Hi All - Let’s talk about investment strategy today, but let’s add a little twist. Let’s talk about what I’m not really fond of. One of those would have to be international stocks and bonds. I really don’t like to put much money there and for good reason. I know, I know, wall street keeps telling us how great it is, but the historical results are quite different. Therefore here at Wealth Mgmt, LLC we keep international allocations very low here for our clients. Besides, most big US companies are already doing a significant amount of international business.
Here’s how I look at it. It takes people and the right kind of systems to have an environment in which business thrives. Things like limited government, freedom, capitalism, property rights, and a strong military. The US has it, and most other countries do not. Take China, their stock market has been depressed for years due to their heavy handed controlled government. Plus they can take your company if they want. Who’s to say. I don’t touch China. How about Russia? Really? That is self evident. Currently they are destroying their own country and their neighbor in war. What about western Europe? They have high taxes and big government and the US stock market has been outperforming them for years. Canada? Same as Europe really. How about the middle east? I doubt it. Abu Dhabi maybe, but that’s a small area. The rest of them are usually fighting. Taiwan, Japan, South Korea, ok but there is risk of geopolitical turmoil over there. India has done well. In Central and South America many people are fleeing to come here, and that’s not going to change.
You see what I mean, the US is relatively stable. Most other countries are less so or do not have the conditions for business to thrive. This is why I will lean US with my client’s money all day long. It’s just makes sense!
See Chart below. The US S&P 500 ETF SPY in Gold vs a well know International stock index the EAFE in black for the past 22 years. According to this chart, on average the international markets have been dead money, and I really can’t think of any reason for that to change.
Mike
