If you want to own international stocks, invest in these 3 countries instead of China

If you want to own international stocks, invest in these 3 countries instead of China

This weekend, millions of viewers will watch one of America’s most famous entrepreneurs, Elon Musk, co-founder and CEO of Tesla, host Saturday Night Live.

Meanwhile, China’s best-known entrepreneur, Jack Ma, co-founder of Alibaba Group, has appeared just once in public in the last five months after the all-powerful Chinese government launched a regulatory offensive against his financial services company Ant Group.

This, in a nutshell, tells you why the U.S., for all its problems, is a great place to invest, while China, for all its strengths, is a bad one: The U.S. encourages innovation while China crushes it.

This column has argued for years that investors should put most of their money into U.S. stocks and avoid emerging markets, of which Chinese stocks comprise roughly 40%. U.S. stocks have outperformed emerging and developed markets by a huge margin over the past 12 years and that’s likely to continue as we emerge economically strong from the COVID-19 pandemic.

And yet for years U.S. investors have pulled money out of superior U.S. stock funds while shoveling dollars into lagging international and emerging-markets funds. Last year alone, according to Morningstar, investors yanked $241.2 billion out of U.S. stock funds, nearly four times as much as they withdrew