Primer On International Investing - Part I
By Guraaf:I am a small individual investor interested in dividend growth stocks and foreign equities. Most of my current holdings are U.S. companies but over the last couple of years, I have diversified into foreign stocks as well. I want to share some of the lessons that I learned about investing in foreign equities that trade on the U.S. stock market. Even though the article is targeted primarily at an investor who resides in the U.S., I am hoping that Seeking Alpha's large international audience may find something of interest as well.
Reasons to look outside the U.S.
- Diversification: It is important for most investors to diversify their portfolio holdings, which helps provide downside protection as well as enhance returns. Diversification comes in many flavors, e.g., by sector (tech/manufacturing/retail/utilities), by market cap (small/mid/large), by type of instrument (stock/bond/gold/real estate) and by geography (U.S./Europe/Emerging Countries). Of course, diversification is a double-edged sword