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Diversifying Across the Globe
The United States accounts for one quarter of the world's gross domestic product (GDP), making the U.S. the world's greatest economic power. But, that also means that 75% of economic activity — and many excellent companies and investment opportunities — are outside the U.S.
Indeed, the Fortune Global 500, an annual ranking for the top 500 corporations worldwide, places just 134 of those companies in the United States, with 103 in China and 52 in Japan. Rounding out the top 10 countries are France, Germany, the United Kingdom, South Korea, Switzerland, The Netherlands and Canada.
Looking beyond global large-cap stocks, the global markets also offer an opportunity to invest in emerging nations — many of which are seeing rising incomes, growing middles classes and fast economic growth.
For the more speculative investor, there are also opportunities to invest in frontier markets — those just on the cusp of economic development and expansion.
The bottom line is twofold: global investing is an important step in diversifying portfolios and investors who focus only on U.S.-based stocks are limiting their investment opportunities.
A World of Opportunities
More sophisticated investors — those aware of the currency and tax implications of global stocks — can buy shares directly on foreign exchanges. For most investors, we would point to a variety of strategies that make it extremely easy for U.S. investors to gain global exposure.
International stocks can also be bought through U.S. listings such as American Depositary Receipts, known as ADRs. Indeed, ADRs are the easiest way for a U.S. investor to take a stake in a non-U.S. company.
Investors can also choose mutual funds, whose managers specialize in global investing, as well as exchange-traded funds (ETFs) for global exposure.
Indeed, you can find funds and ETFs that cover a broad swath of international stocks, specific global regions, specific combinations of companies, specific types of market factors — such as large cap or small cap — and individual countries.
A global perspective is based not only on where a company is headquartered. In today's global landscape, no investor can afford to ignore the impact and implications of geopolitical global economic events.
An understanding of the interrelationship among the United States and economies and countries abroad is critical in assessing the market environment.
Expert Guidance and Global Advice
And, while there's no doubt that adding global securities to your portfolio adds a level of complexity to the investing equation, that's no reason to avoid this important aspect of investing. That's how MoneyShow can help.
Among the 100+ advisors, analysts and newsletter editors who contribute to the MoneyShow website are dozens who specialize in global markets.
Plus, our daily website articles from the nation's top experts will give you the education you need to understand the global investing landscape plus an ongoing review of the best individual international stocks, ADRs, foreign funds and international ETFs.
This ongoing advice — combined with our online expert videos and investor conferences — will give you the tools and resources you need to be a successful global investor.