International Investing

[systematic]

Pure curiosity, so I thought I'd post and ask.

Assuming you are:
- an equity investor
- hold trades for a longer period than a day trader (i.e. you work off perhaps daily, weekly or monthly data and your average hold period is more than one month, say)

Do you invest in international shares?

If so, then US shares or elsewhere as well?

Or do you stick with Australia?



If I ask the question, I should answer it. I am ASX only, at this point in time.

 

[Triathlete]

Pure curiosity, so I thought I'd post and ask.

Assuming you are:
- an equity investor
- hold trades for a longer period than a day trader (i.e. you work off perhaps daily, weekly or monthly data and your average hold period is more than one month, say)

Do you invest in international shares?

If so, then US shares or elsewhere as well?

Or do you stick with Australia?



If I ask the question, I should answer it. I am ASX only, at this point in time.

If you can or are making money in the Australian market why would you need to invest in overseas markets?

I guess some would say for diversification as it lowers your risk but that was really initiated by the finance industry during the nineties when much money was and still is being invested into superannuation and since Australian markets are only 2% of Global markets they had to find other areas to invest. It was just another avenue for them to push another product to help there bottom line as far as funds go.

If you do decide to invest overseas then you would also need to manage the currency risk as well as what risk is involved with that country you are investing in as this risk will also be in your portfolio now.

You would also need to see how that effects your tax position as well so this would also need to be considered to see if it is to your advantage to invest overseas.

As for me I will stick to the Australian market making enough from that ,no need to worry about going overseas.
Just my own personnel opinion though.

I have looked at tables between Australian and Global markets for my own benefit previously as to the average returns as a guide for the individual markets and I did not see any real benefit myself but others may be different.

As I said before if you can make money here no need to bring more risk into your portfolio.

 

[DeepState]

Of all the listed equity investments in the world, what is so special abt Australia that you should restrict your universe to just this location? To extend this, assume you live in NSW...should you only invest in NSW companies? Or, if you worked as a baker, only invest in companies that harvest wheat etc.. The moment you step out of this restriction, why stop at Customs and Immigration? You don't need a visa to invest elsewhere, for the most part. Are the next best ideas likely to only be located in Aust?

If you came from outer space as an explorer from the constellation Investment and started to invest on planet earth, it would be the dumbest idea going to say "let's restrict myself to Aust listed companies only, loaded full of loss makers, spec mining and a couple of large banks and bulk exporters". Yes, there is franking, but you are describing trade activity as opposed to buy-hold.

You can build your knowledge about companies in just abt any location. I would hv thought it was best to go wherever you find the best opportunity. This is different to saying adequate opportunity. If that happens to only be in Australia, though that would be very odd indeed, then fine.

It's not just abt diversification. It's about opportunity. You can hedge currency risk if that matters to you.

 

[Triathlete]

Yes, there is franking, but you are describing trade activity as opposed to buy-hold.

You can build your knowledge about companies in just abt any location. I would hv thought it was best to go wherever you find the best opportunity. This is different to saying adequate opportunity. If that happens to only be in Australia, though that would be very odd indeed, then fine.

It's not just abt diversification. It's about opportunity. You can hedge currency risk if that matters to you.

I take your point Deep State...

My main point being it does not matter where we decide to invest or where the best opportunities may be it is still about making a decent return on your investment and being profitable wherever that may be.

 

[hhse]

whatever engages you and encourages you to learn the domain skills and become financially successful.

 

[So_Cynical]

Pure curiosity, so I thought I'd post and ask.

Assuming you are:
- an equity investor
- hold trades for a longer period than a day trader (i.e. you work off perhaps daily, weekly or monthly data and your average hold period is more than one month, say)

Do you invest in international shares?

If so, then US shares or elsewhere as well?

Or do you stick with Australia?

A large part of the rationale for opening my IB account was access to foreign markets, since the dollar has tanked i've given it a low priority...also a factor is the comfort level, looking at HK and US stocks i have found the reporting to be a bit different and harder to understand..and that leads to discomfort.

All ASX for now, but that will change.

