I've got some troubling news: According to The National Association of Investors, just one in three Americans feels "comfortable" investing in foreign stocks or bonds.
That, my friend, spells trouble
Seriously, if this kind of thinking continues, we could be headed for some woeful underperformance, if not worse. Or so says the "smartest man in Europe."
The smartest who in what? I know. That's what I said. But that's what Byron Wein calls him. According to Wein, this mysterious chap earned his crown by consistently identifying trends that would have major impacts on global financial markets.
He even predicted the collapse of communism and the dismantling of the Berlin Wall, or so the story goes. And yes, he warned us to start looking for investments abroad long before the recent historic bull market in foreign stocks.
You think I've lost my mind, don't you?
In my defense, I read all this in The Washington Post. And this guy Wein is no hack. He was a top equity analyst at Morgan Stanley for years. So I'm inclined to hear him out. As for his "mystery man" on the ground ... who cares? Just look at the numbers.
In 2005, stock markets in countries as diverse as Egypt, Russia, Turkey, South Korea, and Austria all gained 50% or more -- dwarfing U.S. stocks. Just about the same thing happened in 2006. And it's happening again in 2007, too. I don't know about you, but I'm starting to sense a long-term trend.
If I'm right, then when it comes to making money overseas, we haven't missed the boat. In fact, when Wein last crossed the Atlantic to consult with his "source," he was even more adamant that we start moving some of our investment capital overseas. For what it's worth, I'm taking him up on it.
"Global is definitely the way to go"
Not ready to turn over your financial future to some mystery man? Well, how about a Wharton professor? Jeremy Siegel met with us here at Fool HQ last year and those were his exact words -- "definitely the way to go." Amazingly, Siegel insists we should hold as much as 40% of our portfolios in foreign stocks.
Boy, I wish I'd listened. I imagine some U.S. fund managers agree. Last year, the popular $4 billion Janus Research (JAMRX) fund rode some pretty solid holdings, including big positions in Apple, Qualcomm
But Janus might have fared even worse without its 20% exposure to foreign stocks. See, one-time U.S. stalwarts from Caterpillar
Born on the Fourth of July
I assure you, I'm not some doomsayer prophesizing the collapse of the West and the rise of "Chindia." I have too much faith in America for that ... and way too much invested in the U.S. market.
But it's also a fact that more than half the capitalization of all public companies already resides overseas. And just last year, investors poured $53 million into foreign large-company funds, up 32% from the year before. And, yes, I'm one of them.
So far, I've settled for two index funds -- the iShares EAFE Index and Vanguard Emerging Markets. Because I confess: I've been reluctant to invest overseas on my own. But now I have a mystery man on the ground, too -- Bill Mann, to be specific. If you don't know Bill, he's a bit of a globetrotter and an expert on international markets. I don't move a penny overseas without checking with Bill first.
Need help, too?
Fortunately, you don't have to cross the Atlantic for good advice, either. Bill recently launched an investment newsletter service called Motley Fool Global Gains to help American investors like us get invested overseas. Bill travels a lot (in fact, he just returned from China and India) and is a serious investor, so it's not exactly cheap to join.
But that's what makes this such a great deal: Right now, you can try Global Gains free for 30 days and pay nothing. That way, you can check out the complete service, read the latest issue, and hear what Bill discovered on his latest trip to Asia -- and if you don't like it, you don't pay.
Of course, you won't actually go broke if you don't invest overseas. But it could cost you some serious money. Why not take Bill up on his free trial offer and try Global Gains for a month instead? To learn more, click here.
This article was originally published on Jan. 17, 2007. It has been updated.
Fool contributor Paul Elliott owns shares of the iShares EAFE index and Vanguard Emerging Markets Index, but no other company mentioned. Intel is a Motley Fool Inside Value pick. The Motley Fool has a disclosure policy.
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