Should You Invest in Non-US Stocks?

Wealth Advisor

Ben, a wealth advisor at EWA, discusses the importance of continuing to invest in international markets despite the significant drop in international equities of around 20% to 25% in October 2022. He emphasizes the need for a well-balanced portfolio over time, highlighting that U.S. and international stocks frequently alternate in performance.

Ben argues that it’s challenging to predict when U.S. equities will outperform international equities and vice versa. To manage risk and achieve more consistent returns, he recommends maintaining exposure to both U.S. and international markets. He points to the example of the 2000-2010 decade when international equities consistently outperformed U.S. stocks, illustrating that market dynamics change over time.

In conclusion, Ben advises against abandoning international markets during downturns, even though they may be underperforming at a given moment. Instead, he suggests a long-term investment approach that considers the historical cyclical nature of global markets.

Video Transcript

Hi. My name is Ben with EWA. I’m a wealth advisor, and today we’re going to talk about why we still recommend investing in the international markets as we’re filming this. In October of 2022, international equities are down significantly, somewhere around 20% to 25%, depending on the index that you’re looking at.

But in order to maintain a properly asset allocated portfolio over time, we still recommend investing in international equities. As you can see in this exhibit, united States stocks and international equities tend to change leadership and fluctuate often and more times irregularly.

It’s very difficult to predict what years the United States equities will outperform international equities and vice versa. So in order to properly hedge our bets and smooth out returns over time, we recommend having exposure to both United States markets and international markets particularly.

Want to draw your attention to the time periods between 2000 and 2010. That is a decade in which international equities outperformed the United States equity markets pretty consistently. So when we have clients asking us, hey, international markets are really getting crushed, why don’t we move into a strictly United States equity portfolio?

It’s times like this, and it’s exhibits like this where we want to draw your attention to, hey, maybe United States equities are outperforming international equities today, but that’s not always the case.

There are going to be time periods where international equities outperform United States equities, and we want to make sure that we have exposure for when that time comes. So even though international markets are getting crushed today, in 2022, we still recommend investing them for the long term.

Show Full Transcript

Recommended Videos

Build Tax Free Wealth with Back Door Roth Strategy
10 Tips for Current Retirees - Tip 6- Don't Base Investment Allocation on Your Age
Financial Planning for Physicians
5 Tax Tips for Business Owners- Tip 2- Use the Augusta Rule
Direct Indexing
10 Tips for Maximizing Your Financial Plan in 2023: Tip 10-Standard Deduction