| |
| |
|
Investing |
|
|
|
Articles and Information about InvestingNetFinancial | Institutions | LoansColleges and Universities | Search Engines Foreign Investing - US Investors Still Missing Out?
Investors are still too slowly realizing what the academics have long pointed out -- adding foreign stocks to your portfolio will, over the long term, increase your returns and lower the overall risk of your portfolio. US investors embracing foreign investing are both realists and optimists. They are optimistic that the chances of doing well are better if they have at least some of their hard-earned money invested in countries with higher growth rates than here. They can't help but be realists when they see a new record high Trade Deficit for the US, almost monthly, as the figures are released by the Treasury. Until we get our fiscal and trade deficits under control, while short-term rallies are highly probable, no change in the long term weakness of the US dollar is likely for the foreseeable future. The problem is that most US investors, and their advisers, have not had the time, opportunity or inclination to become educated about and familiar with foreign investing, preoccupied as they are with just getting their own home market right. This lack of familiarity and comfort has put average investors off overseas markets. It has encouraged many investors to use relatively costly actively-managed mutual funds. These funds are often sold by brokers or advisers with additional agendas, -- such as to pay for a Financial Plan the broker has provided to the investor. Unfortunately, these actively managed funds so often also produce disappointing results. In large part this is because actively managed funds have relatively high operating expenses, but it is also because International fund managers, like their domestic colleagues, find it so difficult to sustain benchmark outperformance ?and of course private investors just love to chase historic performance! Even many wealthy investors do not have any individual foreign holdings at all. The New York Stock Exchange conducted a Survey of US holders of foreign stocks in 2000. The Survey showed that barely one in ten of investors who held stocks directly, also held a foreign stock of any kind. In my professional experience, this foreign stock was more often than not a Canadian stock. Very few investors on average really benefit from true regional economic and currency diversification from their direct holdings. Most investors still don't realize how easy it has become to trade and follow overseas securities. The development of low cost Exchange Traded Funds ("ETFs") that specialize in tracking the local Indices of different geographic regions, or even individual countries, has meant that the US investor now has made ETFs a real alternative to those expensive actively-managed Mutual Funds A convenient way for a US investor to take a direct investment in an individual foreign company exists if you use a form of security called an American Depositary Receipt, "ADR". These were first developed way back in the 1920's. ADRs are US securities, traded on US markets, and though the majority of them trade on the Pink Sheets, there are still several hundred from which to choose that trade on the New York Stock Exchange or NASDAQ, including dozens of household names like Nokia, Toyota, Sony and Shell. The huge strides made in the last few years in Internet information access, transaction ease, trust, and convenience, all mean you can now track the fortunes of, and trade, the ADRs of an Australian bank or a Mexican bank, just about as easily as you can a US bank ?and in your regular US brokerage account at that. There are downsides to foreign investing too. The possibilities opened up by the Internet are themselves tending to cause markets to correlate more closely with each other, reducing the usefulness of geographic investment diversification. The accounting, reporting, and stock market regulation standards of many foreign markets are frequently not as high as we take for granted here - though all these are rapidly changing for the better. And of course these foreign nations are sovereign states; with different degrees of political stability, and often with a different political outlook than would be broadly accepted here. The time to buy overseas markets is when they are most despised and least loved. And that certainly hasn't been the case for the last year or two; when overseas markets have delivered much better returns than has the US market. Still, investors generally ought to give a bit more thought to the routine 10 -15% of their portfolios typically recommended for foreign investments. Just avoid the latest hot International mutual fund of the Quarter ?any Quarter! Survey cited: http://www.nyse.com/pdfs/Research_NYSE_Supplement.pdf Duncan Ellis is an author and retired stock broker. He has worked both in the UK and USA as a broker. He specialized for many years in researching, trading, and advising US investors on foreign securities. He operates the specialist website http://www.tradeforeignstocks.com.
