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| MODULE 15 |
| INVEST IN FOREIGN MARKETS EFFICIENTLY & INTELLIGENTLY |
8 Crucial Lessons
Definitions You Will Need to Know for This Module:
Pink Sheet Stocks: In the U.S., a daily publication compiled by the National Quotation Bureau with bid and ask prices of over-the-counter stocks, including the market makers who trade them. Unlike companies on a stock exchange, companies quoted on the pink sheets system do not need to meet minimum requirements or file with the SEC.
American Depository Receipts (ADRs): Traded on the American stock exchanges, ADRs are negotiable certificate representing a specified number of shares (or one share) in a foreign stock. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. Most ADRs represent a number of shares of foreign stock. For example one ADR can represent 10 shares of a foreign stock.
LSE: London Stock Exchange
TSE: Toronto Stock Exchange
ASX: Australian Stock Exchange
Bid Price: In simple terms, the highest price that a market maker is willing to buy a stock from a seller.
Ask Price: In simple terms, the lowest price that a market maker is willing to sell a stock to a buyer. |
To maximize the returns in your stock portfolio you have to be heavily invested in foreign markets outside of your country, no ifs and or buts. If you live in America, for the rest of this decade (2000-2010), the overwhelming majority of your portfolio should probably be invested outside of the United States. At certain points in time, the strongest performance of an industry sector will be in companies that are domiciled in other countries.
And even if a sector is booming in your country, there are strong possibilities that the companies that drive this sector reside outside of your country. For example, some of the companies that feed China’s energy needs are located in Australia, and Brazil, and other South American countries. Ignore the stocks in these countries and you may be ignoring some of the best opportunities in the world.
Furthermore, in times of weakening local currency, investing in foreign markets can provide additional benefits. In countries that do not have prohibitive tax structures for foreign investors, a foreign investor can benefit not only from stock appreciation but also from the strengthening of foreign currency.
Module 15 will tell you 8 crucial lessons to consider when investing in foreign markets. Furthermore, you’ll learn about the many traps you need to avoid when investing in foreign markets that 99% of financial consultants fail to explain adequately.
In past years, as recently as 2004, major investment firms in the U.S. were spreading myths that investing in foreign markets was risky because they were just not performing adequate research in foreign markets to recommend individual foreign stocks. In mid-2006, when U.S. markets corrected steeply, all of a sudden, major American firms were talking about the necessity to invest in foreign markets and not to be too concentrated in domestic markets. So what happened here? Did foreign markets, in a couple of years, increase their compliance and transparency in conducting business to such a marked extent that all of a sudden, they went from being “risky” to a “necessity”. Or did this change of strategy come about because it was a “marketing” necessity, and they knew that they would start to lose clients if they did not start marketing this mantra? By now, you, of course, know my answer.
Even so, many large American investment firms are still investing their clients in a manner that is more conducive to their bottom lines, investing their clients in mutual funds in foreign countries instead of individual foreign stocks. And surely, no matter what country you live in, this “sales” strategy is being employed.
Learn how you should be invested in foreign markets, and why you need to find a consultant or advisor that will invest your portfolio in the “proper” manner versus the “lazy” sales and marketing-driven manner.
Content: 8 pages
Number of Lessons: 8
Exam Questions: 9
Estimated Time of Completion: 1 – 1 1/2 hours
Note: Page content is calculated per 8.5" X 11" pages, 12-pt. Times New Roman font text. Web pages may not correspond exactly to page content numbers as listed above, as some single web pages contain 3, 4, or 5 or more "pages" of information.
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