2011’s Top Ten (Part 4)

My number four financial planning resolution is to think globally.

I’ve said before how it’s a global investment world. If you miss being global, you miss a lot. A good reason for this is global leadership. It’s no longer the case that the largest companies in the world are based in the US. The one of largest clothing retailers in the world is based in Spain. The world’s biggest oil company is in Brazil. So you now have to invest worldwide to be in the biggest firms.

But there’s another reason to invest globally. It used to be that the world’s economies were siloed off from each other, each operating in its own space. With global trade rising, that’s no longer the case. Now an investment in the German manufacturer Siemens is a bet on Asian manufacturing growth. An investment in Proctor and Gamble is tied to Turkish consumer appetites.

The world’s economies are tied together now to an unprecedented degree. Global trade has recovered to the level of early 2008 and is accelerating. Even troubled countries can be profitable investments. So far, the best performing markets in the world have been Spain and Portugal, in spite of their debt issues. If the world doesn’t end, they’re likely to continue to do well.

But you have to do your homework. Some global mutual funds have unconscionable fees. And some international markets still struggle with fraud. A year ago a large Indian IT firm admitted to padding its balance sheet with over a billion dollars in cash. Investors lost out when the crime was discovered.

But it would be a mistake to conclude that global markets are too risky. The real risk is missing out.

Douglas R. Tengdin, CFA
Chief Investment Officer
Hit reply if you have any questions—I read them all!

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