MORE RESOURCES:
Investing - Google News |
|
|
|
RELATED ARTICLES
Rules for Simplified Employee Pension Plans better known as a SEP Plans A SEP is a special type of IRA. Under a SEP plan the employer creates an IRA account for each eligible employee, hence the name SEP-IRA. 5 Ways To Protect Your Bond Portfolio From Rising Interest Rates The Federal Reserve recently raised its target federal funds rate for the first time since March 2000. This could be just the tip of the iceberg, though, as many experts believe rising inflation and a strengthening economy will spur continued rate hikes for the foreseeable future. Asset Allocation: Critical to Your Investment Success Asset allocation is a critical component of investing success. Both research and academic studies show asset allocation to be single most significant factor in determining your financial goals. How to Choose the Right Share Class You'll want to opt for the no-load or institutional share class instead. If you're a no-load investor who is determined to buy a fund that's primarily broker-sold, go through a supermarket and opt for the D shares. Seecrets on Investment: Tired of Making Huge Losses in the Stock Market - Part 1 Over 80% of all individual investors lose money in any given span of ten years. This figure is likely to be higher, given most people's reluctance to reveal their losses. Trading Tips No 3: Online Trading and Investing: Buy, Hold, and Hope So you have learned how to trade the markets by mastering a few trading tools like Moving Averages, Channels, Stochastics, MACD, or RSI - that is a great accomplishment achieved by only a few. However, having the tools and rules to trade markets successfully, year in and year out, is only half of the challenge. Why You Need To Buy and Sell Gold Coins (Part 1) The Value of Gold in a Era of Paper Assets, Stocks, Bonds and Mutual Funds.. The Basics of Tax-Free UK Financial Spread Betting Financial Spread Betting (or Trading) offers a tax free method of speculating on financial markets.Quite simply, if you think a particular index, share, commodity, currency or sector will rise, you place an UP bet. Investing In Sons Business Could Cause A Real Family Feud Q: My youngest son wants to borrow $5,000 to start his own business. My wife is afraid to tell him no. Useful Tips on Investing Here are some useful tips on investing. When you make an investment, you are giving your money to a company or an enterprise, hoping that it will be successful and pay you back with even more money. Holy Grail Investments Every year I go to the Money Show inOrlando, Florida. Thousands attend. Why Do You Want to Become a Online Trader? Motivational guru Tony Robbins teaches that the reason for doing something rates much higher than the methods you use to get the job done. In order to make your goal REAL, you need to attach severe, horrifying, intense and profound fear to failure. Investing Offshore for Retirement As an expatriate you are in a privileged savings and investing position. Make the most of the options available to you while you can, consider investing offshore for your retirement. High Volatility Investments Penny stocks and options are high volatility investments that attract both the trader and the long term investor because of the small amount of capital required to make substantial gains as compared with less volatile higher priced stocks. The long term investor buys a stock believing that a company's value will increase over time and the stock price along with it. Forex Trading Best Practices FOREX, the term for the FOReign EXchange market, is an international exchange market where currencies from many different countries are bought and sold. Both long-term hedge investors and short-term investors that seek quick profits use FOREX. Learn How to Lose and Risk Management One of the leading traders on Chicago Mercantile Exchange, because of a single trade lost everything!For all of his years of experience and money, he had failed to master the most important concept in trading: Risk Management!Each trader seems to have his own unique way of identifying market opportunities. One buys a stock in the hopes of never having to sell it, while another might hold a position in the market for a day or even just a few hours. Value Investing By definition, value investing is the process of selecting stocks that trade for less than their intrinsic value. A value investor typically selects stocks with lower than average price-to-book or price-to-earning ratios. Bankers in Denial Denial is a ubiquitous psychological defense mechanism. It involves the repression of bad news, unpleasant information, and anxiety-inducing experiences. Trading For A Living - Part 2 In part 1 of this article I started to look at the financial implications of giving up the day job to instead start trading full time for a living. There are more than just monetary considerations as we will see later, but for now, there are some more costs to ponder. Short Selling for Investors Shorts. Let's see.
|
|
Currency Trading | Investing | Leadership | Negoatiation | Real Estate | Stocks and Mutual Funds | Taxes home | NetFinancial | Institutions | Loans | Colleges and Universities | site map Search Engines | EZmatic | 0pops | GetSonic | TrafficFish | Health |
| © 2006 |