 

[Tooth Faerie]

I am currently ASX only due to comfort and a small capital base. Thinking further ahead, I believe I will go down the ETF route for investing overseas.

 

[TPI]

Of all the listed equity investments in the world, what is so special abt Australia that you should restrict your universe to just this location? To extend this, assume you live in NSW...should you only invest in NSW companies? Or, if you worked as a baker, only invest in companies that harvest wheat etc.. The moment you step out of this restriction, why stop at Customs and Immigration? You don't need a visa to invest elsewhere, for the most part. Are the next best ideas likely to only be located in Aust?

If you came from outer space as an explorer from the constellation Investment and started to invest on planet earth, it would be the dumbest idea going to say "let's restrict myself to Aust listed companies only, loaded full of loss makers, spec mining and a couple of large banks and bulk exporters". Yes, there is franking, but you are describing trade activity as opposed to buy-hold.

You can build your knowledge about companies in just abt any location. I would hv thought it was best to go wherever you find the best opportunity. This is different to saying adequate opportunity. If that happens to only be in Australia, though that would be very odd indeed, then fine.

It's not just abt diversification. It's about opportunity. You can hedge currency risk if that matters to you.

Yes but what if you are sleeping when a market sensitive announcement is released due to the time difference?

 

[The Falcon]

From an investors, rather than a traders viewpoint I am looking for holdings in consumer staples and discretionary companies with durable brands, capacity to reinvest and both developed and emerging market exposure to hold very long term. I can't buy NSRGY, JNJ, PM, UL or CFR on the ASX. I'm not concerned with currency over the long term, but hitching the wagon to growth engines outside OZ.

 

[The Falcon]

Yes but what if you are sleeping when a market sensitive announcement is released due to the time difference?

Same on the ASX when you are working, going to lunch, in a meeting etc ?

If you are trading then you trade in real time. If you are a long term investor and one announcement changes your thesis and you miss it, then there is always tomorrow. Market usually overreacts both ways, so you will get a chance.

 

[DeepState]

Yes but what if you are sleeping when a market sensitive announcement is released due to the time difference?

You catch up with it after you wake up.

Any stops you had active would operate as if in your time zone. If the movement related to a news event of consequence the stock price gaps. If you think you can then outgame the market on movements in micro seconds, minutes or hours after that relative to seeing how things looked a day later then....the investor must be pretty awesome and should have alarm bells set for any corprate announcement worldwide. In three days, they will be super rich, and can sleep.

The really big news announcements of a stock specific nature have suspensions prior to announcement, after which the thing gaps anyway. To the time of the first tic post re-open, it doesn't matter if you are asleep or awake. Please see above if the next few hours is seen to be the difference between success and failure.

Most macro announcements of consequence take place outside of the Aust session. Much of the Aust market movements flows on from the overnight sessions....when you are asleep.

Run of the mill events break both ways. Over time, it averages out. You would risk manage via stops which are active whilst you sleep and the market is open.

The OP was talking about mid-horizon trading which, over time, is less influenced by newsflow trading of the type that requres hypervigilence in real-time. If you were algo and the algo required you to be awake for some reason, then I concede the issue. Otherwise, the relevance of being awake pre-supposes that those extra hours after a gap are highly profitable or highly deleterious. I clearly discount this. But my argument hinges on it and can thus be swept aside if you were to disagree.

 

[luutzu]

Of all the listed equity investments in the world, what is so special abt Australia that you should restrict your universe to just this location? To extend this, assume you live in NSW...should you only invest in NSW companies? Or, if you worked as a baker, only invest in companies that harvest wheat etc.. The moment you step out of this restriction, why stop at Customs and Immigration? You don't need a visa to invest elsewhere, for the most part. Are the next best ideas likely to only be located in Aust?

If you came from outer space as an explorer from the constellation Investment and started to invest on planet earth, it would be the dumbest idea going to say "let's restrict myself to Aust listed companies only, loaded full of loss makers, spec mining and a couple of large banks and bulk exporters". Yes, there is franking, but you are describing trade activity as opposed to buy-hold.

You can build your knowledge about companies in just abt any location. I would hv thought it was best to go wherever you find the best opportunity. This is different to saying adequate opportunity. If that happens to only be in Australia, though that would be very odd indeed, then fine.

