Going Global

It may not look like the best time to invest overseas. Think again.

These days, it seems that you need a strong constitution, a bottle of aspirin and maybe even some hex-breaking abilities to invest overseas. Anywhere you look around the globe-whether across the Atlantic, the Pacific or in the Caribbean Basin-it seems some country is wrestling with economic woes. One day, Brazil devalues its currency. Twenty-four hours later, headlines say Southeast Asia will continue to be an economic no-man’s-land. And, as for Russia, it still hasn’t found its bearings.

Things at home, though, have never seemed peachier. A bull market that knows no limits-economic growth moves onward with no end in sight. Heck, a mere $1,000 investment in the stocks of the Standard & Poor’s 500 five years ago would now be worth $2,939. So why even consider looking outside the good old U.S. of A.?
Well, there are a number of answers to that question, some of which you’ve no doubt heard repeatedly. Let’s start with some figures that should get your attention. First off, there’s no better reason to look beyond American soil than the fact that other markets had their day in the sun, too. For proof, take March as a reference point and look back one year. The S&P 500 as a market gained 20% during the 52-week period. Not bad.

Market stats make only part of the case for international investing. Remember that a lot of very good companies, corporations whose products we know, buy regularly and even love, are based outside our borders. You might drive a Volvo, own a Braun blender or listen to your favorite tunes on a Sony system. Well, it should be some comfort to know that some of the best stocks around are those of overseas firms that dominate markets and grow earnings with the best of corporate America. Take Nokia (NYSE: NOK.A). The Finnish maker of cellular phones, which surpassed Motorola a couple of years back, just happens to be the biggest name in its industry. Nokia shares are all the rave on Wall Street, and for good reason: over the three-year period that ended last December 31, Nokia shares soared 544%, a run that would have taken a $1,000 investment to $6,440. The S&P 500 during the same period rose a phenomenal 111%, but still couldn’t match the little giant from Helsinki.

Maybe you’re a mutual fund die-hard. Then you’ll be interested in knowing that according to Morningstar, the Chicago firm that tracks the mutual fund industry, there are six foreign funds that have beat out the 28.62% gain of the Vanguard 500 index-the fund that tracks the U.S. market’s benchmark, the S&P 500. That’s not to say that the Vanguard fund hasn’t had a simply fantastic run-it has. The point is that investing abroad doesn’t have to be an act of mercy-it can be a profitable venture and one that’s quite worthwhile.

Indeed, while Asia may seem skittish, and Latin America is tied up with economic problems for now, there are some very exciting things happening in other parts of the globe.

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