Every day, it seems, there's fresh news crossing the wire about yet another bailout or another outrageous government spending plan.
Well guess what that’s going to do to the value of the U.S. dollar? The greenback is losing more of its value against the euro, British pound, and even the Canadian dollar. And the more Washington spends, the worse it’s going to get.
For years, investment advisors have been telling you, "Diversify! Put part of your portfolio into international equities!" Well, they were right.
Over the past 10 years, the S&P 500 index has lost about 4% of its value each year. You would literally have been better off putting your money under the mattress than in the U.S. stock market.
Overseas the story was different. Granted, 2008 was an ugly year for everybody. But over the past 10 years, emerging markets like China, Brazil and India have delivered more than 6% annualized returns. Sure, it’s been a bumpy ride, but at least investors have been adequately paid to take the risk.
Let me put it another way. A $10,000 investment in U.S. stocks 10 years ago would have dwindled to a mere $6,500 or so today. That same investment in emerging markets? Even after factoring in a horrible year in 2008, it would be worth more than $18,000.
The numbers just don’t lie--emerging markets were one of the best investments you could have made over the past decade. The bad news is that most folks missed out. They either didn’t know about the opportunities in emerging markets--or they were too busy looking for the next hot Internet stock to bother.
But here’s the good news. Emerging markets are starting to outperform again--and the case for investing in these countries is as strong as ever. It’s a rare second chance that you can’t afford to miss.
While the U.S. market struggles to regain its footing in 2009, international stocks are on fire yet again. Chinese stocks have gained more than 20% since the start of the year. Brazil and Taiwan are up about 40%. Even less exotic markets like Belgium, Denmark and Norway are sitting on healthy double-digit gains.
Meanwhile, the Dow Jones is having trouble staying in positive territory.
See if you can guess what the best-performing stock market has been in 2009....Would you believe it’s Russia? Yep, it’s up more than 50%!
Of course, international markets haven’t been immune to the global economic recession. But a lot of countries were in better shape than the U.S. before the trouble began. And many of these same countries, particularly in emerging markets, are investing a whopping amount of money in infrastructure and other big economic stimulus plans. Unlike Uncle Sam, however, these countries can actually afford it!
The Economist, a sober publication that knows its global financial history well and eschews hyperbole, notes that "never before has infrastructure spending been so large as a share of World GDP." Not even during the Industrial Revolution.
The message is clear: If you haven't been investing overseas, you have been missing out. Big time.
In fact, over the past five years, the performance of U.S. stocks ranks close to the bottom among the world's biggest economies.
Bottom line: International stocks are no longer just something to dabble in anymore--they have become absolutely vital to protecting your wealth.
Trouble is, there are a staggering 40,000 publicly traded equities to choose from worldwide. And holding the right ones in your portfolio can make an enormous difference to your personal wealth.
How on earth do you know which ones to buy?
Unfortunately, you can't simply tell your broker "buy me some international funds or stocks," close your eyes, and hope for the best. And how do you know which countries are heading into raging bull markets...and which are turning into bears?
Good luck asking your broker. Most American stock brokers would have enough trouble just finding some of these markets on a map!
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