Alarm bells ringing

DD tool? For conspiracy theories perhaps.

Hi Nobleone

i’m investing in the US so this is the way i see things

i agree that it is worth considering the Big Picture when investing. firstly these types of things are not new people have been predicting the USA collapse for decades.

However we also need to remember that if the USA topples the whole world goes with it ! And Little old Aussie with it. Look what happening in 1929, the world is far more relient on the State now than ever before. Even the Mighty Chinese need the USA to be an economic powerhouse.

One other way of looking at it is Australia is such small player on the world stage why have all your investments in the one basket? The more i travel the more i realise that i should be spreading my assets.

Another way to view it is while the US dollar is so week compared to the aussie dollar maybe this is the time to have some of your wealth as US dollars, it wasn’t that long ago that the Aussie dollar was about 46 cents. the aussie dollar is one of the most volitile in the world over the past few years. If it retracted to 50 cents we would be making over 50% just on the currency shift ! But then again if the Aussie dollar strengthened even more then we loose.

yes there are implications of investing overseas.

As far as the USA being the Buzz, i honestly believe this is nothing compared to what it will be in a few years time when many more aussie are doing it. Its still so new that people are rightly very cautious. some were slow to see NZ, now everyone wants a bit of Kiwiland.

regards westan

We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database

hi guys

an interesting story in the Paper a few days ago, seems like i’m not the only one who’s shifting assets off shore.

Watch your wealth soar overseas
April 18, 2005
The Sun-Herald

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Investing offshore is a sound strategy and easier than it sounds – David Potts shows how it is done.

When the going gets tough, the tough get going. Somewhere else. It seems rather sudden how Australia morphed from one of the fastest growing developed countries to a “has been”, but there it is.

Not that you’d want to put the home on Toyota shares, American real estate or a bar of gold at the Bank of England, but there’s something to be said for having some overseas investments.

Imagine all that extra diversity that everybody says you need plus the bonus – or the risk, depending on how you look at it – of exchange rate changes.

You can even invest offshore without having to leave the couch.

Just buying shares in News Corporation or Rio Tinto gives a foothold in the global economy with only a currency risk. Or, in the case of News Corporation, which has officially left our shores, perhaps Rupert risk as well.

Outlook

But then you’re still investing in a media or resources company which, let’s face it, Australia has no shortage of. Why not spread your wings?

Before the tech wreck of 2000, international shares were leaving the Australian stockmarket for dead.

More recently, as the Australian market seems to have peaked, Europe and South-East Asia have been picking up. Just as our market might be getting pricey, others probably still have some bargains lurking within.

Investing might begin at home, if not in it, but that’s not where it should end. More than one-third of the Australian sharemarket is made up of bank, insurance or other financial stocks.

And good luck to them. Only it’s somewhat limiting, considering they depend heavily, in one way or another, on the local property market.

If you take into account the size of the listed property trusts, then closer to two-thirds of the Australian sharemarket relies on real estate for its health.

I could say our market depends more on the value of dirt in the right spot as digging it up. But I won’t.

Just settle for the fact that technology stocks, almost non-existent here, comprise about one-third of global markets.

Wall Street

New York’s Nasdaq exchange is tech central.

“Technology shares are coming back,” said Rick Steele, chief executive of TechInvest, which runs the Sydney-based Technology Investment Fund, investing in stocks such as IBM, Dell, Pfizer, Johnson & Johnson and Motorola. It trades on the stock exchange until the end of the month, when it will become a managed fund.

“And the Australian market is extended.”

Not to mention the peaking of the dollar supporting overseas investments. Since it has also outstripped the returns of most global technology funds, this suggests Australian fund managers are no slouches at investing in international stocks.

In selecting a global fund, you have to decide whether it’s the country or the stock you’re after. It’s a similar problem to investing locally: do you pick a manager who follows broad economic trends? Or one that kicks tyres, picking the company irrespective of the broad picture?

You could argue either way, and probably the best solution is investing a bit in both styles. But if you’re like me, you don’t have that kind of money to throw around.

In which case go for the tyre kicking. Besides, if it is a true global success, it shouldn’t matter what country it starts in.

If you don’t want to be at the mercy of fund managers and their fees, then you could always buy international shares yourself.

It’s easier than it sounds.

The leading mums and dads broker, CommSec, will buy shares for you in the US, UK, Europe, Japan, Hong Kong and South America, among other places. You can even do it on the internet. Brokerage rates vary, but for the US it’s $US65 for an online trade.

When you sell, you can get your money in Australian dollars or leave it in an American account CommSec sets up for you, opening up a little sideline of speculating on the currency if you’re looking for an extra financial thrill.

Fortrend Securities, which charges $US60 brokerage for an online US trade, also buys and sells stock in the more exotic markets such as Hungary, Russia, Korea, India and China.

