So You Want to Invest in Foreign Countries? // ETF investing Foreign investment Investing overseas Offshore investment welcome to looking at the markets with David Moadel
let's talk about today's topic which is so you want to invest in foreign
countries talking about international exposure outside of the united states
which is where i am and we're probably many of you are in the United States and
maybe you're interested in investing in other nations
so let's talk about that investing in foreign countries might seem exciting
but if you don't know what you're doing
it can be disastrous for your portfolio before dipping into foreign markets
you need to check the volume of whatever financial instrument
you're using if it's thinly traded I would avoid it
you'll also need to have a thorough understanding of the country's history
government political system economic system
current events international relations and monetary policy
it also helps if you're conversant with the country's culture and i also want to
add that
yeah if you've actually been to the country and if you're familiar with that
nation and just how it works and the spirit of the culture that really helps
otherwise you're working off of secondhand knowledge which is not what i
recommend
so one way to invest in foreign countries is through ETFs or
exchange-traded funds while you would have profited if you had bought and held
the American SMP 500 for the past five years the S&P 500 etf five-year chart is
shown below
right here not every region of the world would have performed well for you if you
had bought and held for five years
alright so if you had bought SP why 45 years you would have profited quite
handsomely
so let's see how a buy-and-hold strategy would have done over the past five years
for other and this is just you know this is not every country
of course this is just a sampling i will start with ewg and that's the germany
ETF and first we're going to check the volume about pretty close to a third of
a million shares traded today not too bad
I prefer to trade ETFs and stocks that are in the millions
or better yet tens of millions or even hundreds of millions but at least this
is respectable but if you look at the performance over the past five years if
you had bought in hell but and held it you would have been down a little bit
about five percent
next we'll take a look at easy a the South Africa etf volumes
probably not as high as I would like it to be about 81,000 today so far
and if you had bought and held this for five years you would have lost
a little bit over twenty percent according to this chart it's it's down
22 . thirty-six percent over the past five years
not the kind of performance that I'm looking for this is FX I the china etf
and the volume is good
almost 3 million shares traded so far but the performance is not what i'm
particularly looking for over the past five years if you had bought and held
you would have lost about fifteen percent of your investment and
particularly in the last 5 i'm sorry the last year or so
the performance has been i would say substandard epi is the india ETF and
when I say the india ETF and you know it's it's not the only one but it's one
of the more popular ones in terms of volume and it has a about half a million
shares traded today so far
and over the past five years it has lost a little bit over ten percent in price
value to be more precise 11 . 71 percent according to this chart has been lost
over the last five years and we're going to look at RSX the Russia etf again
not the only russia etf but one of the more popular ones at least in terms of
volume and it has not quite
eight hundred thousand shares traded so far today
it's respectable and the performance however is not what I'm what I would be
looking for
if you had bought and held this etf for the past five years
well you can see where the trend is it's down it's lost 53 . thirty-four percent
according to this chart that's more than half of its value
not too good
so here's the take away my advice is straightforward
stick to what you know you're safe
consistent income only invest in stocks and etfs that you fully understand and
believe in
so hopefully that answers your question about international exposure
I'm not saying don't invest in foreign or international ETFs and stocks
I'm saying that you know if you think you're going to be the performance of
the S&P 500
well this may not be the way to go if you don't really understand what you're
doing
the results can be less than what you're looking for
to say the least and if you'd like more help with this or with stocks options
ETFs and investing in general please feel free to contact me at any time
my email address is David Modell @ gmail.com thanks a lot