According to Maslow's hierarchy of needs, a sense of security is one of humanity's most fundamental requirements. We need a stable, safe, and protected environment to free ourselves from fear and anxiety. Therefore, when considering overseas investments, a lack of this sense of security often deters many individuals. Investing our money in distant markets, potentially lacking familiarity with foreign assets, and being unable to intuitively sense the fluctuations in overseas economies are all factors that contribute to this feeling of insecurity. However, from a rational perspective, diversifying assets across different countries is extremely important. As Ray Dalio of Bridgewater Associates stated, "The holy grail of investing is to find fifteen or more uncorrelated return streams." It is presumably difficult to find so many high-quality, low-correlation return streams within a single country. The Yale University endowment fund consistently allocates approximately 15% of its portfolio to international equities, while its allocation to U.S. stocks is often less than 5%. The reason is simple: when the majority of your investments are influenced by the U.S. economy, it becomes necessary to seek out high-quality sources of return that are not affected by it. The same logic applies to high-net-worth individuals. If you still have reservations about overseas investing, let's delve into an analysis of its necessity.

1. Accessing Quality Return Streams Independent of the A-Share Market From July 2011 to July 2021, the U.S. S&P 500 index delivered an annualized return of 12.42%. Despite inherent volatility, it provided investors with an excellent return stream over the long term. For domestic investors in China, the significance of investing in U.S. stocks also lies in their low correlation with A-share assets. Comparing the trajectories of the CSI 300 Index and the S&P 500 since 2017 reveals clear differences in their cycles and fluctuations. Although A-shares have accelerated their international integration in recent years, with rising foreign ownership, the correlation between A-shares and U.S. stocks remains relatively low. From 2017 to the present, the correlation between the CSI 300 and the S&P 500 is only 0.58, meaning that in 42% of the time, the movements of A-shares and U.S. stocks have not been aligned. Differences in economic environments, market liquidity characteristics, and developmental stages between the Chinese and U.S. stock markets contribute to their relatively independent price movements. An asset class offering over 12% annualized returns with low correlation to one's domestic economic environment certainly warrants consideration for portfolio allocation.

2. Abundance of High-Quality Core Assets Overseas The previous point compared markets at an index level. Delving into specific financial products, there are also numerous excellent management firms overseas. The most well-known example is Warren Buffett and Berkshire Hathaway. If you had invested in the S&P 500 in 1964, your investment would have grown approximately 200-fold by the end of 2020. However, if you had invested in Berkshire Hathaway, it would have grown by about 28,400 times. Beyond subjective investors like Buffett, who aim to identify great companies such as Coca-Cola, Apple, and Amazon, there are also many quantitative institutions overseas that extract alpha from data. Numerous high-quality products can provide investors with attractive excess returns, and the goal is precisely to identify and present these products to domestic investors.

In summary, we observe that there are many high-quality return streams available overseas. These streams are independent of A-shares and the Chinese economy, offering strong value for domestic investors. Simultaneously, there are many excellent global financial products providing long-term outperformance.

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