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If you want to make your investment decisions based on politics, that's fine. Many of us can't afford that luxury and would rather invest to maximize our returns.
It used to be that the main reason given to hold international stocks is that they were not strongly correlated to U.S. stock performance. When the U.S. market was down, foreign companies would often be up, and vice versa. So a reasonable foreign holding, say 15-20%, would reduce portfolio volatility.
With globalization that's not as much the case any longer. There's a saying now: "When the U.S. catches a cold, the rest of the world gets sick." Nevertheless, holding some foreign stocks can allow you to participate in other economies that are growing at faster rates compared to the U.S..
Dave
I understand that premise. My point was, a stock is ownership in a company. You are buying a tangible piece of a company. Not to sound uber-patriotic, but why should I prop up another countries' economy with my hard earned savings? Greed just isn't that important to me.
I understand that premise. My point was, a stock is ownership in a company. You are buying a tangible piece of a company. Not to sound uber-patriotic, but why should I prop up another countries' economy with my hard earned savings? Greed just isn't that important to me.
And bond ownership is owning a small, tangible piece of a country's debt (propping up that country's government, in your terms). And owning part of a domestic company's stock is just propping up that company's operations.
In short, politically-motivated investment is unsound. Focus on your financial goals in making investment decisions. Ignore the internal tug to "buy American," but recognize that American index funds are typically comparatively stable when compared to foreign index funds (a simplification, but a reasonable rule of thumb), though may also see lower rates of return.
Further, buying domestic index funds will acquire small interests in many large corporations--most of which will have significant overseas operations. When it comes to the economy, there is no longer such a clear division between domestic and foreign operations. Foreign car companies have plants in the United States; domestic car companies have plants in foreign countries. That is just the way of the world today. People around the world are increasingly tied together.
Interested to see your Mairs & Power recommendation since they are not very widely known.
What can I say? I'm a mutual fund junkie The fact that they aren't flashy or well known is a selling point. The larger, more well known funds get asset bloated, which drags down their performance. Of course, I do see the irony in recommending funds with small asset bases.
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Originally Posted by Cnynrat
I'm a long time investor in Mairs & Power Growth Fund (MPGFX), even though it doesn't quite fit my focus on low fees. MPGFX is currently running a 0.7% expense ratio, which is good for an actively managed fund, but not great.
I am not big into growth investing, but if I was, I would definitely own that fund. It does have an absolutely excellent long term track record without crazy volatility. This is a minor quibble, but the ER for that fund is actually .67% and that puts it in the cheapest 20% of all no-load large cap blend funds, so it's actually quite good. Of course, we always want the ER to be lower, no matter how low it is!
Quote:
Originally Posted by Cnynrat
M&P primarily invests locally in the upper midwest, sort of a Warren Buffet only invest in what you know strategy. George Mairs (now retired) would tell you the key to their success was that the insight he gained as a result of the companies being local was a key factor in their success.
Yes, I knew that as well. And their funds seem to do ok even when there are manager changes. I think the culture of the Upper Midwest is generally more level headed than the rest of America.
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Originally Posted by Cnynrat
Anyway, some good recommendations there. I also hold Dodge & Cox, but their income fund (DODIX).
I like DODIX, but don't own it. It's a good fund, but it's one notch below best of breed. I do own their new Global Bond Fund, though. There are practically no good global bond funds out there that don't either charge a sales commission or have high expense ratios. D&C put a ceiling on the expense ratio at .60%...which is cheap for the category. I tend to favor conservative stock funds & racy bond funds. I own Loomis Sayles Bond which isn't strictly considered a global bond fund, but it can invest a good amount outside the U.S. The .92% expense ratio makes me gag, but the fund just spits out money like clockwork . I bought extra shares when the fund tanked in 2008. Wish I'd bought more! I wish I had 100K to invest in it so I could get the more reasonable .63% expense ratio, but I'm a long way from that, unfortunately
I also feel lucky to have a cheap share class of Templeton Global Bond in my 401k. Returns this year and last have been kind of meh, but it's got great long term performance, but I wouldn't own it if I had to pay the load.
Exactly. There really are only 2 financial situations--too much money or not enough. I'll take dying with too much money over risking not having enough every day of the week. I didn't like being poor when I was young. I sure as heck know I will dislike it even more when I'm old.
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The fact that they aren't flashy or well known is a selling point. The larger, more well known funds get asset bloated, which drags down their performance. Of course, I do see the irony in recommending funds with small asset bases. 
