Investors - Any one invest overseas? Like directly in overseas companies not through etf or mutual funds

[AccruedExpenditure]

I'm looking to make a purchase of an overseas security, and I was wondering if anyone on AT had experience in the area. Tips? Issues I should be worried about (esp taxation)?
-AE

 

[alien42]

i invest in foreign companies that are listed on US exchanges, avoids the 'issues' you are referring to.

 

[AccruedExpenditure]

Originally posted by: alien42
i invest in foreign companies that are listed on US exchanges, avoids the 'issues' you are referring to.

Unfortunately the company I'm looking at only trades on US market via ADR on the AMEX, does anyone have any experience with these types of shares. Pros? Cons?

 

[richardycc]

asian ADS stocks should do very well for the next few years....I own WX, SPIL, MPEL.

 

[imported_Tango]

Originally posted by: AccruedExpenditure
I'm looking to make a purchase of an overseas security, and I was wondering if anyone on AT had experience in the area. Tips? Issues I should be worried about (esp taxation)?
-AE

I'm always puzzled when I see this question... Of course I do. How can you not do it?

Foreign markets often have inverse Betas when regressed on the S&P 500, so that you can have lower volatility and higher expected returns. It's the holy grail of investments.

To answer your question: no taxation problems. You'll pay the relative local capital gain.
Issues: currency exchange rates.

Question: why wouldn't an ETF or mutual fund be better for you? The world is big, and doing the necessary research to identify single companies can be extremely time intensive.

 

[J0hnny]

I invest in foreign companies through ADRs listed on our US stock exchanges. Just a lot easier. Although you will pay foreign taxes even with ADRs.

 

[Miramonti]

Originally posted by: Tango

Originally posted by: AccruedExpenditure
I'm looking to make a purchase of an overseas security, and I was wondering if anyone on AT had experience in the area. Tips? Issues I should be worried about (esp taxation)?
-AE

I'm always puzzled when I see this question... Of course I do. How can you not do it?

Foreign markets often have inverse Betas when regressed on the S&P 500, so that you can have lower volatility and higher expected returns. It's the holy grail of investments.

To answer your question: no taxation problems. You'll pay the relative local capital gain.
Issues: currency exchange rates.

Question: why wouldn't an ETF or mutual fund be better for you? The world is big, and doing the necessary research to identify single companies can be extremely time intensive.

Examples of these foreign markets?

 

[AccruedExpenditure]

Originally posted by: Tango

Originally posted by: AccruedExpenditure
I'm looking to make a purchase of an overseas security, and I was wondering if anyone on AT had experience in the area. Tips? Issues I should be worried about (esp taxation)?
-AE

I'm always puzzled when I see this question... Of course I do. How can you not do it?

Foreign markets often have inverse Betas when regressed on the S&P 500, so that you can have lower volatility and higher expected returns. It's the holy grail of investments.

To answer your question: no taxation problems. You'll pay the relative local capital gain.
Issues: currency exchange rates.

Question: why wouldn't an ETF or mutual fund be better for you? The world is big, and doing the necessary research to identify single companies can be extremely time intensive.

I've got a couple company's that I've already researched into and like a lot.

 

[ponyo]

I own couple Brazilian ADRs. I pay foreign tax on the dividends.

Many ADRs typically have low trade volume. So liquidity is sometimes an issue if you trade in large volume but for most it shouldn't matter.

 

[imported_Tango]

Originally posted by: jjsole

Originally posted by: Tango

Originally posted by: AccruedExpenditure
I'm looking to make a purchase of an overseas security, and I was wondering if anyone on AT had experience in the area. Tips? Issues I should be worried about (esp taxation)?
-AE

I'm always puzzled when I see this question... Of course I do. How can you not do it?

Foreign markets often have inverse Betas when regressed on the S&P 500, so that you can have lower volatility and higher expected returns. It's the holy grail of investments.

To answer your question: no taxation problems. You'll pay the relative local capital gain.
Issues: currency exchange rates.

