Investors whom plans to invest internationally should look to diversified their portfolios and invest over long term. In comparison, investors who invest into non-US stocks has typically have higher returns or lower volatility than a US only stock over a long term investment. When investing internationally, investors are looking for the highest possible returns and minimize the variability of returns. In other words, investor wants their portfolio to make the most money as possible with very little risk.

When investing internationally, investor should look for three factors that would achieve profitability. First, investor should look at the average returns of international and US markets. In the long term, historical date has show that the US market and the international market are very similar. In the short and intermediate term, stocks market and business would gain an advantage. But, in the long term, it evens out because developed economies develop in similar fashion. Also, inflation and exchange rate between currencies of developed countries are constant over the long run. In other words, in the long run international stocks and US stocks will even out through volatility. Second, if the long terms return on profits and the risk are similar then international investment are dependent on the correlation between markets. As long as there is an imperfect correlation between markets then international investments should reduce the volatility of an investor’s portfolio. Third, if expected returns and volatilities are similar to their historical values, the case for international investing rest on the future value of the correlation.

In conclusion, investing in the international market would help investor’s portfolio expand. Also, by investing in internationally in the short term would not gain profit but it would be detrimental for investor portfolios. So, when the market is in the bull stage, it means the market is in the profit stage with high returns. When the market is in the bear stage, the market is in the down turn stage with little or no return.

Sources:
Tokat, Yesim. "International Equity Investing: Long-Term Expectations and Short-Term
Departures." Vanguard.com. The Vanguard Group, May 2004. Web. 01 Dec. 2009.
https://global.vanguard.com/international/common/pdf/international_developed_052004EN.pdf