Keep Shopping Overseas
I believe that long-term investors will benefit by keeping at least 25% of their equity exposure in international stocks -- substantially more than the 7% currently in 401(k) plans. And using broad index funds like these is an excellent way of achieving international diversification.
International stocks and funds give investors exposure to markets that represent more than 50% of all stock opportunities in the world. That means that investors more than double their access to potentially exciting equity investments when they look at non-U.S., in addition to U.S., equity opportunities. Enlarging international exposure can provide more opportunity for growth, as well as give stronger diversification.
I'm also a proponent of international investments because of demographics. Over the next two decades, the U.S. population will age and consumer spending of many kinds will slow. By comparison, countries like India and Brazil will have great numbers of people moving into their peak consumer and investment years over the same time frame.
The price-to-earnings ratios for international stocks are attractive, and the concern about the migration from stocks to bonds is creating buying opportunities. If you can ride out periodic volatility, it's worth it to stay the course.Using broad index funds, like the ones I listed above, are an excellent way of achieving international diversification. There also are a number of actively managed international funds that are attractive. I particularly like the (ARTKX) Artisan International Value fund, the (DODFX) Dodge & Cox International fund, the (ICEUX) ICAP International fund and the (SILAX) Wells Fargo Advantage International fund. If you have moved out of an emerging market position because of the speculative buildup, good for you. But don't discount this important equity category over the long term. When prices simmer down, you will most certainly want emerging market exposure in your portfolio.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV