It's A Big World
The world can be a scary place and for most Americans, there's no place like home. But for investors, not only is the world a place for adventure, it may also be the source for higher growth and returns. Since World War II, the U.S has dominated the world capital markets. With five percent of the world's people, the U.S. produces 25 percent of global economic output and, until recently, accounted for 50 percent of world stock market value. With growth abroad eclipsing that in the U.S., in the last seven years, the U.S. share of world stock market value has dropped to 42 percent, according to Dimensional Fund Advisors. Emerging market share has climbed to 14 percent from a low of 4 percent in 2003 as commodity prices soared. With disasters in Japan looming large and revolutions spreading, it's tempting to stay at home. Mark Twain dismissed U.S. travelers as innocents abroad. But over the last thirty years, investment returns have been higher abroad. Over the last 10 years, U.S. market returns were often negative while international stocks returned 7 percent a year and the MSCI Emerging Index was up 10 percent. There's no place like home but it could pay to shop the world.