There is much written about investing in international markets.
First, in the developed countries of Europe and Asia and, then, investing in Emerging Markets (like Brazil, Russia, India, China [BRIC for short]). Now, the Frontier Markets (smaller developing countries) are also recommended by many advisors.
The size of the financial markets based on market capitalization, though, reveal an interesting statistic based on 2007 numbers (the numbers are always changing but I just want to make a point):
The United States...is at 47% of the world's market (almost twice the size of the next largest)
Japan.........................is at 26%
U.K. ...........................is at 14%
Note that these 3 countries make up 87% of the world market's financial size (capitalization).
GDP (Gross Domestic Product) is another measure of the financial influence of countries. From that perspective in round numbers (2010 numbers):
European Union........$15 trillion
U.S.............................$14 trillion
China.........................$10 trillion
Japan..........................$ 4 trillion
India............................$ 4 trillion
All other countries are less than $4 trillion each.
Although there is something to be said for investing internationally in developed countries as well as in emerging markets of "developing" countries, please do not lose track of the additional risks involved. These markets are still very small in relation to the world economy (China is the exception now but per capita is yet another story).
I will highlight the risks (including per capita) in my next blog entry.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.