Active Investors

jdhdiggs

Just seeing if anyone else is actively trying to get their money out of the US economy and into other countries like Brazil, India, and China?

If so, what research have you done? Thus far I have only used i-shares index funds and would like to locate some good online resources for investigating foreign markets.

shack

I am a firm believer that any serious investor should have a very good understanding of what they are investing in and that is tough to do in the foreign stocks. While foreign markets are attractive they should be approached very cautiously. There are just not the safeguards in countries like Brazil, China, India that we have here. There is no version of the SEC in those markets that is reliable. Remember when Brazil not too long ago had inflation approaching 40%. While the govt of China is very pro business "right now" it is too unstable to predict their stance long term. Research a few mutual funds that invest in foreign markets but keep it as a small percentage of your total portfolio (20% max IMO). Do not give up on the US economy. It is still the SAFEST equity market in the world. There is still lots of room for long term growth (and relative safety) if you don't get too greedy.

jdhdiggs

Shack: That's why I'm looking for a place to get informed. I really, REALLY don't like the US economy right now and for the next 2-3 years. The only indicator right now that looks good is unemployment-everything else is pointing to an upcoming recession (IMHO of course). Yes, it's safe from the perspective that the SEC can help keep an investor informed and help protect from cooked books, but that's about it.

shack

So you believe that if the US economy goes into a recession that it won't have a serious impact on foreign markets? I'm of the opinion that even in a recessionary period that I would want most of my money in the US. Recessions are excellent times to buy stocks if you have the cash, time and patience to hold on.

Sami

Most of my money is on foreign stocks. I do my own research and invest very carefully but aggressive. RIO, TKC, AMX, STO, SDA etc. So far so good.

jdhdiggs

You'd put your money out before the recession and back in after! but yes, a collapsing US economy and a falling dollar would be a drag on most economies, especially Japan, Korea, and Europes but investments in India, China, Australia, Brazil, etc... would net better off with a struggling US economy. The falling dollar and the overvaluation of the stock market and housing market in general is leading me to believe that the US is not the safest investment location for the next couple of years.

In the end, you outlined my three choices: Cash out and wait for buying, stick with it, or move it outside the US. I have a fairly good idea what would happen with the first two, but am looking for more info on the third.

Sami:

Where do you get your research?

Sami

jdhdiggs wrote: »

Where do you get your research?

TD Ameritrade, finance.yahoo.com etc. Be careful of Chinese market right now, it might run into huge troubles soon and while it has huge potential it also is very highly priced. Brazil might be safest bet right now of all the markets, including USA.

shack

jdhdiggs wrote:

but investments in India, China, Australia, Brazil, etc... would net better off with a struggling US economy.

Guess again. We are China's largest trading partner. A weak US economy would hurt China significantly and have a negative impact on the others as well.

jdhdiggs wrote:

The falling dollar and the overvaluation of the stock market and housing market in general is leading me to believe that the US is not the safest investment location for the next couple of years.

The stock market is not overvalued (especially not now). The main drag on the markets is the financial sector which is very depressed because of the mortgage and CC issues. They will always be propped up by the FR and Treasury so a collapse of any major banks just won't happen. They will be back. Residential R/E may take a hit but commerical (a much larger segment) is still a good value and shows no sign of weakness. I think you are too bearish on the US economy...especially in relation to the rest of the world.

jwhitakr

If you are going to invest in foreign markets, or just looking for help on where to invest a sizable chunk of change, my advice would be to enlist the help of a financial advisor. Unless you are going to spend the time needed to do the research (which maybe you are planning to do... ), I would say that a good, solid, trusted financial advisor is well worth the money.

If you are just looking for learning about foreign markets and to play with a small amount of money, then by all means go for it and look to invest it outside the U.S. But, for me at least, I don't have the time or the desire to do all the research it would take to feel confident investing in non-U.S. companies.

jflail2

And speaking of commercial RE, many of those companies are now investing abroad as well in the form of a joint venture. It takes a lot of the risk out of the company's hands, and puts someone in their corner that is entrenched/ well versed in the market they are expanding into.

Kimco (KIM) is just 1 example of a US shopping center REIT that has recently expanded operations to include JV's in both Russia and Brazil. Prologis (PLD) is another REIT (Industrial) that has expanded operations significantly outside of the US predominantly through joint ventures.

There are many ways to diversify your portfolio geographically, including investing in US companies that are themselves investing abroad in a sensible, conservative manner.

Sami

It takes the same amount of research whether you're investing abroad or US. I don't really see the difference.

jflail2

Not quite Sami, b/c disclosure varies a pretty good bit from country to country. We're lucky enough to have the one stop document shop that is the SEC for a great majority of our data needs.

What has to be disclosed (and how clearly) is not nearly as prevalent in other countries/regions (especially emerging markets.)

Other countries, such as Japan, are highly regulated, but good luck finding much in the way of documents in English........believe me, I spent months looking for an SEC equivalent with English docs.

Finding reliable sources of data is a royal pain in many international countries.....Not to say they're all like that of course. Most everyone in the EU, HK, Singapore, etc have good information available.

The other part to investing abroad is understanding the data. What can be net income in one country, could be considered book value per share in the next and NAV in the 3rd. Honestly, the ability to compare financial line items across companies/countries on an apples to apples basis is a borderline impossible task, especially considering differences in accounting standards (even small differences for the majority of non-US companies that have adopted IAS/IFRS.)

It can be done, but believe me, researching abroad is indeed more difficult than in the US.

Now if XBRL were to be adopted worldwide.........

shack

Not only must you understand the data, what's being reported, how it's being reported, what standards are they using, etc... IMO one must also have a reasonable knowledge of the business culture of the country or region. Some idicators that may be "red flags" here may be "nomal business proceedures" elsewhere. If you are not using a reputable financial advisor then you should understand WHAT you are investing in. There is nothing more idiotic than investing in something because so and so said it was a hot stock.

jflail2

Exactly Shack. Even the largest mkt cap US companies would do well to begin their international foray in the format of a joint venture. Nothing beats local knowledge of how things are done......

Agreed, never ever ever invest in anything someone tells you is a "hot stock" unless you happen to be eating lunch with Warren Buffett or Sam Zell or someone along those lines......

shack

jflail2 wrote:

Agreed, never ever ever invest in anything someone tells you is a "hot stock" unless you happen to be eating lunch with Warren Buffett or Sam Zell or someone along those lines......

I bet even they would tell you to familiarize yourself with the stock/investment to make sure it fit your investment strategy.

jflail2

True. But if I were sitting with the likes of those 2, I'd be a bit more willing to go out on a limb.....

Sami

I only suggest stocks to look at, not buy. The only time I told my friends to buy something, the stock doubled in short time. The funny thing was when I sold the stock, the sale price was the 52wk high for 2-3 months.

Oh yes, a foreign stock too, Japanese. NSANY.

schwarcw

My financial advisor has but a bunch of my 401K into various Pacific Funds, and other foreign stocks.

Has anyone noticed Google has doubled their stock price this year???

Sami

Yep, so have many others.