It's not just abt diversification. It's about opportunity. You can hedge currency risk if that matters to you.

Ey, you actually do make sense sometimes.

 

[luutzu]

Pure curiosity, so I thought I'd post and ask.

Assuming you are:
- an equity investor
- hold trades for a longer period than a day trader (i.e. you work off perhaps daily, weekly or monthly data and your average hold period is more than one month, say)

Do you invest in international shares?

If so, then US shares or elsewhere as well?

Or do you stick with Australia?



If I ask the question, I should answer it. I am ASX only, at this point in time.

Currently ASX only but looking to buy a couple US-based ones.

ASX market cap is $1.7 trillion [?], the US is some $17 trillion? More opportunities there. But to paraphrase Buffett (referring to the US market), if you can't do it in a $1.7 trillion market it's not probable you could move a few thousand miles away to then show your stuff.

As the Chinese say, danger and opportunity are interchangeable.

 

[luutzu]

Yes but what if you are sleeping when a market sensitive announcement is released due to the time difference?

You ought to already know all the news there is to know about your company


There's this great scene in "The Emperor and the Assassin" where the Assassin, as an envoy, went to present to the First Emperor a map of his state - as a sign of their submission to Qin.

The assassin's plan was to kill the emperor as he couched over admiring the detailed map, stabbing him with a dagger hidden at the end of that scroll. But...

When the emperor heard it's a map, he wave them away, saying I don't need your map. I already know your entire country like the back of my hand.


Anyway, the assassin tries to sell the antique and calligraphic qualities, just so he could scroll to get to the dagger... then he chased the emperor around court with it.

Great movie.

 

[Triathlete]

Currently ASX only but looking to buy a couple US-based ones.

ASX market cap is $1.7 trillion [?], the US is some $17 trillion? More opportunities there. But to paraphrase Buffett (referring to the US market), if you can't do it in a $1.7 trillion market it's not probable you could move a few thousand miles away to then show your stuff.
As the Chinese say, danger and opportunity are interchangeable.

Exactly my point....!!

and to quote Buffet further...

"Diversification is a protection against ignorance . It makes very little sense to those that know what they are doing"

Happy investing / trading everyone

 

[DeepState]

On the futility of investing offshore if you don't know what you are doing +

Exactly my point....!!

and to quote Buffet further...

"Diversification is a protection against ignorance . It makes very little sense to those that know what they are doing"

Happy investing / trading everyone

So...

if you don't know what you are doing, stick to Australia because to invest offshore is protection against ignorance only for you will not be able to show your stuff in offshore markets anyway.

However, if you do know what you are doing, like, say Buffett, investing offshore is fine, as is holding a portfolio of companies. Because he was referring to over-diversification as opposed to diversification per se.

To my knowledge, Buffett doesn't have a major investment on the Australian listed market.

What does the above imply for someone who only invests in Australia? Someone who does not know what they are doing but yet fearful of accusations of diversification against ignorance? For if they do know what they are doing...they would not be doing this...according to Buffett's own deeds and words. Even if ignorant, Buffett would advocate high levels of diversification as a countermeasure.

That would be my point....and Buffett's. If you know what you are doing, you would open your mind to investing offsore where more opportunities exist - as Buffett does. If you don't know what you are doing, you should diversify a lot ... Like, say, offshore, particularly for a narrow market like Aust. Either way, you find yourself offshore. That's unless you really know what you are doing, but your knowledge stops at the border for some reason despite the fact that the companies you invest in strut their stuff thousands of miles away even if you can't.

What am I missing?

Interestingly, the long term portfolio Buffett wants for his wife after he is deceased is passively invested in the US alone. So, a portfolio with no idea what to buy is heavily diversified, but not offshore in terms of listing domicile. Methinks the US market is somewhat broader in scope than the Aust market though...Can you imagine him saying 95% Aust equities and 5% cash? I have some doubts...because you can't even make an argument that Aust index equities is a representative basket against Aust future consumption. That argument is much stronger, though for major markets like the US.

Happy Easter Monday.

