Please ensure Javascript is enabled for purposes of website accessibility

The 5 Best Places to Invest

By Tim Hanson – Updated Nov 11, 2016 at 6:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

They may not be the places you expect.

If pressed, could you tell me the country that offered the best stock returns over the trailing 12-month period? What about any members of the top 5?

It's harder than you probably think, because they're not the countries you might expect.

You call that a bull market?
Despite recent volatility, the S&P 500 has still returned more than 10% annually over the past five years. While that's an impressive number on the surface, it's abysmal when compared to the rest of the world's equities.

And over the past year, the S&P has been down, while many foreign markets have been booming. Without further ado, the top performers over the past year:

Country

Return

Bangladesh

126%

Cote d'Ivoire

118%

Oman

99%

Mauritius

81%

Qatar

76%

Source: Motley Fool Global Gains.

This list is incredible to me. Tiny Mauritius?

We can learn a few things from this list. First, if you're an American investor, it's absolutely crucial to be invested abroad. The potential returns to be had there are too good to pass up. Second, the best returns often come from obscure places -- not from the countries we read about every day in the papers. And finally, there is some risk involved in investing internationally. For example, Bangladesh isn't exactly a nation known for its corporate governance, and Qatar is in a region not generally known for its stability.

Buy what others aren't
The main lesson here is old hat: To get the best returns, you need to be willing (and able) to look where other investors aren't. That's why the 10 best domestic stocks of the past 10 years were all small caps.

See, huge numbers of investors and analysts watch large companies and popular markets. Goldman Sachs (NYSE: GS), UnitedHealth (NYSE: UNH), and ConocoPhillips (NYSE: COP), for example, get coverage from 20 or more analysts. Those three popular stocks also have more than 2,000 ratings each in our Motley Fool CAPS community intelligence database.

In other words, they're probably pretty efficiently priced.

You'll get the best returns, however, by finding market inefficiencies. And while another 2,300 and 4,500 investors, respectively, are covering Corning (NYSE: GLW) and Sirius Satellite Radio (Nasdaq: SIRI) in CAPS, there's not a single Bangladeshi stock that you can buy on a U.S. exchange.

The Foolish bottom line
That's where your opportunity lies as a Foolish investor, though it makes investing in Bangladesh extremely difficult. But as I said, international investing is not without risks, and know that you don't need to find the best foreign market over a trailing 12-month period in order to do better. Even the more developed European markets, which you can access here in the U.S., will give you greater diversification and better returns.

If you'd like some help finding worthy international investing ideas that you may never have heard of, click here to try our Motley Fool Global Gains international investing service free for 30 days. There is no obligation to subscribe.

This article was originally published on Dec. 13, 2006. It has been updated.

Tim Hanson does not own shares of any company mentioned. UnitedHealth is a Motley Fool Inside Value and Stock Advisor pick. No Fool is too cool for disclosure.

None

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sirius XM Holdings Inc. Stock Quote
Sirius XM Holdings Inc.
SIRI
$5.86 (2.63%) $0.15
The Goldman Sachs Group, Inc. Stock Quote
The Goldman Sachs Group, Inc.
GS
$299.15 (2.08%) $6.10
ConocoPhillips Stock Quote
ConocoPhillips
COP
$109.97 (7.46%) $7.63
UnitedHealth Group Incorporated Stock Quote
UnitedHealth Group Incorporated
UNH
$515.51 (2.07%) $10.47
Corning Incorporated Stock Quote
Corning Incorporated
GLW
$29.87 (2.93%) $0.85

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/04/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.