You've got money, you've resolved to make this a banner investing year, and you're chomping at the bit to buy.
Patience.
The problem with free advice
You're going to read a lot (and probably already have) about U.S. large-cap growth stocks. Indeed, Intel
And while Intel, Sprint, and eBay have fared better than the market this year, Yahoo! and Amgen have fared worse -- with Amgen actually down more than 15% since the beginning of the year. In fact, a contrarian bet on each of these five stocks at the beginning of the year would still be trailing the market at this point.
Last year's laggers
Even more disconcertingly, U.S. stocks had a great 2006. Led by Allegheny Technologies
So how much better can our stock market continue to do when economists aren't expecting our economy to grow any faster than the 2% we're getting accustomed to? It might be time to diversify.
Get thee behind me, prediction
It's tempting to get caught up in shortsighted crystal-ball games. We read about them in the news, and we pass judgment based on our otherwise quite random 12-month periods.
But if you're eager to put your money to work, remember that you're putting it to work for more than a random 12-month period. If your aim is to get rich, you're putting it to work for the next decade or more.
That's why I was heartened to read The Wall Street Journal advising investors, "2007 may be the year that the rest of the world helps pull up the U.S. stock market." Why? Because "Every major emerging economy is booming."
And that's true. The world's best returns this year made our own bull market appear puny indeed.
The emerging trend in emerging markets
But 2007 won't be the first year that emerging global economies help pull up U.S. investors. The global MSCI EAFE index has outperformed the S&P 500 annually since 2002.
This is a trend U.S. investors should expect to continue in 2007 (the MSCI EAFE index is already ahead of the S&P 500 by more than four percentage points), and for your investing time horizon of the next decade or more.
Countries such as India, China, and Slovenia have advantages such as younger workforces, greater population growth, or economies with more significant upside potential. In other words, unlike U.S. large caps, the stocks in these countries have significant tailwinds.
Buy these stocks this year
Unfortunately, the recent outperformance of international equities has driven up their valuations -- making the exchange-traded fund route a little less appealing, and the process of finding superior international stocks trading at great prices a little more difficult.
But if you want an investment strategy that will enrich you for the next decade, you must add superior international stocks to your portfolio in 2007. That's where our Motley Fool Global Gains international investing service can help. Advisor Bill Mann recently returned from a research trip to India, China, Macau, and Taiwan with several new stock ideas he's excited to share with subscribers.
So if you're chomping at the bit to put your money to work and want to see the stocks Global Gains is recommending today, click here to try the service free for 30 days. There is no obligation to subscribe.
This article was first published on Jan. 10, 2007. It has been updated.
Tim Hanson does not own shares of any company mentioned. Intel is a Motley Fool Inside Value recommendation. Yahoo! and eBay are Stock Advisor picks. No Fool is too cool for disclosure.
