Risk in American portfolios

Risk has been increased in American portfolios not only by
adding more American stocks but also by beginning to add stocks
from abroad, especially as the fall in the dollar in the past several
years has made buying abroad much more profitable.
Treasury data on the purchase of foreign stocks by Americans
shows that the dollar total has risen dramatically. Annual net
purchases of foreign stocks did not get over $10 billion until
1989 and by 2005 they had zoomed to over $127 billion. For the
12 months through November of 2006, Americans were buying
foreign stocks at a pace that would bring them close to the 2005
total. Purchases of foreign bonds, which used to be more popular
than foreign stocks, totaled $47.1 billion in 2005, the third highest
yearly total ever in the history of the Treasury data. At the furious
pace of buying through November of 2006, Americans
were en route to more than double that 2005 total and set a new
annual record.