Are International Stocks Getting Ready for a Comeback?

This is a sponsored post written by The Cheat Sheet on behalf of Nationwide®.

Woman checks stocks on her phone in front of a laptop

The U.S. stock market makes for good investments, but don’t forget about international stocks, too | Pixabay

The United States’ stock market has been the envy of the world. Since the March 2009 bottom, the Dow Jones Industrial Average and S&P 500 have both surged to new record highs with little interruption. The recent correction was the first decline of at least 10% for the benchmarks since 2011. Nonetheless, as the adage goes: All good things come to an end.

In a bull market, the good times feel like they’re never going to stop. History, on the other hand, teaches us otherwise. No matter how strong one country’s market appears, a catalyst is always waiting to bring investors back down to reality. When that happens, diversification is an investor’s best friend. A portfolio holding international stocks can help investors weather domestic downturns or periods of underperformance. The trick is planning ahead and buying them before the tide turns.

Now may be the time for long-term investors to buy international exposure. Global developed markets have lagged behind the U.S. significantly in recent years. In fact, the developed markets only have an annualized 8.4% return over the last 15 quarters, compared to an 18.8% pace for the S&P 500, according to a recent report from Nationwide. This may not be too surprising given the historic steps of America’s Federal Reserve, but other countries are also set to benefit from their own forms of quantitative easing and low interest rates.

“In theory, central bank bond buying should lift inflation expectations and incentivize investors to take on more risk,” explains the Nationwide report. “The experience in the U.S. and Japan in recent years lends credence to that view and, with the European Central Bank now following a similar path, bodes well for European market performance in the quarters ahead.”

This is a sponsored post written by The Cheat Sheet on behalf of Nationwide®.

This information is general in nature. It is not intended as investment or economic advice, or a recommendation to buy or sell any security or adopt any investment strategy. Additionally, it does not take into account the specific investment objectives, tax and financial condition or particular needs of any specific person. We encourage you to seek the advice of an investment professional who can tailor a financial plan to meet your specific needs.