Are global investors losing interest in U.S. stocks?

I often write on Quora.com, where I am the most viewed writer on financial matters, with over 281.1 million views in recent years.

In the answers below I focused on the following topics and issues:

  • Are global investors losing interest in U.S. stocks?
  • Can you make money from stock market volatility? Should you be afraid of volatility to begin with?
  • What are the best, and cheapest, countries for expats to live in?
  • How can people invest in US stocks from Africa in a pension structure?
  • Are bonds good long-term investments?

Some of the links and videos displayed on the original answers might not show up on here, and if so, you will need to refer to the original answers to view that.

If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me, email (advice@adamfayed.com) or use the WhatsApp function below.

Are global investors losing interest in U.S. stocks?

I see no evidence of that. Money is flowing into US stock markets. What is true, however, is that some savvy investors are looking for value in Europe and Emerging Markets.

On some measures, like CAPE, those markets are very cheap. So cheap, in fact, that US stock markets have only hit such levels twice in thirty years.

The bigger mistakes investors usually make is “recency bias” – they chase recent performance rather than long-term ones.

For example

  • So many investors wanted to get into technology in the 1990s. Few wanted to in 2000–2008, when some people thought the internet was overhyped with headlines like this:
  • Most investors wanted to buy emerging markets, and especially Chinese equities, in 2006–2007, and few wanted to in recent times
  • In the last few years, few people have wanted to buy European markets. They have become interested again after the recent excellent performance.
  • Too many investors wanted to buy oil ETFs in 2006–2007
  • Few investors were interested in the US stock market during the “lost decades” of 2000–2010 and 65–82.
  • Even though interest in US stocks has been high since 2011 or 2012, fewer people seemed interested before Trump’s 2016 election, the 2020 disputed election or when COVID-19 came along.
  • The Brexit vote harmed UK stock markets and not many international investors wanted in, but with the recovery of the Pound and markets, it has done OK.

The point is, beating on “unfashionable” markets can be quite profitable, as can investing at unfashionable time periods.

That doesn’t mean that people should just select stock markets that look cheap and are “unfashionable”.

The market isn’t stupid. Cheaper markets are often riskier, US stock markets are tried and tested and for that matter global due to the way big US firms operate.

Many emerging market companies also do IPOs in the United States. Yet the broader point is that don’t assume that markets that haven’t done well in recent times, will always be like that, and keeping to a plan is more difficult than people think.

If people stay globally diversified and have a long-term plan, they will do fine.

There is no need to always change your plan.

Is volatility in a market something that can make you money?

The short answer is yes. Let’s look at some different ways.

  1. Market timing

As I have said on previous answers, this doesn’t work for over 99% of people, but it might for the occasional institutional investor or professional.

So, let’s move on.

2. Rebalancing

If you have 80% in stocks and 20% in bonds, you can rebalance during a market crash.

Simple example. Let’s say you have $400,000 in stock market ETFs and $100,000 in bonds.

Let’s say the bonds are now worth $101,000 and stocks $200,000. If you then sell some bonds to buy stocks, you will benefit once the enviable upswing happens.

Take 2020. Stock markets took months to rebound. Or 2008 when they took about three years to rebound.

Your portfolio can rebound more quickly if you rebalance.

3. Just accept the ups and downs of the market

If you are adding money to your account on a regular basis, for example every month, you will get the advantage of “dollar cost averaging”, which is a fancy way of saying you are buying monthly at different price intervals.

If you do this, you can benefit from any period of falling markets, as illustrated here:

However, that doesn’t mean you should gradually put in a lump sum, as lump sum investors do tend to beat those who dollar cost average long-term:

Yet we all have to dollar cost average up to a point. We are all either salaried or have businesses, so we need to invest gradually.

So, the best thing to do is invest a lump sum when you have it, but also add monthly or yearly, therefore getting the benefit of both.

As a final comment, I will paraphrase the quote below. Far more money has been lost worrying about volatility, than from the volatility itself.

Volatility comes with the territory, and it is a mistake to assume that it is connected always to risk.

Many non-volatile assets like cash are full of risks.

What are the best but cheapest countries for expats?

Of course, the best will depend on your individual preferences. However, for most people, we can split it up by region

Europe

For the majority of people, some countries in Eastern and even Southern Europe offer the best quality relative to cost.

Places like Poland, Bulgaria, Romania and even some parts of Spain, Portugal and Greece.

For older people in particular, the healthcare costs will usually be lower in Europe, if the country is part of the EU.

Ukraine would be an exception as quite a cheap country which doesn’t have great healthcare benefits for older expats.

The “best” places are often up and coming. In much the same way that being an expat in Spain or Greece in the 1980s and 1990s probably had its advantages compared to now, places like Bulgaria are probably better now than what they will become once they are more popular.

Latin America

Panama and some Central American countries have the easiest and cheapest visa process.

