Wednesday, 11 September 2013

There are incredible opportunities in International Investing.

  1. There are 16,000 public companies based in the United States.
  2. There are 49,000 public companies listed outside of the United States.  
  3. The American economy is the largest, most diverse on earth.  
  4. The American legal and regulatory regimes offer the most protection for minority shareholders.  
  5. Also, the U.S. market is less prone to wild swings than most foreign markets.
  6. The refusal to consider international companies makes about as much sense today as investing only in companies with two syllables in their names. 
  7. There are incredible opportunities in international investing.
  8. Many overseas markets, including the growing monsters of China and India, have improved their regulatory oversight by leaps and bounds.
  9. There are also markets with all the legal framework that are out dated, to be sure too.  Those tend to be obvious and better avoided.
  10. Besides, the increasing globalization of markets, and the explosion in individual company cross-listings and exchange-traded funds (ETFs), have made buying foreign shares easier than ever before.
  11. In fact, international investing can be as easy as picking a foreign country and buying an index fund based on the performance of its market.  Indonesia?  Check.  Brazil? Check.  Japanese small caps? Check.  European bonds?  You get the idea.
  12. To buy foreign equities, you have to understand some additional considerations and challenges.
  13. In the six months after October 2007, the Shanghai Composite Index lost nearly 50% of its value, wiping away $2 trillion in wealth for investors.
  14. This wasn't suppose to happen - the ascendancy of China is considered inevitable.  
  15. Only investors extremely familiar with the Chinese economy had a hope of knowing the right answer. 
  16. Point being, an investing thesis constructed on a skin-deep understanding of a country is likely to end with a suboptimal outcome.  And we try to avoid suboptimal outcomes.
  17. Investing overseas is not just a means of diversification.
  18. The one and only purpose to invest in companies overseas is far less complicated:  the opportunities beyond our borders are too good to pass up.
  19. You want your long-term savings tied to the best companies with the best prospects.  
  20. You would miss out on many great stocks by imposing an arbitrary geographical limitation on your investments.
  21. It's unlikely that the best investments are all going to be just in your own country.  
  22. The U.S. has the potential to do quite well.
  23. The U.S. represents 5% of the population of the world and 24% of its gross product.
  24. The U.S. had her days as the greatest growth economy in the world.
  25. In 2007, the U.S. economy grew at a rate of 2.2%.  
  26. But, many other countries outside the U.S. have economies that grew at higher rates, and when these are measured in depreciating dollars, these economies are growing even faster.
  27. Your approach to international investing remains the same:  bottoms-up, business-focused.
  28. The only key difference is not the how, it's the where.
  29. The approach encompasses small caps and fast growers and dividend payers and value stocks.
  30. When we disregard borders in our search, there is almost no difference between international and domestic stocks.  
  31. The scorecard for foreign stocks is still based on their ability to turn profits.  
  32. Economies around the world are growing quickly.
  33. That's why international investing works.
  34. You have an opportunity to examine mature industries domestically and find those same industries in their high-growth phases elsewhere.
  35. Diversification, while important, is not the goal of investing.  
  36. The goal is you want 100% of your money invested in companies that don't suck, and 0% in companies that do - and that's regardless of where the company is located.  
  37. International investing is not about exposure to a particular sector or style.
  38. International investing is about opening up all the doors available for your portfolio: it broadens frontiers.

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