Ken Fisher on Why You Should Invest Globally and Diversify Your Portfolio

#diversification #investing #kenfisher
Why should you invest globally? What could your returns look like over time if you do? Ken Fisher, Fisher Investments’ founder and Co-Chief Investment Officer, answers these questions and more in this video. While many investors may be biased toward investing in stocks based in their home country, this isn’t necessarily the best approach to investing, and it limits the level of portfolio diversification you can reach. Different countries represent different categories of stocks—just like Consumer Staples stocks have different qualities from Financials stocks. Different categories trade leadership over time. No one category is best! This is also true of countries. While one country may perform well in a given period, over very long periods, performance tends to even out. This means countries trade performance leadership, and investing in only one country can mean missing out on better returns elsewhere for a long time. This phenomenon is due to supply and demand factors. Like any other widely traded good, stocks’ prices move based on supply and demand. Over long periods of time, supply trumps demand, as companies can expand or contract their stock supply on a near-infinite basis. If a country has outperformed (or underperformed) for a long time, eventually supply factors will adjust accordingly, leading to similar returns over decades-long periods—which is the time frame many long-term investors should care about most. Watch now to learn more!

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[alanhomer]

I agree we need to think/invest more globally. The challenge as you eloquently put it, 50% of the global market is derived from the U.S. market. And in bad times, there is a flight to quality US stocks. Would it be more beneficial to have a US index fund & an international (ex-u.s.) index fund? With an allocation of 45%-65% US vs 55%-35% international?

[roberttormey]

Lately I’ve been focused on domestic. US companies, large ones, derive a lot of earnings from abroad anyway, and the major foreign country economies are struggling with some issues that at 64 I don’t need to figure. While Trump is president and CEO of this country, it’s hard to beat the USA!