Global Stock Biases
Investors faced with bad economic or financial market news are well-served when they maintain long-term perspectives. Remember that:
• If there were no risk, potential investment rewards would be small, or nonexistent. “Risk- free” assets typically offer only modest returns.
• Markets can change rapidly in response to news, accounting for much of the difficulty in timing trades in an effort to beat broad-market averages.
• News providers naturally have a short-term focus. Investors’ horizons should be more akin to those of historians—years or even decades long.
If you look beyond headline risk, you can realize that, historically:
• Global stock market indexes have been less volatile than most national indexes.
• Investing part of a stock portfolio in international markets has reduced volatility relative to a 100% U.S. stock portfolio.