It offers a 10 US stock portfolio, with shares such as Disney, McDonald’s, Pfizer, Dow Chemical and Energizer, one way of avoiding managed funds but still getting some diversification. It’s been returning an average 14 per cent a year.

Technology and pharmaceutical stocks are the most tempting for an Australian investor.

The high price of oil – and analysts Fat Prophets estimate global demand exceeds new discoveries ninefold – also suggests it would be worthwhile considering the big US refiners.

Stocks such as BHP Billiton give you exploration and production, but the refineries are where the real money is made. Mind you, if you’re nervous about investing overseas, there’s always Caltex Australia, our only listed refinery stock. But most analysts think it is expensive right now.

Incidentally, persistently high oil prices are the most obvious threat to global growth, which could well put you off international investing.

But don’t forget an international slowdown would be magnified in Australia because without the commodity price boom, we’d be in a recession.

Other markets

The so-called emerging markets, including China and India, are investment hot spots. Strangely, India has stayed off the radar of fund managers, who aren’t usually slow to spot an opportunity.

Perhaps they just think of it as the world’s biggest call centre when, in fact, it’s a high-tech and software powerhouse. An exception is the broker CommSec, which recently offered an Indian index fund.

Still, emerging markets funds have some Indian stocks. Mum and dad offerings include funds from ABN Amro (Emerging Markets Equity Fund), Deutsche Bank (Global Emerging Markets Fund), ING (Global Emerging Markets Shares) and Macquarie (Emerging Markets Share Trust).

China, on the other hand, has spawned a few funds on its own merits. AMP launched one last week, while HSBC says it will shortly reopen its fund to mum and dad investors.

The AMP fund tracks an index of the top 25 stocks traded in Hong Kong, while HSBC’s invests in specific stocks.

Both are long-term investments and in AMP’s case there’s a money-back guarantee after six years, although you get nothing in the meantime.

The other way to invest in global shares is to choose strong brand names and, better still, monopolies. Many American and European companies are household names, but Petrobas and CVRD, two Brazilian resource giants aren’t, though at least you would have heard of South Korea’s Samsung Electronics.

You can tap into stocks such as these through emerging markets or Platinum and Macquarie international funds.

Property

We weren’t alone when we had our property boom, even if we seemed to take it further than most.

With global interest rates on the way up, buying an overseas property, even if you could afford it, isn’t likely to bring immediate gains. Besides, the exchange rate could go either way.

But what’s true of the residential market doesn’t necessarily apply to commercial property. Indeed global property securities funds are the flavour of the month.

Little wonder; there are entire categories that are ignored by the listed property trusts.

Global property funds will invest in anything from container terminals to car parks and sewage plants. Sure, you wouldn’t go out of your way to visit them, but they can make a lot of money.

Funds open to mum and dad investors include AMP Capital Investors and Deutsche Asset Management.

Bonds

Just as you miss out on some of the biggest corporate names by sticking to only the Australian sharemarket, the same is true of bonds.

And a shortage of government paper makes it virtually impossible to invest for longer than 10 years.

Yet swelling super funds as baby boomers reach retirement will put longer-dated bonds in greater demand everywhere.

“There just aren’t enough bonds to go around,” said Stewart Cowley of the leading UK fund Newton Investment Management, which is sold by Advance. As the population ages, super funds will have to put less in shares and more in bonds to guarantee a fixed income.

“There will be a natural tendency towards bonds over time,” he said.

And apart from any capital gain, an international bond portfolio will boost your annual income since it’s bound to include high-yielding corporate as well as emerging-markets securities. Most of the big-name fund managers offer global fixed interest rate investments, but check whether they’re hedged against the dollar.

We find cash positive deals showing 15-25% Returns in the USA email me at [email protected] to join our database

If you want to read another viewpoint I recommend http://www.thedailyreckoning.co.uk (the UK site is better in my view).

Whilst they do tend to exaggerate and hype, their writing entertains some thoughts.

D

“The biggest problem encountered while trying to design a system that was completely foolproof, was, that people tended to underestimate the ingenuity of complete fools.” – Douglas Adams

10 years for 22%… hardly whopping! I’d be looking for 100% in 10 years.

Extensive list of ‘Off The Plan’ property available for sale in Perth.

John – 0419 198 856

Of course 22% pa compounded annually over 10 years is roughly 630% growth:
Year 0 = $100k
Year 1 = $122k
Year 2 = $149k
Year 3 = $182k
Year 5 = $270k
Year 7 = $402k
Year 10 = $730,460!
The US has some of the world’s greatest minds, eh’ superman?
Cheers, F.[cowboy2]

Yale apparently.

Source
I can’t find the original paper, but The Economist are generally very thorough.
Cheers, F.[cowboy2]

They certainly are an optimistic bunch those West Coast home buyers. Of course they have no facts to back it up with, but shucks they are enthusiastic.

Now what was that latest Green Day album called again….?

It’s always doom and gloom with you isn’t it![biggrin]

F.[fear]