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Most American investors don't understand the rationale for investing beyond our borders.
That's not terribly shocking, when you consider the immense size and diversity of the U.S. economy, and the $22 trillion "market cap" of our stock market.
So folks simply don't feel like they "need" to look outward to build wealth; U.S. investors held almost no foreign stocks in the 1980s. That edged up to about 5% of their stock portfolios during the 1990s and has crawled up to about 15% now.
Now, that may sound like a lot, but research suggests that the correct level might be something like 30%.
About the Author
Before he moved into the investment-research business in 2005, William (Bill) Patalon III spent 22 years as an award-winning financial reporter, columnist, and editor. Today he is the Executive Editor and Senior Research Analyst for Money Morning at Money Map Press.