Should I Still Be Investing in International Markets?

My first job in financial planning started in 2000, at the end of the bull market of the 1990s and you guessed it after the dot com bubble burst! What followed that burst was about ten years of underperformance of the U.S. vs. International stock market. However, currently the US Stock Market (S&P 500) has been outperforming the Broad International Market (MSCI World ex USA) for thirteen years. These fluctuations are normal and historical data shows that different markets often take turns leading in performance. For example, since 1975 the outperformance cycle for US vs. International has lasted an average of eight years¹.  

Our memories are short, so sometimes, we need a reminder of why we invest the way we invest.  In his blog post "Diversification is About Decades," Ben Carlson sums up the case for staying broadly diversified emphasizing the importance of learning from past experiences. By spreading investments across various global markets, investors can reduce exposure to any single country's economic fluctuations, political changes, or market downturns. In essence, international diversification is about planning for decades, not just years, aligning with our philosophy that it's wise to not put all your eggs in one basket.

We hope you enjoy this article and happy reading!

Citations:

https://www.hartfordfunds.com/practice-management/client-conversations/investing-for-growth/us-and-international-markets-have-moved-in-cycles.html#:~:text=Since%201975%2C%20the%20outperformance%20cycle,5%2Dyear%20monthly%20rolling%20returns