And as world markets become more integrated, the limits will be more easily reached. Investors should still be able to profit handsomely from diversifying. One good combination of stocks to own would be from Switzerland, Japan, U.K. and Australia. Emerging markets also vary in the degree they move with trends in the world's major economies. For example, Hong Kong and Argentina, with their currencies pegged to the dollar are vulnerable to rises in U.S. interest rates, as is Singapore, with a high dollar component in its trade-weighted currency basket.
Risk is almost inevitable in any investment.
Most assets carry the uncertainty of whether they will realize a return in the future, and if so, how much. Stock prices move up and down and dividend yields may vary from year to year. Unfortunately, if you wait long enough, it loses in purchasing power. Even securities issued with the full faith and credit of the U.S. government are not riskless. The price of a U.S. Treasury bond maturing in 30 years may fall in a year if interest rates rise.