Consider applying your investing skills abroad, but only after you have gained some UK experience. You will need to consider the exchange rate as well as the share price. The US market is the first mover and other global markets follow. European markets tend to swing in tandem.
The internet is a key research tool. Through a search engine such as Google you can gain access to stock data, market reports and stock exchange profiles in various regions of the world.
If you have significant investing experience, consider emerging markets. The risks are high but so are the potential rewards. In Brazil, Russia, Turkey and India, share prices quadrupled between the start of 2003 and May 2006.
Jim Rogers, a legendary commodity investor, says that Russia and the ex-Soviet Union countries have terrible prospects, not least because they lack infrastructure and do not invest in themselves. He puts his faith in China.
But some who, unlike Rogers, are short-term stock traders have made a lot of money out of Russian stock market volatility in recent years.
American depositary receipts (ADRs)
Some markets outside Western Europe are so illiquid that, once you have bought shares, you cannot easily sell them. If you complained about how the deal was handled, you would as a foreign investor receive little priority. It will be almost impossible to conduct court cases from outside the country.
You can avoid these problems through buying American depositary receipts (ADRs), which are US domestic securities representing ownership of a foreign stock. General depositary receipts, or GDRs, are an equivalent that may be found in London.
ADRs work out slightly more expensive than the underlying securities, but they are liquid, and give you access to proper reporting information about the company. You will be notified of dividends and structural reorganizations, and there will be proper news coverage. To find out more, visit the ADR website of US investment bank JP Morgan at www.adr.com. |
