Investing in another country's stock market isn't about investing in their economy 🌍

Beware what you're getting when you invest abroad 🧐

We often talk about how the stock market is and isn’t the economy.

In the U.S., the stock market is tilted toward larger companies with greater exposure to goods. Furthermore, the stock market is driven by the profitability of companies all along the value chain. Whereas the economy, as measured by GDP, is mostly about revenue from final goods and services.

Importantly, the companies that make up the U.S. stock market generate about 30% to 40% of their revenue outside the country.

Similarly, when you invest in another country’s stock market, you’re not always getting as much exposure to the local economy as you might assume.