Hello, I have a question about the economy.

[Manifestor_of_Light]

Some people own stocks, mutual funds and ETFs that are traded on the NYSE, but they are foreign companies and/or based on foreign currencies.

Many Americans are urged to invest in foreign companies because of the dollar's fall, at least from the investment newsletters I read.

If you have securities traded on U.S. exchanges, but based in foreign companies and/or currencies, does that protect you any?

Or do you need to get your investments COMPLETELY out of the U.S. and into a foreign bank, let's say?

Would opening an account at a branch of a foreign bank that is located in the U.S. be good?

What about investment vehicles in foreign banks?

Are foreign currencies much safer than the dollar? Or is gold the answer?

I realize I'm talking about the structure of the banking system here and the stock exchange here, and banks in other countries.

I'm asking this board because I realize people who write investment advice newsletters want their clients to continue investing in the NYSE, and don't want their clients to panic, so they play down churning markets.

Thank you for your responses.

[A HERETIC I AM]

1. If a foreign company - say Toyota has a great year while the US is struggling...

and you can buy shares in Toyota, even though it is a foreign company, do you think you would benefit? Almost without exception, foreign corporations that trade on American exchanges (The NYSE, AMEX, NASDAQ, etc.) do so using either ADR's or ADS's. Some large, global financial firms that have offices and operations in foreign countries are able to trade on the local exchanges, purchase shares, package them into a fund of some sort (ETF, Mutual Fund, Closed End Fund, etc.) and then make them available to the American public. Investing in these vehicles offers diversification, not protection.

You might find it difficult to go to a US branch of a foreign bank and opening an account with the expectation that it be denominated in the currency of the banks home country. I made an inquiry to Deutsche Bank branch in Miami about this very question a few months ago. I was told there was no way they could or would open an account for me and denominate it in Euro. They simply do not do retail accounts in that fashion.

[Art_from_Ark]

4. Interesting, because in Japan

several banks offer US dollar and/or euro accounts, and a few offer other currencies as well.

[rgbecker]

2. Subject: I have some money in a couple of international mutual funds.

Subject: I have some money in a couple of international mutual funds.
Message:
These funds invest in foreign companies in various countries depending on the target. For example one is the DWS (Scudder) international fund and invests world wide. When the dollar falls it generally gets a boost because of the exchange rate and so in the last couple of years returned more than 20% I believe. However this recent turn down, since the new year has affected also international stocks (Even though not traded on the nyse). ref the billions lost by the french bank's trader. It turns out investors are connected worldwide and in a general downturn like this all markets are hurting. Buyers are in retreat, waiting and afraid to move probably until the news starts indicating some sort of bottom.

Another fund I have is Scudder's latin american fund and also a T. Rowe Price latin american fund. Both these funds showed incredible returns in recent years because of the dollar's fall. Once again, the companies these funds are holding are not on the nyse so your concerns would not be with the nyse connection. But as with the Scudder international fund, these funds, the nasdaq, everything is taking a hit and will continue to fall for a while I bet. But if past performance is any indication, suddenly investors will not be able to sit by and watch these low priced stocks sit unclaimed and will step in with a vengeance.

Check out a finance site, for example Yahoo and put in these symbols to check performance of these foreign stock funds. SLAFX, SCINX, PRLAX. Compare them to the Dow, or better yet to the S&P 500 to see if they did any better. This recent fall is killing everyone but Gold and Oil.

I hope this is of some help. I'm not a professional, but enjoy watching the markets.

[Extend a Hand]

3. Etrade has a global trading service

that let's you trade on some foreign exchanges. I opened one and converted some money into canadian dollars and bought some stock traded on the Toronto exchange.

[gravity]

5. The US markets are the safest in the world

If you want to buy foreign companies listed on the NYSE or NASDAQ, they are as safe as anywhere else in the world. They are probably safer, since the US has some of the best accounting standards out of anywhere. There is a reason why so many foreign entities want to place their money in the US.

