Is It Unamerican To Do International Investments?

American flag in distressRecently, I was criticized by a friend of mine when I mentioned offhand that I had a significant amount of my retirement portfolio invested in international stocks. He claimed that by having international investments, I was being distinctly un-American and that I was helping out our international competitors by investing in their stocks. On the contrary, I actually feel it is my duty as an American to invest at least a portion of my portfolio in international funds. Here’s why.

First of all, I’m putting some ownership of international corporations into the hands of an American. I’m exchanging American dollars for a stake in a company that does business in other parts of the world. By doing that, I am claiming a portion of that company, so that if that company takes off, I (as an American) can ride that growth to the top. If Americans invest in strong international companies, then the United States can share in the inevitable growth of international companies rather than being left behind.

Second, I’m being a capitalist. The United States was founded as a capitalist nation, one that is as close to laissez-faire as you’ll find in the world today. The Declaration of Independence declares that I am endowed with the right to life, liberty, and the pursuit of happiness, and whenever I make the choice to invest in an international fund, I’m exercising all of those rights in order to make a better life for me and my family. In doing this, I harm no one, but instead build opportunities for myself and others.

Third, I’m reversing the effects of the trade deficit. Everyone is worried about dollars leaving the United States, right? When I buy a foreign investment, suddenly that corporation is paying dividends to me, causing money to come back into the United States. When I sell, if the stock has gone up, money comes back into the United States. My pal who criticized me was wearing a pair of shoes made in southeast Asia and he’s criticizing me for selling out America?

Last but not least, what does it really mean to be an American? What does the United States represent today? Some people will say that it’s a land of dreams and of opportunity. Others might complain about how it is a global superpower bent on hegemony. Still others might view it as a beacon of light in a dark time. No matter how one looks at the United States, it is completely appropriate for the nation to invest in the growth of other nations. We want to give opportunities for the best and brightest, no matter where they may live in the world, and we have enough capital here to open doors to the world’s brightest. If that’s not American, I don’t know what is.

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  1. jake says:

    As I have mentioned on the post regarding baby boomers. Investing in foreign stocks or retirement funds is a good way to go right now.

    Baby boomers have much to gain right now as the dollar is weakening and a huge trade deficit is looming over head. If more and more baby boomers want to cash in on their investments now is the time to turn to foreign investments and ride the growth that is rising in places like China and India, and Europe.

    Baby boomers should be careful because if there is a rush to sell and cash in their investments in the US market they might meet the current generation which does not have enough money to buy those investments. If baby boomers cant sell their investments retirement wont look so fun. But if you diversify in foreign stocks you can mitigate some of the possible risk ahead.

    People associate buying foreign stock much like buying foreign cars. It doesn’t work like that.

    I agree with Trent, if you want to be American, invest in countries in which the US has a large trade deficit like China. China has leverage because they have so much invested in the US, which can be seen as owning a part of the country and gives them influence.

    When foreign countries buy US bonds and stocks they are in essence buying America….piece….by….piece. When we buy their stocks and their bonds we have a stake in their country and so-to-speak owning them piece by piece.

  2. jake says:

    Not sure if you did it on purpose but you have the picture of the US flag upside down.

  3. eR0CK says:

    No, it’s not un-American.

    It’s part of diversification as far as I’m concerned.

    You wouldn’t put all your money into one company so why would you put all your money into one market?

    -Erich

  4. Michael Langford says:

    1.The US Flag upside down is a distress signal. It means come save this outpost. You’re letting off some weird meaning by using that pic that way.

    2. It doesn’t make you unamerican. What they hell does that even mean?

    It can mean several things. You *are* voting for the currency that backs that company. So if you buy IEV (the European EFT that tracks their S&P 350), you are strengthening the Euro more. But this effect is very small.

    However, you *are* guarding yourself against another slide of the dollar. I would count that as sound financial advice. Some people would say you should buy gold or some other commodity to shield yourself against dollar losses, but most gold is mined outside the US, and is a much bigger loss of money.

    You can easily diversify by buying stocks and bonds and even other government securities (usually) more easily than gold. Gold is speculation, where the price must increase for you to make money, where if you buy a foreign bond or stock, you can get money back from the investment by a means other than the price going up.

    (Disclosure: I invest in IEV).

  5. Jim Lippard says:

    It’s a global economy now. The people who insisted on buying “American cars” are now faced with Japanese cars built in the American south, American cars built in Mexico, and one of the largest American car companies now merged with a large German company (DaimlerChrysler).

    We’re now seeing some of the world’s poorest nations pulling themselves up and developing into economic powerhouses–and that’s a good thing, not a bad thing.

    I’d say that if you’re not investing internationally (with at least a little bit in emerging markets), you’re being a foolish investor.

  6. Clever Dude says:

    Personally, I’m looking out for myself and my own financial future. I can help those around me, and those who read my blog, but lifting the entire economy is a bit too much for me.

    I’ll invest where it makes sense. Right now, that means international stocks, whether they’re based in US Dollars, Euros, or Yen.

  7. imelda72 says:

    “Personally, I’m looking out for myself and my own financial future.”

    And why not? Not to mention that, by looking out for yourself, you’re also making yourself less of a future burden on the government.

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