It’s been a common question that we’ve been getting lately
Should I continue to own International Companies?
The question is understandable because international stock markets in aggregate have under-performed their United States counterparts for several years. These trends are commonplace when you look back through the history of the global stock markets with the U.S. or international companies performing better for a stretch. The key is to stay invested in the global marketplace for all publicly traded companies consistently to benefit from the diversification.
To help with the discipline to stay invested in these international companies while their shares have under-performed their U.S. counterparts, I thought it helpful to understand what companies are involved in the international stock markets. To do so, let’s look at a day in the life at a fictitious couple here in the United States to see the daily interactions that are possible with products sold by publicly traded international companies. In doing so, I hope to demonstrate the benefits of holding ownership in the strong well-financed publicly traded international companies.
A DAY IN THE LIFE: John and Mary are awakened for the day by their Panasonic clock radio. (Panasonic Corp., Ltd. is a Japanese multinational electronics corporation). John turns on the Sony television to see the news from overnight. (Japanese Sony is ranked 116th on the 2015 list of Fortune Global 500 and employs 125,000 employees) As they dress, John gets into a Hugo Boss suit (Hugo Boss AG, a German luxury fashion house founded in 1924) , and Mary dresses in Dior (French Christian Dior SE , is a luxury goods company.)
They sit for breakfast while enjoying Nescafe coffee and Nestle water from Nestlé. (Nestle SA is a Swiss company and is the world’s largest food and beverage company with over 325,000 employees. Nestle owns several major consumer brands such as Stouffers, Gerber baby food, Nestle Toll House, Dreyer’s Ice Cream, and many others ).
John takes his prescription medicine which is manufactured by Novartis and Mary takes a prescription from TEVA pharmaceutical. (Novartis International AG is a Swiss multinational pharmaceutical company and is one of the largest pharmaceutical companies in terms of global sales. Teva Pharmaceutical is an Israeli multinational pharmaceutical company specializing primarily in generic drugs).
They head out the door to their respective cars. John drives a Volkswagen (German company worth approx.. $47 Billion) while Mary owns a car from Toyota (Japanese’s Toyota Motor Corp has been in business over 75 years) which has Michelin tires (French company has over 100,000 employees). They are saving money to be able to lease their dream car a BMW 529 (German’s Bayerische Motoren Werke Aktiengesellschaft (BMW). is one of the best-selling luxury automakers in the world. The company is a component of the Euro Stoxx 50 stock market index.)
John needs to stop for gas at his favorite gas station selling Shell gasoline (Dutch’s Royal Dutch Shell is one of the six oil and gas “supermajors” and the 5th largest company in the world measured by 2015/2016 revenues (and the largest based in Europe). Mary puts on her Ray Ban sunglasses (from Italian company Luxottica Group S.p.A). Mary stops on the way at their bank – TD Ameritrade (a subsidiary of the Canadian multinational Toronto-Dominion Bank. The largest bank in Canada).
After work, the couple meets afterwards at a pub for a drink. John orders a Bud Light beer (owned by Belgium’s InBev-Anheuser-Busch. InBev has operations in over 30 countries and sales in over 130 countries ) while Mary orders a glass of Cabernet Sauvignon from Stag’s Leap this Napa Valley label is owned by Australian Treasury Wine Estates.
Over the drinks, they talk about taking a trip to California flying with Swissair on an Airbus airplane (Airbus Group SE is a European multinational aerospace and defense corporation headquartered in Netherlands & Swiss International Air Lines is the flag carrier airline of Switzerland).
This is just a representative sample of the more than 3,000 companies that make up the international companies that are publicly traded on many stock exchanges around the world. These companies in aggregate have been through many market cycles, but have withstood the test of time and their management and employees will continue to work hard to determine a way to stronger profitability in the future. Continue to have globally diversified portfolio that will continue to help you ensure that your retirement income keeps pace with the ever-increasing cost of living.
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