If a business does much of its business overseas, while the dollar is falling, it will bring in more money in terms of dollars. This will cancel out most of the effects of inflation.

Now for investment advice. Take everything in newsletters with a grain of salt. You will probably do better if you ignore them all together.

[Manifestor_of_Light]

6. my background is not in math or statistics.

Or finance. I am not able to sift through the mounds of data out there on companies. My background is in law.

I know there are certain benchmarks to look for but the amount of data out there is overwhelming, as far as deciding what to invest in.

I am attempting to educate myself.

[gravity]

9. The markets are confusing

Even if you do have a degree in finance, there is just too much information out there to make solid decisions. The mood in the street changes everyday, and following it will make you insane.

The one thing that I would stress is that the US markets are safe and you should have no conerns about investing in them. You can dabble in other countries if you want, but you will just be making your investing more complicated which won't help you much at all.

If you want to educate yourself, I would recommend the book A Random Walk on Wall Street, by Burton Malkiel. If I had to recommend only one book about the markets, this would be it.
http://www.amazon.com/gp/product/0393325350/ref=pd_cp_b_1?pf_rd_p=317711001&pf_rd_s=center-41&pf_rd_t=201&pf_rd_i=0393330338&pf_rd_m=ATVPDKIKX0DER&pf_rd_r=11V1PESK4T4YNVQ9T279

If you are thinking about selecting investments to beat the market I would recommend One up on Wall Street by Peter Lynch. This is a timeless guide about how average investors using the knowledge they know to beat the street.
http://www.amazon.com/One-Wall-Street-Already-Miniature/dp/0762409819/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1205246317&sr=1-1

Now if you are really considering beating the markets, understand that it won't be easy and will take time and energy which many people don't have. Even if you do put in the time, there are no gaurentee of results and you could just end up losing money. It isn't an easy game, and most folks are better off with buying index funds, which is what Burton Malkiel advocates doing.

[A HERETIC I AM]

7. You make an excellent, often overlooked point, Gravity.

I have said a number of time in various threads something to the following effect;

The financial markets in the United States are deep, extremely liquid, transparent, well regulated and financially as well as politically stable.

This might sound to some as ridiculous but it is an absolute fact. The entire world knows that businesses that wish to offer stock or other securities will get a fair shake on American Exchanges, that accounts will settle in an orderly fashion and that there is a reliable court system in place in which to argue disputes.

[Warpy]

8. The problem is that the big crash happening to institutional

investors like banks, brokerages, pensions, and insurance companies is happening worldwide. All institutions have been infected by a buying spree on hedge fund "special investment vehicles" which were backed by bad loans. Some of those things were so exotic nobody knew what they were, much less how to price them, and they were bid up to the stratosphere every time they changed hands.

The Euro looks strong now, as does the pound, but their institutions have been affected as badly as US banks have been.

As this disaster slowly filters down to the rest of us, it will be felt worldwide. There is no safe place to stash the boodle unless you want a numbered account in Switzerland (expecting the Caymans to go belly up).

Personally, I think getting out of debt gives us the best chance to escape from this one with any assets left, at all.

[bhikkhu]

10. You need to define your goal.

Are you older, and have capital you need to protect to ensure retirement? If so the standard advice is probably good. I would diversify to gold, foreign investment vehicles and so forth for the time being and expect to avoid the worst of things before having to reposition. Better would be to find a good advisor (other than online) and follow his or her advice. The medium term preservation of assets is all a gamble in any case.

If you are younger and have years of earning potential, I would focus on the building of skills rather than the manic preservation or generation of capital in volatile markets. Your sanity would probably benefit. Owning property outright is a good goal. Education (without too much debt) is also a good thing.

Having a bit of land and the skills to grow food is my own preference, representing a useful repository for capital, a skill that has inherent value, an asset you can appreciate each time you get hungry, and a most sane and satisfying way of spending time that might otherwise be wasted online looking for financial advice.