My advice
I recommend owning international stocks for one reason — diversification. We live in a global economy, and investing globally is important. I live in Colorado and would never invest only in Colorado stocks, just like you shouldn’t invest only in stocks in your home state. But having a hunch that international stocks will outperform the U.S. market is the wrong reason to load up on them.
Last year, I made the case for including international stocks in one’s portfolio. I didn’t know they would do so well this year — or lag for the remainder of 2016 — and I still don’t today. I made no changes in my investing with President Trump since I don’t know anything that hasn’t been already priced into markets.
Committing to whatever asset allocation you decide is best for you is more important than whether your exposure to international stocks at this point is too high or too low. Sticking with an allocation means you likely will be buying low and selling high — the opposite direction of the herd.
Don’t buy international stocks because you think they will outperform. And don’t think you know which countries or sectors will do better unless you are certain you know something the market doesn’t already know. Do own international stocks because you want a disciplined approach to global diversification.
Allan Roth is the founder of Wealth Logic, an hourly based financial planning firm in Colorado Springs, Colo. He has taught investing and finance at universities and written for Money magazine, the Wall Street Journal and others. His contributions aren't meant to convey specific investment advice.