Fisher Investments’ Founder, Ken Fisher, Debunks: “Who Needs Foreign?”

In this installment of his Debunkery series, Ken Fisher addresses the question "Who Needs Foreign?" and argues that foreign stock allocation is important for most long-term investors. Fisher begins by establishing his core principle: correctly categorized stocks of different types—growth vs. value, large vs. small, U.S. vs. non-U.S.—should deliver similar returns over the very long term, though short- and intermediate-term returns can vary significantly based on expected earnings changes.

Fisher acknowledges that recent years have seen U.S. stocks significantly outperform non-U.S. stocks, leading many investors to adopt a passive S&P 500-only strategy. However, he argues this approach carries concentrated risk: if something negative happens to America's economy or markets, a U.S.-only portfolio provides no hedge. He emphasizes that historically, periods of U.S. leadership have been followed by periods of non-U.S. outperformance, with these cycles lasting 10-15 years—long enough to feel permanent to investors.

Fisher illustrates his point with the technology sector, noting that while the U.S. dominates tech innovation, foreign holdings like Taiwan Semiconductor and ASML provide additional opportunities. He also highlights that non-U.S. stocks have larger weightings in industrials and banks compared to the U.S., providing natural diversification benefits when those sectors perform well.

Crucially, Fisher raises the question whether the U.S. market has entered a period of multi-year underperformance relative to foreign stocks, noting that 2025 has already seen U.S. stocks drop significantly in global rankings. He concludes that global diversification provides the best risk-adjusted returns and highest probability of achieving strong long-term results, with lower total volatility than U.S.-only strategies.