Nathaniel Thiele

Here are five reason why I don’t invest in international stocks.

1. International stocks have local currency risk. As a USA investor, you are luck to have one of the greatest currencies in existence. If you invest in international equities, they earn in a currency that is less than the USD and genially don’t have stable earning power. When the international company earn more money the dividend and income willn’t be seen as growing due to the deprecation of the local currency and the growth of USD.
2. International stocks are midcap stocks or smaller. Generally international companies are smaller than the US equivalate and are more at risk for being delisted. Smaller companies have lower returns due to higher perceived risk, lower cashflow, and low if any dividend yield. It much more common for international stocks to have a short investing horizon than USA based investments.
3. International stocks have unique risks that most investors can’t document. Most countries outside of USA have a large amount of instability. Countries are constantly have new dictators, wars, and tribal disputes. Only in the USA, which hasn’t had a war on home turf since 1812 is the most stable of all countries despite what the pundits say.
4. International stocks underperform all USA equivalents. USA stocks are innovate sectors such as tech and healthcare. Generally international stocks are more successful in area that are terrible investments. Materials, Banking, and Auto manufacturing are clear examples of companies that underperform the index.
5. Ask a foreigner what they invest in. Most foreigners only invest in two markets. The home market they live in and the USA market. Investing in other countries are tax burdensome for international investors. The USA has trade agreements with many countries which leads to lower investments cost and higher returns. Additionally home markets are often taxed a lower rates and have no additional cross nationality taxes.

This is my thoughts on investing internationally.