Foreign Investing
So I put a little money in the market, you know, the usual, some funds, some stocks, some etfs, nothing special. I’m no expert at the investing and I’ve got a question. The traditional wisdom is something like 20-30% in foreign stocks. Right? Some folks like Bogle see a little less need for it, blah blah blah high correlation blah blah blah.
Now here’s the question. For people in France or one of those other, you know… countries, is their advice to only invest 20 or 30% in their local exchange and bust the rest out on the American exchanges? I’m guessing probably not, so what advice are they given? Where does this disconnect come from?
One thought was that it’s harder for the average person to invest in foreign stocks (although etrade with their new global trading platform is trying to change that - still it’s kinda pricey for the small time joe). ADR’s are lame and not incredibly comprehensive in any event. But, when we’re talking about mutual funds, as we often are, that argument goes away. There are tons of mutual funds (and now etf’s as well) that slice (or don’t slice) the foreign markets into whatever broad or narrow theme you’re looking for.
At this point I read some where on the internets that 50% of market cap is now foreign (to Americans), so it would seem logical to me that a diversified portfolio might reasonably have 50% foreign and then vary +/- from there. If you talk to some folks like that, they’d think you were crazy and getting ready to flush your money down the toilet. So o’ wise crowds, explain me, please.
