Debunkery: Learn It, Do It, and Profit From It—Seeing Through Wall Street's Money-Killing Myths

PART 5

IT’S A GREAT BIG WORLD!

Americans are frequently villainized as too materialistic, loud, crass—so some believe. We don’t bother speaking French in France. Quelle horreur! What those Frenchies (and most others) don’t realize is we’re much more alike than they know. Almost all investors, from the US to France to Japan to Djibouti, fail to think globally. In fact, investors, as a group, are downright provincial!

Americans may say, “That’s fine for those other people, but America is huge! We don’t need to think globally. We have all the stocks we need right here in the awesome US of A.” The US is awesome! Nowhere else I’d rather live. California is problematic. But anywhere else! However, I’d never want to invest solely in the US. You shouldn’t either.

But more importantly, neither your portfolio nor your thinking should be constrained by borders—wherever you’re from. America is big (and awesome) but is just under 25 percent of total world GDP.¹ Big! But just a quarter of the world. In other words, what happens in America’s borders can be heavily influenced by the massive 75 percent of non-US world GDP.

Which means the world is much more correlated than most think. And it’s been that way not just in recent history, but for centuries—a point few appreciate. So investors who ignore the world miss powerful opportunities to better manage their portfolios. (Bunks 43, 44.)

That’s one benefit—a major one. But there are also major investor misperceptions that linger, just because folks ...