Conventional wisdom has it that foreign stocks are the place to be. Similarly, foreign currencies are supposed to better investments than the U.S. dollar.
Yet how often has conventional wisdom been right? About as often as it is wrong! In fact, it is only after 4 years of foreign stock and foreign currency supremacy that pundits are telling everyone about the importance of thinking globally with your money.
Now, I am not here to tell you that international investing is a bad thing. Far from it! I’ve profited from exposure to countries as diverse as Korea, Australia, and Canada.
Yet the idea that the U.S. stock market has nothing to offer is laughably absurd. For one thing, the rise in foreign stocks has closed the gap between a bargain abroad and an investment in U.S.blue chips. Even the U.S.dollar may surprise investors who continue to bearish on the U.S. currency; that is, while I may agree that the upside potential for the U.S. dollar may be absent, the idea that it must therefore fall much further is far from certain.
Think about what the good old U.S. has that many other developed and underdeveloped nations do not. Nearly half of the world’s 200 largest companies call the U.S. home. The political landscape… no matter how contentious… is exceedingly stable. What’s more, U.S. stocks in the S&P 500 are cheap by U.S. historical standards, with a forward P/E of 15.
At this point in time, a helping of the exchange-traded fund standard from Standard & Poors, the S&P 500 index (SPY) is still worthy of consideration. (Yes… even if you think there’s more money to be made over there… remember… there’s no place like home!)
Disclosure statement: Some of Pacific Park’s investment clients may hold positions in any of the investments mentioned above.