This photo was taken on Montpelier Beach in Nevis, a tiny island in the Caribbean that plays a big role in North American history. Christopher Columbus sailed past Nevis on his second trip across the Atlantic. John Smith landed at Nevis on his way to Virginia in 1607. When I was on Nevis I visited the site where Alexander Hamilton was born, and another where Admiral Horatio Nelson was married.
In the late 1600’s, Nevis was one of the most important islands in the world. Back then the island likely produced more revenue for the British Empire than all the North American colonies combined! As I spent my honeymoon in Nevis, I couldn’t help but think about how much the world has changed.
Investing to evolve
The world changes slowly but it also changes a lot. I use this approach when helping clients construct investment portfolios for generations. Families receiving and passing on inheritance tend to approach investing with a longer term perspective than other investors. Stock picking and jumping from one investment to another each year doesn’t help, but clients must shift their investments over time to evolve with global business.
In the early 1600’s, Spain was a huge power. Western Europe was the epicenter of commerce. North America and Australia were virtually non-existent as economic forces. Think back even less than 100 years ago; until fairly recently, most US citizens only invested in US investments. Now almost every investor has some foreign exposure.
The lesson here is that investment portfolios cannot remain unchanged as the decades and centuries go by.
At the same time, it is important to make portfolio changes patiently and thoughtfully, and that means not jumping around the globe year by year. Piling into Japan in the late 1980s or into the US in the late 1990s would have produced poor long term outcomes.
As I work with Foster Wealth clients, navigating global investment exposure is a critical part of my approach to investing for multiple generations.