International Markets: Two Thoughts for Our Clients
Written on November 03, 2023

International Markets: Two Thoughts for Our Clients

Why are international investments important?

When we think of investments it’s tempting to focus on the U.S. stock market. This makes sense, as the American stock market is the most accessible equity pool in the largest economy in the world. But well selected international investments have been a part of diversified portfolios for decades now, and with all that history it’s clear that stock investments in other economies present opportunities that should not be ignored. The chart below illustrates the percentage of the world’s top 50 stocks that are non – U.S. It indicates that on average 82% of the top 50 stocks each year are from somewhere other than the U.S.! At OFM we’ve long believed that our clients’ pool of investments should be larger than just the U.S., and this chart demonstrates why that’s been so important year after year.

How do international markets compare to the U.S.?

International developed stock markets have had many periods of outperforming U.S. stocks, sometimes by a large margin. A recent trend has emerged where U.S. stocks have been outperforming international developed markets, but as shown below this trend has recently ended. U.S. stocks enjoyed 14 years performing better than international, the longest streak recorded below. But this trend ending reminds us that recency bias can fool investors. Recent trends may or may not continue! International and U.S. stocks outperform each other in a cyclical manner. Good investment planning can allow us to capture the upsides of international stocks.

The Hourglass is an OFM Wealth Publication.  This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

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