The overwhelming majority of Americans have lives that cause them to get behind the wheel of a car anywhere from a few times a week to a few times per day. Driving is an activity we do so often we don't really think about it. You don't go through some sort of mental checklist to make sure you remember how to drive correctly. You just drive.
So, to the question of "Do you know how to drive?" most people would automatically answer in the affirmative. I might question whether people who drive slow in the passing lane (you know -- it's that left lane where the fast cars pile up behind you very quickly) actually know how to drive, but that's more a matter of driving well. Drive? Yeah, no problem.
Driving without "home road advantage"
I suggest that you can't drive as well as you think, because for most of you there's an adaptability problem. You may be the world's greatest driver in your own environment. But what happens when you travel to Great Britain, or the two-score other countries where the steering wheel is on the opposite side of the car? I know what happened to me -- when I first started driving in Japan, every time I wanted to turn, I hit the windshield wiper lever instead of the turn signal. The stick shift was in the opposite hand, but the same foot operated the clutch. I was out of my element. Driving was suddenly difficult (and a little more dangerous) again.
Japan's a place where at least the rules of driving are similar. Now watch this video of an intersection in India. Think you could drive just as confidently in that environment?
So to the question of "do you know how to drive?" I suggest that the answer depends on whether you know the rules of the place where you're trying to drive.
Investing is not so different from driving in that regard. You can take a great company like 3M
Know the rules overseas, or know someone who does
More than 150 countries have some form of stock exchange. Some of the largest companies in the world, Toyota
But the rules are different. They're different in every country in the world. Protections of minority investors are far weaker in Japan than they are in the United States, for example. If you own Toyota, or Honda
- Only invest domestically.
- Ignore the fact that you don't know the rules overseas.
- Start to learn the rules yourself.
- Put some faith in someone who knows them.
Global exposure
In November, The Motley Fool launched a new service called Global Gains and invested me with the responsibility of running it. I've lived, worked, and invested outside the United States for years. As a full-fledged believer in the power of globalism, I bought into Telekom Indonesia
Recently, renowned Wharton finance professor Jeremy Siegel stated that investors should have at least 40% of their assets in foreign stocks. I don't necessarily put much weight in pronouncements of 5% this and 25% that, but I do believe most American investors have given foreign stocks a short shrift. Perhaps we are afraid of our inability to "drive" overseas. Whatever the reason, I believe it is a mistake to avoid more than half of the world's stock market cap and 70% of the world's public companies because they happen to be garrisoned outside of the United States.
You can view all of Bill and team's international stock ideas with a 30-day free trial to Global Gains. Click here for more information.
B ill Mann is the advisor of Global Gains. He does not hold shares in any company mentioned in this article. Ever notice cars stacked up behind you, but no one in front of you? Moving out of the left lane will cure this. 3M is an Inside Value recommendation. The Fool has a disclosure policy.