It's not additional risk. It's different risk.Exactly right there. There has to be a time when you realize that this idealistic theory of investing in international stocks is neither providing you diversification benefits, nor superior returns. So what’s the point of taking additional risk, then?What's the evidence for better risk management being obtained by indexing the myriad foreign stock markets? It's possible to concoct all kinds of theories, but where's the evidence? Ultimately, if the theory doesn't work in the real world, then it's invalid. Theory doesn't pay any bills.
Investing in unhedged ex-home country stocks provides currency and geographic diversification, addressing both the risk of home country inflation outpacing global inflation and the risk of an asset bubble in one's home stock market.
We do know. Buybacks spurred by low cost of readily available capital, followed by a massive injection of liquidity into the system, all during a strengthening dollar....something did change in the 21st century, tilting towards the US. We can (and have) speculated as to what. But we don't know.
Statistics: Posted by Beensabu — Sun Dec 29, 2024 2:03 pm