International stocks: Why bother? For the greater part of the past decade, it hasn't paid to invest abroad. U.S. stocks beat their over- seas counterparts in eight of the past 10 calendar years. It's little wonder that many investors now avoid foreign stock markets. "Our clients see international investing as a greater risk," ignoring any diversification benefits the asset class may provide, says Lewis Altfest, chief executive of Altfest Personal Wealth Management.
But it may pay to bother now. The stars are aligning for foreign shares. Inflation is easing, for a start, in much of the developed world and some emerging countries. "A lot of last year's headaches-higher inflation and rising interest rates-should subside throughout this year," says Nicole Kornitzer, manager of Buffalo International, "so the big question is how much of those rate hikes will flow through and cause a recession" and how bad the downturn will be.
But the economic outlook this year may not be as gloomy as economists once thought. Though the International Monetary Fund expects global growth to slow to 2.9% this year, down from an estimated 3.4% in 2022, many market strategists and economists think that in certain key markets, particularly the eurozone, any recession will be shallower than originally expected. Some say Europe may avoid a recession entirely.
What's more, foreign shares are cheap cheaper than they have been in 15 years relative to U.S. stocks, according to some calculations. Of course, "you could have made the same observation anytime over the last two years, and still, international markets didn't outperform," says Jed Weiss, a Fidelity international-stock fund manager. "But starting points matter. They were cheap two years ago and they're even cheaper today." The dollar is weakening, too, which can be a boon for emerging markets.
Open for business.
This story is from the April 2023 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the April 2023 edition of Kiplinger's Personal Finance.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 8,500+ magazines and newspapers.
Already a subscriber? Sign In
Your Vacation Home Could Provide Tax-free Income
If you plan to rent out your vacation home, it's important to understand how your proceeds will be taxed.
A SOLID YEAR FOR THE KIPLINGER 25
All but one of our favorite actively managed, no-load mutual funds gained ground as markets recovered.
IT'S NOT YOUR IMAGINATION: YOUR CEREAL BOX IS SHRINKING
To avoid raising prices, some manufacturers are reducing the size of common grocery items. Here’s how to fight back.
SHOULD YOU WORRY ABOUT BEING LAID OFF? IT DEPENDS ON YOUR INDUSTRY
Downsizing has hit certain sectors. But cutbacks may be slowing, and some companies are expanding.
How identity thieves are exploiting your trust
Con artists themselves are disguising as well-known brands to steal your money and personal information.
CUT THE COST OF YOUR WIRELESS BILL
AT&T, T-Mobile and Verizon dominate the market, but smaller outfits offer similar network coverage at lower prices.
MAKING HOME ENERGY MORE AFFORDABLE
Households in need can get energy-efficiency upgrades, help with utility bills and more from this nonprofit.
A HEAD START FOR SAVERS
The Saver's Credit is designed to help low- and middleincome taxpayers contribute to a retirement account.
Say I Love You With a Money Date
To nurture a lasting bond with your partner, meet regularly to talk about money.
Plan for Your Own Elder Care
AFTER I wrote a series of columns in 2022 about elder care planning for family members, I received a number of responses like this one: “What about married couples who have no children or whose family members don’t live nearby?” wrote one reader. “Or a single individual with no close relatives? How should these people plan for their own elder care?”