Question: why wouldn't an ETF or mutual fund be better for you? The world is big, and doing the necessary research to identify single companies can be extremely time intensive.

Examples of these foreign markets?

In the 2000-2006 period: Brazil, Russia, China, India, Turkey, Korea.

Western Europe has usually positive Beta when regressed on the S&P 500, although still provides diversification.

Edit: the part of my sentence you have not put in bold is relevant! You have higher expected returns and lower volatility when you build a portfolio with both these assets and the S&P 500. That's what low correlation or inverse correlation is for. If you only buy foreign assets the Beta between those and the US markets is meaningless.

 

[imported_Tango]

Originally posted by: AccruedExpenditure

Originally posted by: Tango

Originally posted by: AccruedExpenditure
I'm looking to make a purchase of an overseas security, and I was wondering if anyone on AT had experience in the area. Tips? Issues I should be worried about (esp taxation)?
-AE

I'm always puzzled when I see this question... Of course I do. How can you not do it?

Foreign markets often have inverse Betas when regressed on the S&P 500, so that you can have lower volatility and higher expected returns. It's the holy grail of investments.

To answer your question: no taxation problems. You'll pay the relative local capital gain.
Issues: currency exchange rates.

Question: why wouldn't an ETF or mutual fund be better for you? The world is big, and doing the necessary research to identify single companies can be extremely time intensive.

I've got a couple company's that I've already researched into and like a lot.

If you already researched the companies and like them, then go for them. Just factor in foreign exchange and political risk (if the companies are in countries where there is significant political volatility).

From a purely technical point of view everybody should have at least a 10-20 percent in emerging markets and another 20-30 percent in Western European equities. Expected returns would simply be higher in the long run and volatility of the total portfolio lower.

I guess for some American people there's a psychological barrier from buying foreign equities, or maybe it is just not practical for the average Joe because they feel like it's more complicate/time consuming.

I mean... the US markets are so big most people probably don't see a reason to look for more companies, but from a purely technical perspective the figures change a lot when you diversify internationally.

Of course only do things you feel absolutely comfortable with.

 

[Phokus]

Invest in Nigeria!

 

[rchiu]

If you wanna buy individual stock, ADR is the best way to go. But I wouldn't recommend buying single stock in foreign market. First of all, it's hard to get accurate financial info on those companies. Even though level 2 ADR requires the company to file annual reporting following GAAP standard, who knows what kinda accounting game they play in their country. Plus the whole idea of investing in foreign market is to diversify, and one company don't give you much diversification effect.

I think the best way to invest in foreign market is through fund or ETF. I am trying to create a portfolio of BRIC (Brazil, Russia, India, and China) ETF, still haven't decide on which ETF and what weight I wanna put in each yet.

I believe the tax on ADR/EFT is like US stock/index funds. Same capital gain and dividend rules.

 

[imported_Tango]

Originally posted by: rchiu
If you wanna buy individual stock, ADR is the best way to go. But I wouldn't recommend buying single stock in foreign market. First of all, it's hard to get accurate financial info on those companies. Even though level 2 ADR requires the company to file annual reporting following GAAP standard, who knows what kinda accounting game they play in their country. Plus the whole idea of investing in foreign market is to diversify, and one company don't give you much diversification effect.

I think the best way to invest in foreign market is through fund or ETF. I am trying to create a portfolio of BRIC (Brazil, Russia, India, and China) ETF, still haven't decide on which ETF and what weight I wanna put in each yet.

I believe the tax on ADR/EFT is like US stock/index funds. Same capital gain and dividend rules.

There are a few BRIC ETFs and many BRIC mutual funds. It really depends if you want to buy a single instrument investing in the 4 countries or you want specific instruments for each country so to choose your own weights and re-balance the weights when you want. In this second case of course you pay commissions every time you do it. In the first case you must let the manager decide your country-specific weights. Right now most BRIC funds overweight (significantly) Brazil and underweight Russia, for example.