
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Re: Why invest in international stocks?

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AltaRed wrote:Take a look at this periodic table for some reasons to potentially invest internationally.
These numbers aren't hedged so it's weird to see that emerging only had 1 year in the negative relying on currency weakening for canada. overall long term it seems for most periods US/Can outperform emerging/foreign by a long shot
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AltaRed
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Re: Why invest in international stocks?

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Hedging sucks....so forget that. What is important for Canadians is what global markets do in CAD. International (EAFE) which is not that much less than USA in market capitalization share doesn't look so bad to me. Emerging markets are not really relevant since they are a relatively small portion of global market capitalization.

Edited for clarity

Added: This provides a good indication of market capitalization shares http://www.agf.com/institutional/global ... wi-cad.pdf

Added again: From that document, US share is 53.8%, Canada 3.3%, EAFE 32.4% and EM 10.5%
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SoninlawofGus
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Re: Why invest in international stocks?

Post by SoninlawofGus »

jbonne84 wrote:Less than 10% of the time does international outperform the US in the last 10 years.
One issue is your metric -- 10 years is simply not long enough. If you go back to 1970 and plot it until now, EAFE's performance is virtually the same as the S&P in Canadian dollars (see Norbert's data, for example). EAFE easily outperformed in the 70s and 80s (remember the strength of Japan back then)? Over the very long haul, the Canadian market has lagged them both...which is not to say it will in the future. It's easy to pick out a winner over any ten year period, but don't overlook the longer term trends. Even 30 years might not be long enough to be certain of a trend (just look at long bonds).
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Re: Why invest in international stocks?

Post by DenisD »

Useless fact: looking at the past 10 five-year rolling returns, Canada, US and Emerging Markets beat each other 50% of the time. But the average excess of Emerging Markets is significantly higher. EAFE is far behind.
Excess.JPG
The spreadsheet can be accessed at http://www.financialwisdomforum.org/for ... 23#p587823
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