Taking your investments out of town
2008 should have solidified the belief in international funds. Domestic funds look terrible, they’re beaten down by the perma-oil bear and an economic downturn. But overseas things are looking on the up and up, actually they look great. Why? Developing nations practically control the world’s commodities, we buy their oil, their metals, their food. We used to produce the world’s food, but take a look at how much we’re sending into creating energy. Food for energy, ethanol, yuck.
Either way, the issue remains that we can’t be all US invested anymore. Sure it was great in the days of McCarthyism to slam around the idea that buying War bonds is American and you shouldn’t send your money to those socialists overseas. But now that we’re over our fear of socialism and a structured economy and instead fearing terrorists, there’s plenty of merit to an international perspective, even more so considering the huge gains made available in the past few years.
I think it would be ridiculous to assume that the gains that have been made in the past 80 years are going to continue in the United States. We’ve fallen under the assumption that the market rises 10.5% every year, perfectly and if we just save a meager part of our earnings that we’re going to be able to retire with a corvette in the driveway and money in the bank.
People used to think that real estate never went down in value, that it was like the stock market where 10.5% per year just fell into your lap. People still throw money into stock funds chasing returns from blue chips that grow slower than you can believe.
The fact is, we’re no longer developing. The United States used to produce, used to be the world’s largest creditor but now we’re the largest debtor that consumes more each and every year. Moving your portfolio overseas, even if only 20-30% greatly reduces your dependency on the economics of one region but also allows for hefty gains when the US slows.
Take your money overseas and park it, there is plenty of money to be made, especially in our neighbors to the south. Latin America is starting to fire up with high sugar prices and its production of the world’s fertilizer. Buy overseas.
