Reply #43: U.S. investors turning overseas to boost portfolios

[54anickel]

http://www.newsday.com/business/ny-bzcov024101360jan02,0,5755462.story?coll=ny-business-leadheadlines

All the talk of the falling dollar and investing abroad has piqued Ken Molloy's curiosity in foreign stocks. So, in 2005, he plans to experiment a bit by putting a few thousand dollars into international mutual funds and to bone up on the subject by reading Investor's Business Daily.

But the Forest Hills resident is not quite ready to fully plunge into overseas markets. Though he's been in the U.S. stock market for about a decade, Molloy doesn't feel comfortable enough to pick individual companies outside the states just yet.

"It's difficult for me to keep a pulse on the foreign climate and economy," said Molloy, 45, an associate court clerk in Brooklyn who is a co-chairman of The Fight Club investment club in Garden City South. "I can manage my domestic holdings, but for foreign investing, I'm inclined to leave it to a professional."

Like Molloy, many investors are setting their sights overseas for 2005. Foreign stocks are expected to prosper since many are considered fairly cheap compared to U.S. investments and since they should benefit if the dollar continues to fall, experts said. Also, look for better payoffs from large-cap companies and more interest in dividend-paying stocks.

On the fixed income side, favor short-term and inflation-protected bonds, experts say.

Of course, you shouldn't make wholesale shifts of your holdings in hopes of finding the hot stock or sector in 2005. But January is a good time to look at your portfolio and see whether it is still in line with your asset allocation goals. If not, you may need to take some profits from investments that have appreciated and move them into other areas.

more...