Investing Internationally

[JWinvestments]

We're talking Englishmen on NASDAQ, Canadians on DAX and Americans on CAC.

What on earth am I talking about?

Investing abroad is something I do often, mainly on the NYSE.

Investing internationally carries more risks, there are the obvious forefront ones - it being a foriegn country, you have no solid idea of what is happening or what opinions are, just the etchi-scetch of what you look up, you may well think 'ChinaGolfSolutions' (if there is such a company?) is fantastic and way underpriced, but if it turns out they don't give the slightest about golf in China then that is bad news. These can affect your investments, but normally it is pretty easy to find relevant information.
E.g. I didn't expect the Chinese to like Junk food as much as they do - YUMBrands (holders of Pizza Hut, Taco Bell, KFC etc.) excelled.

The more important thing (I feel) that you to pay attention to: Currency.
You aren't just investing in Google, you are investing in the US Dollar. This can effect you largely. You may well make 10% profit on a US Stock, but if the £ rises 60% against the $ (example!), then we aren't seeing smiles. Working the other way around, if the pound drops 60% against the dollar, then we're getting huge gains.

Solutions?

- You don't need to be fluent in FOREX, you just have to avoid being a pleb. E.g. If Zimbabwe becomes stable, the last thing you would do is start selling Zimbabwean stock (therefore currency).
- There are some companies (well, probably a lot), which work with single currencies (but note that the stocks value still follows its currency, falling currency can sometimes be negative or positive for a stock.)

*It isn't the end of the world! We are talking dramatic changes in currency value, which does happen, but rarely, a 1-10% change won't break your arm off.

Interesting, and very true. Do you trade much on the LSE?

[JWinvestments]

Occasionally, it depends what in. I have had Falklands oil & gas (a loser) and Royal Dutch Shell (winner).

[Sutler]

I've never ventured outside of the TSX/NYSE. I have been hit hard by the changing dollar a few times, but nothing that caused me to have a loss. Although I have looked into 'foreign' companies, none have ever piqued my curiosity enough to actually buy them.

In the US market I only buy in to very promising (in my opinion) stocks. When H1N1 was freaking everybody out, I bought some of GSK (GlaxoSmithKline), one of the leading companies creating the vaccine. And ten minutes ago, I bought Royal Caribbean Cruises Ltd., following a rise of 10% last week, and a drop of 5% today. If I don't have a personal interest in an American stock, I don't like taking the risk.