Today’s Investor’s Business Daily has an interesting chart in an article on U.S. economic freedom compared to what prevails in other nations worldwide. If you’re not diversified into foreign stocks, this chart should provide some motivation…
3 thoughts on “Investor’s Business Daily: U.S. economic freedom compared to world average”
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Two comments on this:
1. The graph is a little misleading as the date scale changes mid-axis. The dropoff would be even more pronounced if they kept the same scale for the last 10 years.
2. I’ve been hearing for the last 25 years about how you should be diversified into international stocks. I have heeded that advice, but am still waiting for the payoff. If I look on the Vanguard site, the International Growth fund (VWIGX, the oldest international stock fund I could find there) returned 10.77% yearly on average since 1981, the year it started. The S&P Index 500 fund (VFINX) returned 11.07% since 1979, also the year it started. I’m staying the course, but history makes me skeptical about the possible return on foreign stocks compared to the U.S. market.
Were they arguing that the US is “overspending” because our GDP is higher than would be predicted based on their index? Doesn’t that mean that their index is not predictive of US GDP? I did read the article quickly; what did I miss?
It does not worth to invest in US based foreign stock index funds over long time periods based on economic climate in the US and abroad and believe in free (and thus efficient) market: if your assumption is right then foreign exchange rates at future date will eat up your supposed extra earnings.