Is International Stock Exposure a Good Idea?
Some people are worried about markets outside of the US and at the same time feel good about US markets, which makes sense, as the US markets are on a 6 year Bull Run, the economy is decent and unemployment has been steadily decreasing. In addition, one could argue that Europe’s economy in comparison to the US is not as good due to Greece’s instability, high unemployment, and questionable currency.
So, if you had to choose between the two, you would more than likely pick the US, as it appears to be more stable. However, the US market is not doing as well compared to the rest of the world. In Europe for example, Great Britain, France, Germany and Switzerland markets are all significantly up year to date, some as much as 25% or better.
This is a great example of Warren Buffett’s advice of sell when others are comfortable and buy into fear/chaos. While the US economy is comfortable, the markets have not gone anywhere for some time now, and despite Europe’s messy economy, the markets have taken off.
This is why we recommend being diversified in your portfolio and not having all your eggs in one basket, as you never know which one will take off.