Over the long term, it’s been some 30 years since the United States exported more than it imported in a given year.Well, it is logical, because most of the earned money are spent within the country where good is produced: salaries, raws (if imported it is the same as local company buys it) and there are also different taxes which are going to government of the country, so what multinational is a net profit which is not that high for most sectors (and also locals are also free what to do with their net profit, they can move it outside of a country, so both ways are more or less equal in my opinion).
There are 20,000 U.S.-owned affiliates in various international markets around the world. It’s through these affiliates that U.S. firms deliver their products. Much more so than they do through exportation unless they're Boeing. Customer proximity is the key for multinationals.
Take the iPod for instance. The 30 gigabyte video iPod is manufactured in China by a Taiwanese firm. It sells for around $224 (wholesale), with China, the master assembler, receiving $3.70 from the total price. The bulk of the profits flow to Apple, even though the product bears the "Made in China" logo.
Though foreign investment in China is dwarfed by US investment in say Ireland the US companies have over 30 times more affiliate business in China than China has in the US.
All of them. Ship the secret ingredient and sell the product locally. Coca Cola recently bought the largest juice company in China and has considerable market share on soda already. This in turn puts Pepsi at a distinct disadvantage since they need to figure out what snacks the Chinese prefer like watermelon seeds and peanuts. Potato snacks are not quite so prevalent so Pepsi's chips are packaged as Peking Roast Duck and Spicy Crab.Which country could coca-cola be produced in? Brazil? India? Germany?
Keep at it but diversify your holdings (Right now you have 100% in international small company and developing markets firms) which by nature are the most volatile in price but often ceases to see reality. Not a bad thing for someone young but time not timing will make the difference. Some emerging market companies are extraordinarily cheap now and may get even cheaper but over time that cheapness will find price discovery.Hello. I just started my (401 k) 2 years ago. Last January 2008; I had $18,000 invested on MFS International fund (MIDAX), By June 16 I peaked at $27,000 (employer match contributions included) Today I am down 59.5 % at only $13,200... What options do i have, i believe it is too late to change it into a more conservative fund. Is there a chance that i might lose all of it?
My company's 401 K program is very good; matching 50 % of the first 6 % we save, plus giving us a bonus contribution a little bit larger than the employer match. Nearly $8,000 dollars came from my employer contributions in the last 2 years.
Thanks in advance.
In the meantime, rather than changing that particular fund have new your new contributions and match spread amongst the other funds available.
IE Large company dividend fund, balanced, US mid/small cap and even large company international.
Here's a small tidbit. According to Jeremy Grantham (renowned value investor who called for the outlier of (1.1) % real returns in US equities Sept 1998 ago (he only missed that projection by 3 additional days of trading in October) and 10.9% for emerging markets (they were 12.8%).
US stocks are just now at fairly value based on a dividend discount model in the US for the first time since 1994 but as he says when bubbles break they are usually very painful.
His assessment for the next ten years would be (broadly speaking)
2% real returns on US stocks
1% for bonds (likely assuming the Lehman bond aggregate index)
4-4 1/2% for high quality dividend paying US stocks. Dividends on the S&P 500 are the highest since 1991 so this would make sense. (IE Pfizer pays over 7% dividend to just hold the shares.)
5% for developed markets (companies are valued cheaper in Germany, UK etc vs. US)
7% for emerging markets (growing faster with low valuations and better GDP potential).
These numbers assume you can't add alpha (return above expected).
See his comments here. Not very pretty especially for China and the US.
http://www.gmo.com/websitecontent/JGLetter_ALL_3Q08.pdf
I think his quote on the recent crisis is quite appropriate for these times...
“We will learn an enormous amount in a very short time, quite a bit in the medium term, and absolutely nothing in the long term. That would be the historical precedent.”