# Risks of owning international securities



## darien44 (7 October 2022)

I was thinking about the risks of owning direct international stocks versuses being biased toward our home market.

I  was just reading a chapter in Phelp's 100-1 in the stock market, where he mentioned that UK holders of US stocks saw them all sequestered by the government in 1941 to pay for the war effort. I'm sure there are plenty of other examples where citizens holding foreign stocks are potentially not well protected.

Just throwing this out there. Not saying don't buy foreign securities, but are there risks that go ignored as many look toward the juicy high returns of international companies?


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## divs4ever (7 October 2022)

your geopolitical is doubled ( at least , depending on which two nations are involved )  do the returns look so juicy after that is factored in ?

 ( and yes i hold ASX-listed stocks  where the company operates in New Zealand , PNG and Zimbabwe )


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## waterbottle (7 October 2022)

A few that come to mind... 

Currency risk
Tax risk
Regulatory risk
Mechanics risk I. E. Some tend to be more volatile than others and will affect drawdown
Political risk


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## divs4ever (7 October 2022)

waterbottle said:


> A few that come to mind...
> 
> Currency risk
> Tax risk
> ...



 i don't see  currency particularly as a risk  , but then the majority of my income are from Australian head-quartered stocks , sure there will be fluctuations  but i see that as a hedge against a comparatively weak Australian dollar ( and when the Aussie dollar is strong , skinny divs from the international stocks   don't ruin my income much )
 tax and regulatory risk  absolutely  but ( maybe naively ) i bracket that in with political risk ( in each nation )

 obviously if the majority of your portfolio is in international  shares  then the metrics change


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## Value Collector (7 October 2022)

darien44 said:


> I  was just reading a chapter in Phelp's 100-1 in the stock market, where he mentioned that UK holders of US stocks saw them all sequestered by the government in 1941 to pay for the war effort. I'm sure there are plenty of other examples where citizens holding foreign stocks are potentially not well protected.




Do you have any more details on that, eg was it the British government the sequestered the stocks or the US Government?


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## darien44 (7 October 2022)

Value Collector said:


> Do you have any more details on that, eg was it the British government the sequestered the stocks or the US Government?



According to Phelps " At the bottom of the market in 1942 the British government  "sequestered" American securities owned by British citizens and sold them to get dollars to help pay for the war" Chap.20 Getting Away from it all.

Phelps was a US stockbroker at the time.


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## Value Collector (7 October 2022)

darien44 said:


> According to Phelps " At the bottom of the market in 1942 the British government  "sequestered" American securities owned by British citizens and sold them to get dollars to help pay for the war" Chap.20 Getting Away from it all.
> 
> Phelps was a US stockbroker at the time.



In that case, not many assets are safe if it’s your own government taking them from you.

—————
I guess if you were worried about your own government stealing from you then international assets might be the best choice, provided they are held in a way that your government can’t get their hands on them.

—————

But yes when ever it comes to wealth, there is always risk of some one taking it, whether that’s your own government a foreign government or just out right theft.

As Ukrainians are finding now in times of war assets can be destroyed or annexed.

Even cash in the bank isn’t 100% safe over certain limits or in times of war or high inflation, so you need to hold your capital in some type of asset and there is always a way that it could disappear.


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