International Stocks: Investing for Retirement Pt. 2 – Barber Financial Group

Updated : Oct 26, 2019 in Articles

International Stocks: Investing for Retirement Pt. 2 – Barber Financial Group


What’s going on everybody? Jason Newcomer
with Barber Financial Group here. Welcome back for part two of our series
Investing for Retirement. Today we’re going to be looking at international
stocks. If you open the paper you turn on the TV right now, a lot of the stories
dealing with things overseas have to do with trade wars or tariffs being
escalated, ships being shot at over in the Middle East, or you’ve got missiles
being launched over in North Korea. There’s a lot of scary things going on
around the world. But in our post today we’re still going to make the argument
for why international stocks belong in a diversified balanced portfolio.
I am a big baseball fan and one of the things I love about baseball is just the
sheer amount of games that get played and the amount of statistics that get
kept track of. And one of the biggest things that you can expect with baseball
is over a long time you see players kind of revert to a average. They might go on
a hot streak or a cold streak but eventually they get it figured out and
their stats become sort of consistent from year to year. A good example of
that, and one that I referenced in my post, is a player for the Cincinnati Reds
Joey Votto. Joey Votto is known as – he’s probably got
one of the best eyes in Major League Baseball when it comes to hitting. He
is a career .300 batting average player. Right now, he’s in the midst of what we
would call a “slump”. He’s hitting about .200 – compared to his long-term average of .300. So, unless we
think that Joey Votto has forgotten how to play baseball after more than a
decade as a professional, we would expect that he might revert to his long-term
average sometime in the future. And the same can be said across different asset
classes and investments. If you had put money in international stocks –
you can’t invest directly into an index but we’ll use the MSCI all countries
world index, which includes every country that’s investable aside from – let’s say X
United. If we look at that index if you had put
money in that index five years ago today you’ve lost money whereas if it would
have been in the United States – like the S&P 500 or an S&P 500 index –
fund you’re probably up by about 50% whereas International you’re
down about 5%. So, do you think that that’s going to continue into the future
or do you believe that eventually countries overseas will come out of
their slump, markets overseas will start to make money again, and revert to their
long-term averages? There are a few other reasons that we outlined in the article
as to how international stocks might fit into a balanced diversified portfolio. So
be sure to check out our post part two of investing for retirement
international stocks. Share this article with your friends and be
sure to check back with us next week for part three of our series Investing for
Retirement.

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