For years there have been investors who focus ONLY on buying US companies, or worse large US tech stocks. The rationale goes like this “These large US tech companies go up faster than other companies so I’ll buy them”. When I hear that I want to scream NO! YOU’RE CHASING PAST PERFORMANCE. WHAT HAPPENED THE LAST 10 YEARS ISN’T GOING TO BE WHAT HAPPENS THE NEXT 10 YEARS.

A couple years ago I made a post similar to this with this warning: Watch out, one of these decades international stocks are going to outperform US stocks. Tech bros would say “JERMEY UR SO DUM DUM TEK STONKS ONLY GO UP”. Well, here in 2025 we may be seeing the start of the reckoning. In 2025 year to date QQQ (Large tech stocks) ETF is -7.5%. VOO (S&P 500) is -4.9%. VXUS (Non-US stocks) is +6.0%. That means tech stocks have UNDERPERFORMED international stocks 13.5% points in just the first two-ish months of the year.

I think Americans have a very US centric view of the world. Maybe every citizen of the world has a “home country bias” but my sense is it’s stronger in Americans. Especially with regards to the economy. But as measured by GDP, while the US is the biggest economy in the world, it only makes up about 26% of the global economy. ‎
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If you just invested in the S&P 500 (large US companies), you would be omitting small US companies from your portfolio as well as every other country in the world! ‎ I like to imagine this chart as a snapshot in time. Imagine if it were animated and each box grows or shrinks as time goes on. I bet there will be a lot of action in that 74% not covered by the US. I want a piece of that in my portfolio!‎
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So when I invest, I invest globally. Not weighted by GDP, but weighted by market capitalization, or about what the companies are worth. That puts the US closer to 50% and non-US companies at 50%. You can invest in these economies in separate US and non-US index funds, or in one convenient package, like a target date index fund! That’s my favorite way to invest!‎
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As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.‎
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-Jeremy‎

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By: Gabriela Gonzalez
Title: Why ignoring international stocks could cost you big
Sourced From: www.personalfinanceclub.com/why-ignoring-international-stocks-could-cost-you-big/
Published Date: Wed, 19 Mar 2025 02:48:07 +0000

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