USA vs. Europe & Asia

The theory that you could greatly reduce your risk by diversifying outside the United States isn't holding up that well in hindsight.





Avoiding Japan starting in 1991 wouldn't have even helped much, had you known to do it. Unfortunately, that's not exactly what investors were told to do.

January 28, 1991
New York Times: Japan Poised for Postwar Boom

"The world has seriously mistaken what has happened in Japan," said Richard Koo, a senior economist at the Nomura Research Institute. "The Bank of Japan is trying to slow the economy with every tool they have. This is a policy-led slowdown because it's the only way they can clear out all the excesses of the past few years, when monetary policy was too easy."

Added Susumu Kato, chief economist for Goldman, Sachs (Japan): "There are problems, but they're manageable. We don't see those kind of crash scenarios taking place."



Source Data:
Yahoo: S&P 500
Yahoo: FTSE 100
Yahoo: DAX
Yahoo: CAC 40
Yahoo: Nikkei 225
Yahoo: Hang Seng
Yahoo: Strait Times