This article appears on HumbleDollar where I also regularly write.

International stocks?

Adam M. Grossman  |  Oct 6, 2024

IS IT WORTH OWNING international stocks? There’s far from universal agreement. The traditional argument for investing outside the U.S. is straightforward: diversification—since domestic and international stocks don’t move in lockstep, and sometimes diverge significantly.

At the same time, however, international stocks have lagged behind their U.S. counterparts for so many years that it’s been trying the patience of even the most tenacious investors. Domestic stocks have outpaced international stocks in eight of the past 10 years. On average, over that period, the U.S. market has returned 12.3% a year, while the most commonly referenced index of international stocks has delivered 4.6% annually. On a cumulative basis, domestic stocks have more than tripled, gaining a cumulative 219%, while international stocks have gained just 57%.

That’s enough to make any reasonable person question the value of investing outside the U.S. Though the long-term data indicate a benefit to diversifying, we need to be cautious in using the past as a guide to the future. The economist John Maynard Keynes commented that, “In the long run, we are all dead.”

So why, in the face of recent data, would anyone stick with international stocks? Below are five reasons I still recommend international holdings.

Read Adams five reason on HumbleDollar