Apart from that, some parts of Mexico and Colombia are also up and coming, and it is a misconception that every area is dangerous!

Asia

The obvious area is South East Asia. The common one is Thailand. Cambodia and Malaysia can be good.

For something truly different, consider South Korea and especially Taiwan.

By different, I don’t mean there aren’t many expats in both countries. There are, but most are working age expats who aren’t location-independent like nomads or some business owners.

South Korea outside Seoul can be decent value for money, and Taiwan is especially good value outside of Taipei.

It has regularly been listed as one of the best places for expats to live. It is developed yet cheap.

So, you get good value for money, rather than just “cheap”.

Another off the beaten track idea would be any developed country. In most developed countries, you can find areas which are relatively cheap.

The UK isn’t cheap, and London certainly isn’t, but some parts of the Midlands and North aren’t bad.

The same is true in Germany, Japan and many other places. For example, you can get a 3–4-floor house in some parts of Okayama, Japan, for $1,200 a month.

That is cheaper than the capital city of many cheap countries.

How does one invest in the US stock market while living in Africa and be able to access funds as a retirement plan?

There are two parts to this question.

For the first part, you need to:

  1. Find a DIY broker or advisor who can accept for your exact country of residency
  2. You will be asked for your proof of ID and address for international anti-money laundering requirements
  3. An application form will be needed. You can usually do this online, but sometimes you need to scan it back by email.
  4. Send the money and make the investments. In terms of the specifics, the best thing for non-Americans is to invest in the S&P500 ETF domiciled on the London or Irish stock exchanges. If you buy the one domiciled in New York, you face withholding taxes. You can also invest in individual US shares, but most investors are better served going into ETFs.

If you are living in South Afrcia and a few other African countries, there are loads of choices.

For the majority of African countries, it is more specialist providers who cater to the market.

It only becomes very difficult if you are living in a war torn country, which is also sanctioned by the US. In which case, 99.9% of providers don’t accept.

For the second question, you can largely avoid putting all the money into a retirement fund structure, which is usually inflexible.

Just a normal brokerage account can indirectly be used as a retirement account, but with more flexibility to withdraw some money early in an emergency.

If you only want to invest in a retirement account structure, you can usually only use local providers who have access to the US stock markets, with all the negatives associated with that, such as exposure to riskier local banks.

One of the main reasons people invest in foreign markets is to “kill two birds with one stone” – get lower risks with overseas financial institutions and the chance of better returns in some cases.

Are global investors losing interest in U.S. stocks?

I see no evidence of that. Money is flowing into US stock markets. What is true, however, is that some savvy investors are looking for value in Europe and Emerging Markets.

On some measures, like CAPE, those markets are very cheap. So cheap, in fact, that US stock markets have only hit such levels twice in thirty years.

The bigger mistakes investors usually make is “recency bias” – they chase recent performance rather than long-term ones.

For example

  • So many investors wanted to get into technology in the 1990s. Few wanted to in 2000–2008, when some people thought the internet was overhyped with headlines like this:
  • Most investors wanted to buy emerging markets, and especially Chinese equities, in 2006–2007, and few wanted to in recent times
  • In the last few years, few people have wanted to buy European markets. They have become interested again after the recent excellent performance.
  • Too many investors wanted to buy oil ETFs in 2006–2007
  • Few investors were interested in the US stock market during the “lost decades” of 2000–2010 and 65–82.
  • Even though interest in US stocks has been high since 2011 or 2012, fewer people seemed interested before Trump’s 2016 election, the 2020 disputed election or when COVID-19 came along.
  • The Brexit vote harmed UK stock markets and not many international investors wanted in, but with the recovery of the Pound and markets, it has done OK.

The point is, beating on “unfashionable” markets can be quite profitable, as can investing at unfashionable time periods.

That doesn’t mean that people should just select stock markets that look cheap and are “unfashionable”.

The market isn’t stupid. Cheaper markets are often riskier, US stock markets are tried and tested and for that matter global due to the way big US firms operate.

Many emerging market companies also do IPOs in the United States. Yet the broader point is that don’t assume that markets that haven’t done well in recent times, will always be like that, and keeping to a plan is more difficult than people think.

If people stay globally diversified and have a long-term plan, they will do fine.

There is no need to always change your plan.

Pained by financial indecision? Want to invest with Adam?

Financial Planner - Adam Fayed

Adam is an internationally recognised author on financial matters, with over 281.1 million answers views on Quora.com and a widely sold book on Amazon

Further Reading 

In the article below, taken directly from my online Quora answers, I spoke about the following issues and subjects:

  • I was asked “what important business lessons have you learned from Amazon’s Jeff Bezos?”.
  • What are some investment options apart from the stock market?
  • Is the UK a good place to retire?
  • Is it better to take one or two big risks or many small investment risks?
  • What are the best banks for expats in South Korea?

To read more click on the link below.

Add a comment

*Please complete all fields correctly

Adam Fayed financial consultant WhatsApp