Live It Up Without Outliving Your Money!: Getting The Most From Your Investments in Retirement

Chapter 9. Putting the World to Work for You

In investing, what is comfortable is rarely profitable.

—Robert Arnott

A recurring piece of nonsense that is taught to many investors is that they can get all the investment performance they'll ever need or want from companies based in the United States. The reality is that less than half of the world's stock market value resides in companies based in the United States. The rest is beyond the U.S. borders. Throughout this book, I urge investors to diversify. That's the most fundamental piece of investment advice I know. I believe almost all investors should have some exposure to international stocks.

The stocks of companies with headquarters outside the United States don't always outperform those of U.S. companies. But there are years—and multiyear periods—in which U.S. stocks take a back seat to international ones. That's why I counsel investors, including my company's clients, to have half their equity investments in international funds.

One of the biggest risks investors take is believing too strongly that they know what they are doing—overconfidence, if you will. Investors in Japan in 1990 had every legitimate reason to believe that they didn't need to invest in stocks outside their own country, which at the time seemed to be on the brink of having the world ' s largest economy.

Nobody could have credibly predicted that the bottom would fall out of the Japanese market for the next dozen or more years. Yet that's exactly what happened. ...