Post by roi2020 on May 14, 2023 21:15:08 GMT
Whether or not an investor should own foreign equities is a contentious topic in some circles.
Some prominent investors (Warren Buffett, Jack Bogle) have stated that international diversification is not required.
"Diversification is hard because you just know there is always going to be something in your portfolio that’s going to underperform.
You just don’t know what that asset class or strategy it will be at any given time."
"Global diversification is about accepting good enough returns to avoid the potential for terrible returns at an inopportune time."
The author compares returns for the S&P 500 and MSCI World ex-U.S. indexes below.
We have MSCI data for international stocks going back to 1970.
Here are the annual returns for the S&P 500 and MSCI World ex-U.S. through April 2023:
U.S. stocks +10.5%
International stocks +9.1%
It’s also true that much of the outperformance has taken place during the latest cycle.
From 1970-2012, the annual returns were basically dead even:
U.S. stocks +9.7%
International stocks +9.6%
awealthofcommonsense.com/2023/05/the-case-for-international-diversification/
Some prominent investors (Warren Buffett, Jack Bogle) have stated that international diversification is not required.
"If you could predict the future there would be no reason to diversify but no one has the ability to know what comes next in the markets or global economy."
You just don’t know what that asset class or strategy it will be at any given time."
"Global diversification is about accepting good enough returns to avoid the potential for terrible returns at an inopportune time."
The author compares returns for the S&P 500 and MSCI World ex-U.S. indexes below.
We have MSCI data for international stocks going back to 1970.
Here are the annual returns for the S&P 500 and MSCI World ex-U.S. through April 2023:
U.S. stocks +10.5%
International stocks +9.1%
It’s also true that much of the outperformance has taken place during the latest cycle.
From 1970-2012, the annual returns were basically dead even:
U.S. stocks +9.7%
International stocks +9.6%
awealthofcommonsense.com/2023/05/the-case-for-international-diversification/