I was catching up on some reading today and worked my way through John Mauldin’s recent missive. He had an interesting factoid. According to Mr. Mauldin, 40% of the earnings for the S&P companies come from outside the U.S. Whoa!

I suppose I should have thought about that but I haven’t. That is one big number and to me, at least, calls into question a lot of the bullish talk I’ve been hearing about stocks and sectors. Assuming that it’s even in the ballpark of accuracy, it sure indicates a need to do some deep research before committing any money.

Although the world’s economies seemed to tank pretty much in unison that doesn’t necessarily mean that they will recover in a similar manner. The extent of the damage to economies is going to vary and it’s probably reasonable to expect some to take longer than others to repair that damage. So, the nature, extent and location of each company’s exposure to international risk is going to be a pretty important component of its prospects for recovery. It also throws the notion that you can identify likely sectors that will recover more quickly and play the game from that angle. There could be wide variations in performance for particular companies in any given sector depending on their international exposure.

Now, this all could play out in reverse too. The U.S. could lag while other countries leap ahead and so the international exposure works out as an advantage. Therefore, before you go all in, figure out your scenario and do some reasonable analysis of country exposure.