Paul Dietrich's Global Investing Trends Report

Why Is Global Investing Important?

Posted May 5, 2008 · 0 Comments

Dear Paul,


One of my clients asked me why global investing was important. Are there any studies that definitively explain the importance of global diversification in a client’s investment portfolio?




After your grandmother told you as a child to always “buy low and sell high,” she also probably reminded you “not to put all of your eggs in one basket”—at least that’s what my grandmother used to tell me! That is the underlying timeless wisdom of global diversification.


Although the stock market has recovered some of its recent losses over the past few weeks, almost all of the economic news here in the U.S. is negative.


Oil is going higher; the U.S continues to lose jobs; food prices are going through the ceiling and, according to the FEDERAL RESERVE, the peak in home foreclosures will not happen until mid-2009.




Over the next couple of years, I believe we will see some rallies in the stock market, but only within the context of an overall downward trend in the stock market. From 2000 to 2002, we had several stock market rallies followed by even steeper drops in the stock market.  We will see that trend again during this current bear market that I believe will last at least until late 2009 or early 2010.


Given the U.S. economic slowdown and the subprime crisis dragging down world stock markets, it would be easy to discount the value of global diversification.




According to BUSINESS WEEK, a recent study by Wharton School professor Karen K. Lewis found that even though U.S. and foreign stock markets move more in step than they did 30 years ago, investors still need to globally diversify their investment holdings.


Thirty years ago, global exposure cut the volatility of an investor’s portfolio—the ups and downs of performance returns—by 30%.


Although that number has dropped to 15% today, says Lewis, it’s enough to show that global diversification works.




According to Lewis’ study, the ideal allocation in foreign stocks is 50% of your investment equity assets vs. the 12% average that most investor’s hold today.


Lewis also contends that much of the future growth in investments will be in foreign markets given the strong demand for natural resources and the growth of emerging economies.


At FOXHALL CAPITAL, we typically hold about 60% of our assets in U.S. companies, but many of our holdings are in U.S. companies that supply goods and services globally. Many of these companies receive a majority of their earnings from foreign markets. I feel that FOXHALL CAPITAL is generally within the optimum global diversification guidelines recommended in the new Wharton School study.


Until next week…


—Paul Dietrich


Disclosure: The opinions and portfolio information provided in the Foxhall Global Outlook are subject to

change at any time, and are not to be construed as advice for any individual nor as an offer or solicitation of an offer for purchase or sale of any security. Client accounts may differ from model allocations due to many reasons. All investment strategies offer the potential for loss as well as gain. Individuals should consult with their financial professional to determine an investment strategy appropriate for their objectives, risk level, and time horizon prior to investing. Past performance is not a guarantee of similar future performance.

Back to Blog


Subscribe to my blog via RSS or email.


About Paul Dietrich
Paul Dietrich is the Chairman, CEO and Co-Chief Investment Officer of Foxhall Capital Management, Inc. (Foxhall).  Foxhall currently manages investments for individuals, mutual funds and private institutions throughout the United States. Paul Dietrich is also a portfolio manager to a publicly traded mutual fund, the Foxhall Global Trends Fund.
Learn more about Paul Dietrich

Latest Video:

Paul Dietrich on FOX Business


Foxhall Capital Management economic measures food inflation global profits presidential election Eurobonds allocation global trends global food crisis economic crisis investment speculation gold and precious metal energy Pacific Rim/Emerging Markets process Trend Identification Technology bull markets economies economic cycle stock prices double digit gains global investing trends oil treasury bonds ETF sympathy selling equilibrium life insurance investors FOXHALL STOCK STRATEGIES

August 2013
July 2013
May 2013
April 2013
March 2013
October 2012
September 2012
July 2012
June 2012
May 2012
March 2012
January 2012
December 2011
November 2011
October 2011
September 2011
August 2011
July 2011
June 2011
May 2011
April 2011
March 2011
January 2011
December 2010
July 2010
June 2010
May 2010
March 2010
January 2010
November 2009
September 2009
July 2009
June 2009
May 2009
April 2009
February 2009
January 2009
December 2008
November 2008
October 2008
September 2008
August 2008
July 2008
June 2008
May 2008
April 2008
March 2008
February 2008
January 2008
December 2007
November 2007
October 2007
September 2007
August 2007
July 2007
June 2007