No. of Recommendations: 1
The reason I see to diversify into international companies id the different regulatory structure that exists in each country. If the regulators are blind to some new earnings scam (as they were in the Enron case), a whole lot of companies domiciled in that country or traded on its exchanges could go belly-up. PIMCO's head dude recently talked about the risk that US companies are overdosing on derivatives (the financial kind) to give them the appearance of an earnings boost (the bill will be due later). In another country, where derivatives are forbidden, that risk doesn't exist.

In other words "Don't make too much of your portfolio subject to the same kinds of risks."

A portfolio made up entirely of US stock and bonds is very dependent on the US economy. A downturn could lead to plunging stock prices and bond defaults.
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