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Action Plan

Although it is a bit of a cliché, the financial world has indeed become a global village, and it is foolhardy for investors to ignore what is going on overseas because they view the American market as their primary focus. Like it or not, at a time when the U.S. economy is dependent on the kindness of strangers to support substantial financial imbalances, it is possible that a coup in the Mideast or an earthquake in Asia might potentially have more impact on the Dow Jones than an unexpected interest rate move by the Federal Reserve. However, because the domestic press often emphasizes a distinctly American-centric point of view, it can make sense to seek out other sources to get a more complete picture of what is taking place outside our borders. As an added bonus, foreign publications often provide an alternative—perhaps, even a more objective—look at what is happening here. For other views, turn to resources such as www.ft.com, www.economist.com, http://news.bbc.co.uk, and the overseas editions of The Wall Street Journal.

There is an old saying that goes, “When in Rome, do as the Romans do.” In the investment arena, you do not actually have to be based in far-flung locations to adopt that perspective, but forcing yourself to look at the world through others’ eyes can often provide useful insights that will add to your overall understanding of the big picture. Aside from that, it is wise to assume that foreigners may not necessarily act and react like domestic players when it comes to the latest data or developments, particularly those that pertain to hot button issues on the macroeconomic and geopolitical fronts. For example, though most Americans admire the dominant role the nation has had on the world political stage, the view of everyone else is much more ambivalent—some resent what the country stands for, while others look forward to continuing American supremacy. Unfortunately, it seems that lately more people are leaning towards the former.


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