global investing

Since the Great Recession in 2008 the US stock market has outperformed international markets by a large margin. This has caused many portfolios to become overweighted in US stocks and some people have questioned if investing internationally still makes sense.

 

There are many decisions to be made when allocating your investments and the charts below provide information to keep in mind when deciding how to allocate your investments in the US and overseas.

 

The first chart shows US and international markets have historically traded periods of outperformance. The gray area represents when the US has outperformed, which you can see it has done for over 13 years now, and the purple area indicates international outperformance. 

Investing Cycles

 

The next two charts show that the S&P 500 looks to be fairly expensive given a variety of measurements, while international markets look cheaper comparatively. 

S&P 500 Valuation Expensive

 International Stock Market

 

Keep in mind this is not a prediction that the tide is about to turn, I don’t know when a rotation of outperformance may shift. Rather, it is a reminder of how markets have worked in the past, and given these patterns tend to repeat themselves it will likely happen again.

 

Some may argue that holding a portfolio of just US stocks such as the S&P 500 would have outperformed holding a globally diversified portfolio over the last decade, which is true. It is also true that if you held a portfolio of only international stocks during the previous decade you would have done better than allocating any money in the US market. However, since getting the timing of these cycles right is nearly impossible, an allocation to each is recommended and adds diversification to a long-term investment portfolio. The downside to diversification is you may not be the biggest winner from year to year, however, the beauty is that you are also not the biggest loser and long-term you are likely to have a more consistent and rewarding experience.

 

If you would like to discuss international investing within your portfolio, please email me at advisor@blakegallion.com to schedule an appointment. 

 

Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

retirement, International investing, stock market, san diego, CFP
Retirement Planner in San Diego

 

Advisory services offered through Arbor Point Advisors. Securities offered through Securities America, Inc., Member FINRA/SIPC. Arbor Point Advisors and Securities America are separate companies. This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. CA Insurance #0E88557

Advisory services offered through Arbor Point Advisors. Securities offered through Securities America, Inc., Member FINRA/SIPC. Arbor Point Advisors and Securities America are separate companies. This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. CA Insurance #0E88557​

Rancho Bernardo Financial Planner