Foreign investing?

[ybbor]

Foreign investing?

Hi, I’m a fairly young, yet experienced investor. Until now, most of my investing has been in US stocks (usually large, Value type stocks), gold/silver, foreign currencies, etc…

Now i’m wanting to diversify in to foreign investments because I fear for the dollars continued purchasing power.

My goal would be to invest in larger (safer) Value style companies in asia, Europe, Scandinavia, Australia, and maybe India.

Where I run in to difficulty is identifying specific stocks to purchase… Do you know if there is like a fortune 500 for each country? What is the best way to identify foreign companies, and then to classify them as value, equity, growth, etc?

Thanks for all your help!
-Robby

[hipmatt]

Try PID.. an ETF that geared towards foreign value stocks..

The PowerShares International Dividend Achievers™ Portfolio (Fund) seeks to replicate, before fees and expenses, the International Dividend Achievers™ Index, which is designed to identify an international group of American Depository Receipts that have qualified as International Dividend Achievers™. These companies have increased their annual dividend for five or more consecutive fiscal years. The portfolio is rebalanced quarterly and reconstituted annually.

[hipmatt]

Or you can try BJBIX.. it is a mutual fund.
http://rps.troweprice.com/Files/fundfacts/BJBIX.pdf?pn=104389&pnlc=2

[Anonymous]

I suggest WisdomTree series of funds — also keyed to dividends which adds a level of comfort for foreign investing, but not limited to DRs so a broader/more diverse investment base. However if your sole concern is currency value you may want to be careful. You are late to the game — Warren Buffet has unwound his Fx trades. There is no fundamental reason why USD should continue to weaken against European currencies, esp. from a PPP perspective. It is the Asian currencies that need to appreciate. However many are pegged to USD.

[bob007]

The Indian stock market is overvalued. Your best bets are Western Europe, Canada, Nordic regions of Europe.

Look at foreign ADRs that trade in the USA
Unilever
Vodafone
Toyota Motors

Go to NYSE/NASDAQ websites

Some of them might be overvalued. You need to do your homework.

[heavyd]

Every single market in Asia has the equivalent of an S&P 500 Index. But typically the big cap names you seem to be attracted to are not cheap; real value in my experience can only be found outside the well known big-cap names.

Do a bit of research online; every major Asian exchange I invest in has an English language website that contains information about the exchange itself and the companies that trade on the exchange. In a few rare cases you can open accounts in local currencies and begin trading online.

There is lots of value out there — stocks trading on 3-4x earnings, stocks trading at a discount to net cash — but you won’t find it in the big index components, nor will you find it among the tiny handful of names that have issued ADRs.

HeavyD

[rseiser]

I think this is a great thread, and thanks for the good suggestions. I haven’t bought any stocks outside the U.S., although I am from Austria and have a brokerage account in Germany. It makes perfect sense though, since one has to take opportunities as they come, and in the U.S. they are limited, simply because U.S. stocks are popular. I have had a few ADRs and ETFs, e.g. EWM, which have run away from me for now. But I know I will get a chance to buy something again.
Often it is difficult to invest in foreign markets, since one either doesn’t have the knowledge or doesn’t have an account.
Regarding the first, I, for example, was reluctant to invest in my home country since I only knew U.S. stocks and how to research those. This is a good thing, since it doesn’t make sense to buy what you don’t know. But a few years ago I saw that there is an ETF for Austria, and I tried to find information. It seemed that the P/E was about 10. I thought that this wasn’t great since people in Austria are usually lazy, and so there won’t be much growth or excitement that would deserve more than 10. But speaking as a value investor, a P/E of 10 is pretty good, especially if it is stable earnings, and if they had a long time of consolidating. Then this can improve, and also often after a while of nothing happening, some good news comes along. Austria started to benefit from the east expansion of the EU. And while the earnings rose, the P/E rose, and one always got the earnings along the way, and it would have been an incredible gain to hold on for a while (chart).
I totally missed it, but it showed me that I should always keep looking for similar inexpensive opportunities.

[rseiser]

By the way, I just had something annoying happening to me. My brokerage in Germany contacted me to close my account. Even though I have a German passport, I properly declared that I am a resident in the U.S., and I always paid taxes on my capital gains in the U.S. They said that they are now required by the IRS to not take U.S. investors anymore, and there is nobody they can recommend who does.
I tried to find another brokerage in Germany, but no luck so far. Please let me know if anybody knows brokerages abroad who accept U.S. residents.
Are you coming to the meetup, heavyd?

[greekfire]

You might want to explore investing in a foreign-laden mutual fund of some sort. It would probably also make sense to figure out exactly which foreign areas/entities you are investing in and why…as well as the term length of your investment. The previous statement may sound redundant, but it can really help to narrow down your choices.

It might be beneficial to consult with a professional about it if you are still unsure. Afterall, they are the ones that research this stuff on a daily basis. This site’s host specializes in this sort of thing (I am not affiliated with his company). If you are a do-it-yourselfer, there is an absolute mountain of data (some free, some not) concerning foreign investments. Either way, I wish you the best of luck in your endeavors.

[ybbor]

Does anyone know of ‘EuroPacificCapital’… the brokerage firm started by Peter Schiff, the writer of the book ‘crash proof’.

I just got off the phone with them, and apparently they will put together a portfolio of foreign investments that are comprised of good dividend paying companies. Sounds great…

The problem is, I am a ‘working class stiff’, and don’t have tones of money to put in their account for investing… so I will probably be on the bottom of the totem pole when it comes to service. They say usually it takes at least $100k minimum to build a diversified portfolio.

If I don’t go with these guys, I would probably just buy about 10 different ETF’s from different countries. The dividends out of these funds suck, but at least it would get me global exposure.

I know I’m late to the game when it comes to foreign investing… I’m just hoping that I did not ‘miss the boat’…

Any thoughts?

Thanks!
-Robby

[heavyd]

RSeiser,

I’m unfortunately going to miss the meetup this Saturday, as I have to attend a friend’s bachelor party; I’m 41 years old and this may be the last one I ever attend — gotta keep my priorities straight!

Here are the official websites of what I consider to be the 4 most “liberal” exchanges in Asia; I am now restricted in my personal accounts, but in the past it was not so difficult for foreign nationals to open trading accounts in these markets:

Thailand: http://www.set.or.th/en/index.html

Singapore: http://www.ses.com.sg

Hong Kong: http://www.hkex.com.hk/index.htm

Malaysia: http://www.klse.com.my

If memory serves, in order to open accounts in Japan, Taiwan, Korea, and India, you must have a local bank account, and to open a local bank account, you need a local ID of some kind. More trouble than it’s worth, unless you have dual citizenship or a close relative who lives in one of those markets. China is also a pain in the neck, but you can get great access to plenty of ‘China Plays’ via Hong Kong or Singapore or even Bangkok.

I have enjoyed this site immensely over the past year+; in about a month this SD native is once again moving to NYC where my wife was happier and where our kids can get some special care. I have mixed feelings about the move…

I hope (and fully expect) that the Piggington-ites who are biding their time and waiting for a leg down in local real estate prices will be handsomely rewarded.

HeavyD

[4runner]

rseiser,

E-trade is apparently about to open up a global trading platform for US investors.

https://us.etrade.com/e/t/investingandtrading/globaltrading

[4runner]

Another question:

Does anyone know an easy platform for investing in non-dollar (e.g., Euro, Yen) denominated bonds?

[Author]

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