If Your Retirement Money Isn't Invested Globally, You're Toast

The only thing more maddening than the media's refusal to cover the retirement crisis -- with the exception of the Washington Post -- is the fact that most of us don't realize that our eggs aren't in the right baskets.

Despite the fact that two-thirds of the largest publicly held companies are based overseas -- and have been since Fortune magazine launched its Global 500 series 23 years ago -- only one-third of Vanguard's 401(k) participants invest in international funds. Only 28 percent of Fidelity Investment's participants invest internationally and the assets make up only 7 percent of their overall portfolios.

Why do we care? One of the untold stories of globalization in the 21st century is that international stocks have outperformed domestic ones. For example, while Vanguard's S&P 500 fund's 10-year return in 2010 was a measly 1.4 percent, its global equity returned a healthy 7.19 percent over that same decade.

Here's some more mind-boggling statistics:

• Not only is Toyota higher on the list than GM, which has descended from number one in 1990 to number 19, but Volkswagen is number 12.
• The world's biggest insurance company, Axa, is based in France; number 2, Allianz, is in Germany; and number 3, Assicurazioni Generali, is in Italy.
• While 18 of the "Global 50" are oil companies, only five are U.S- based.
• Of the four banks on the "Global 50," only one, Bank of America, is U.S.-based and ranks lower on the list than ING of the Netherlands, Banco Santander of Spain and EXOR Group of Italy. Citigroup fell from Number 16 in 2005 to 69 in 2011.
• There are only 14 U.S. companies in the top 50 -- and that's only three less than there were 23 years ago.

What's even more mind-boggling is that while our media may cover China's hacking into our computers, the most astounding inroad Chinas has made is hacking into our status as the world's power. It's no surprise that China passed Japan in 2010 to become the world's second-largest economy after the U.S, marking the end of Japan's 43-year reign. China has 73 companies on the Global 500 -- compared to 26 for Britain and more than France and Germany combined -- and that's up from only 16 seven years earlier.

Don't be surprised if a Chinese car maker winds up high on the list in a decade or so. China is not only going to be the biggest market for cars but it has the will and the money to make their auto industry world class, says Max Warburton of Sanford C. Bernstein & Co. in a recent interview with Bloomberg Businessweek. Of the more than one hundred Chinese automakers -- yes, you read it right -- SAIC Motor Corp. stands the best chance of becoming a world-class manufacturer as it has learned a "huge amount" from its joint venture with General Motors, Warburton said.

Bottom line: we may not be able to turn back the clock to 1950 when everything that was consumed in the USA was made here but at least we should reap the rewards of investing our retirement money where the future is.