Should You Buy Foreign Stocks?

Should You Buy Foreign Stocks?

How about foreign stocks? Don't they have terrific potential? Yes, a few foreign stocks have great potential at the right time and the right place, but I don't advise individual investors to waste much time investing in foreign stocks.

The potential profit should be two or three times as large as that in a standout U.S. company to justify the additional risk of owning a foreign stock. For example, the player in foreign securities must understand and follow closely the general market of the particular country involved.
Sudden changes in the country's interest rates, currency, or governmental policy could, in one sweeping action, make your investment considerably less attractive. There have also been such onesided moves as nationalization of companies by countries.

It is not really necessary for individuals to find foreign stocks when there are over 8000 securities to select from in the United States.

Foreign stocks should probably be left to professionals who specialize in this field. There are a few good mutual funds that excel in this specialty.


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