How to Invest in Foreign Stocks

Why should I invest in foreign stocks?
David Marotta: The biggest reason to invest in countries outside the United States is to not have all of your investments in one country. If something happens in United States, you want to be diversified in other countries and your portfolio will have a smoother return because of it. If you were just to invest the way the global economy is you would invest two thirds outside the United States and only one third inside the United States.
If you were just to look at the global capitalization of countries, you would invest half in foreign stocks and you would invest half in US stocks. If you look at each country's stock return and you look over the last 25 years, the United States has not been the best performing country ever. There is always another country that beats us and on average foreign stocks end up doing a little bit better then US stocks. Finally, foreign stocks don’t move in sync with US stocks. Sometimes they move in sync and sometimes they don’t. But the times they don’t give you a little bit of diversification and generally they only move in sync about 70%.


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