Sometimes a picture really can make things easier to understand. Many of the important ideas and concepts you need to know as a long-term investor don’t require lengthy explanations. They can be as simple as these four charts. Together, these charts illustrate foundational principles of investing such a focusing on the long term, diversification, and not letting emotions compromise your portfolio.
Source: Morningstar Direct 2018. Countries represented by their respective MSCI IMI (net div.). Past performance is not indicative of future results. Securities listed are for illustrative purposes only and are not to be viewed as investment recommendations.
What This Chart Means to You: America may be #1 in our hearts, but there are many other countries with great companies to invest in. The average U.S. investor has a portfolio made up of about 75% U.S. stocks1, which seems patriotic, but can mean missing out on a world of opportunity. You might be surprised by the number of familiar companies and household brands that are internationally owned, such as Samsung, Michelin, Frigidaire, and even 7-Eleven. No one can predict which country will be the top performer, (and the U.S. has never been the top performer over any 10-year span of time), but if you own a lot of companies around the world you can worry less if any one company or even one country experiences losses.
1Morningstar, MSCI, as of 3/31/17. “Looking for Value Opportunities Outside the U.S.,” Oppenheimer Funds.com, David Mazza, July 11, 2017