 

[luutzu]

On the futility of investing offshore if you don't know what you are doing +

So...

if you don't know what you are doing, stick to Australia because to invest offshore is protection against ignorance only for you will not be able to show your stuff in offshore markets anyway.

However, if you do know what you are doing, like, say Buffett, investing offshore is fine, as is holding a portfolio of companies. Because he was referring to over-diversification as opposed to diversification per se.

To my knowledge, Buffett doesn't have a major investment on the Australian listed market.

What does the above imply for someone who only invests in Australia? Someone who does not know what they are doing but yet fearful of accusations of diversification against ignorance? For if they do know what they are doing...they would not be doing this...according to Buffett's own deeds and words. Even if ignorant, Buffett would advocate high levels of diversification as a countermeasure.

That would be my point....and Buffett's. If you know what you are doing, you would open your mind to investing offsore where more opportunities exist - as Buffett does. If you don't know what you are doing, you should diversify a lot ... Like, say, offshore, particularly for a narrow market like Aust. Either way, you find yourself offshore. That's unless you really know what you are doing, but your knowledge stops at the border for some reason despite the fact that the companies you invest in strut their stuff thousands of miles away even if you can't.

What am I missing?

Interestingly, the long term portfolio Buffett wants for his wife after he is deceased is passively invested in the US alone. So, a portfolio with no idea what to buy is heavily diversified, but not offshore in terms of listing domicile. Methinks the US market is somewhat broader in scope than the Aust market though...Can you imagine him saying 95% Aust equities and 5% cash? I have some doubts...because you can't even make an argument that Aust index equities is a representative basket against Aust future consumption. That argument is much stronger, though for major markets like the US.

Happy Easter Monday.

I think investors ought to only go overseas for better opportunities, not for diversification - aka risk reduction.

The idea that offshore diversification is also, or even a better, form of protection against ignorance... I don't think that's true. Say a person is a bad Australian driver... it's crazy to suggest that he'll drive better or safer if he's also on the roads in Asia or anywhere else.

Just about all big Australian companies have operations overseas. An Australian investor owning those will first be protected by him knowing at least something about those big Australians; and his need for non-Australian diversification can be met through these holdings' foreign operations. So if the investor is "ignorant", owning just Australian stocks is safer as well as geo/diversified.

But yea, if we're selective, know what we're doing...

Buffett does invest in Australia: his subsidiaries, and their subsidiaries, do have operations here.

 

[Triathlete]

I think investors ought to only go overseas for better opportunities, not for diversification - aka risk reduction.

We are all talking about better opportunities overseas and I agree the world is a big place to invest.

But should we also be thinking about what returns we can generate for our portfolios whether in Australia or overseas.?

We all know the great man Buffet was able to generate a 20%pa return for over 40 years.

So if we are only investing long term in the ASX and are generating this type of return or greater is there a reason to go overseas?

I would have thought that if your portfolio became so large that you where no longer able to generate this than that may be a time to look elsewhere.

 

[DeepState]

We are all talking about better opportunities overseas and I agree the world is a big place to invest.

But should we also be thinking about what returns we can generate for our portfolios whether in Australia or overseas.?

We all know the great man Buffet was able to generate a 20%pa return for over 40 years.

So if we are only investing long term in the ASX and are generating this type of return or greater is there a reason to go overseas?.

Out of our population of 23+ million, could you please tell me maybe three names whose record matched or exceeded Buffett over the forty year period investing long only, with long horizon, in Aust equities, as a portfolio investor? If these names are hard to come by or not particularly numerous in any case, presumably the rest of the population, ignorant or otherwise, might have something to gain from offshore investment on a natural extension to your point?

Let's not get into opportunity and the direct link to probability just yet, before we know those names and consider how they achieved it with a restricted universe.

 

[Smurf1976]

My super is in a fund managed by others but at present I have chosen to have it invested in overseas equities. So the Australian exposure of my super is zero.

Reason for this is my expectation of better returns, noting that I moved it all overseas when the AUD was near the peak. In due course I'll likely change it to something else.

For my non-super assets (aside from PPOR) it's Australian shares, ETF's and cash. Nothing foreign unless it's listed on ASX.