Is It Time to Buy the World?

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Recently, my husband and I spent a week in Argentina. We traveled from the fabulous city of Buenos Aires to an estancia, or ranch, in the Pampas to the wine country in Mendoza. It was a fantastic vacation (a belated honeymoon, actually). The food throughout the country – particularly the famous Argentinean rib eye – was as good as I’d been told. (Hot tip: Keep an eye out for Francis Mallmann, the Bobby Flay of Argentina. He has cookbooks, restaurants and a television show. I fully expect to see him soon on “Iron Chef.”) The people, who stopped us on street corners whenever we consulted a map to see if they could help, were as friendly as reported. And the strength of the dollar made spending money on everything from dinner ($65 for two including wine) to fantastic designer handbags (about $80 each) a kick.

And yet, I’ve never felt further from home. When I’ve traveled before – to parts of Europe, Canada, Central America – the world never felt quite so big. It wasn’t just the fact that the only available English-language newspaper, the Buenos Aires Herald, had a strange world perspective. (Roger Federer’s play at the Sony Ericsson Open was front page, above the fold.) Or that it was impossible to get a New York Times or International Herald Tribune that was less than three days old. It was a conversation with a college-educated driver hired to take us to the airport in Mendoza who told us that many of the people in Argentina believe that the United States itself planned and carried out the events of 9/11 to give us an excuse to go to war against Iraq.

When I got home – and back into a work frame of mind – I couldn’t stop thinking about the New York Times panel I’d participated in the week before I left. Saturday “Your Money” columnist Ron Lieber gathered me, Consumerist blogger Ben Popken and Princeton economist Burton Malkiel, author of A Random Walk Down Wall Street, for what he called a “financial tune-up.” A participant asked Malkiel a question about the correlation of world assets. We used to tell people that by investing in different countries – buying an international stock fund, for instance, as well as a broad domestic one – you’d have your bases covered. One would likely go up if the other went down, providing the sort of insurance that is the precise purpose of diversification. The economy has gotten so global that these relationships are a little out of whack. Lately, these funds are just as likely to move together as they are to diverge. What’s an investor to do?

Malkiel’s advice: Buy the world. Jim Cramer says, “There’s always a bull market somewhere.” Even after being trained as a stock analyst on Wall Street, I have absolutely no confidence in myself to find it. So my strategy has always been to go broad, to buy everything. That way whatever goes up, I own it. But, as Malkiel noted, the definition of broad – the availability of everything – has changed. Recently both Vanguard and iShares have launched all world products, in the form of an index fund and ETF, respectively. Malkiel says he’s in. Particularly after my recent vacation, I’m getting in, too.

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