The Investment U E-Letter: Issue # 353
Thursday, July 15, 2004 Investment Biker Jim Rogers: Five Steps to Becoming an "Adventure Capitalist"
By Brian Hunt, Vice-President, Investment U One year ago, I hadn't even considered investing in foreign countries, but an investing trip to Argentina four months ago changed my mind…
Despite going through a horrendous financial crisis in 2002, Argentina is a great place to visit… and home to some of the best investment values in the world. As part of Dr. Steve Sjuggerud's True Wealth Argentina tour, I - along with dozens of other investors - visited one of the most beautiful cities in the world, Buenos Aires. We saw firsthand what makes the Argentine land company Cresud (NASDAQ: CRESY) such a great investment. Companies trading at such a discount to their actual worth, like Cresud, are almost unheard of…but values like this can be found when you look at things from a global perspective. So if you can't find a good bargain here in the U.S., start looking around the world… particularly considering that the domestic markets have been DOA this year… Let's take a look at some specific resources you can use to get started, including a great book on global investing by 'investment biker' Jim Rogers… How to Become an International Investor Fortunately, you don't have to fly around the world or open a foreign bank account to become an international investor. You simply have to know about ADRs and ETFs. American Depository Receipts (ADRs) are shares in foreign-based companies that trade on U.S. exchanges like the NYSE. They make buying stock in foreign countries as easy as picking up shares in companies here in the U.S.A. If you want to invest in a certain country but don't want the risk of owning a single stock, you can start with an Exchange Traded Fund (ETF). Exchange Traded Funds hold a lot of different stocks like mutual funds, but they trade on an exchange, by a single symbol, just like regular stocks. For example, country-specific ETFs like the iShares Australia Fund (EWA) let you buy a piece of the biggest banks, commodity producers, and media companies in the country. There are also country funds that you can buy in the states. I'm careful when buying these… they can trade at discounts or premiums to the foreign shares they hold, and you can end up overpaying for the assets if you buy at the time of maximum optimism. For example, investors who bought shares of the China Fund (CHN) amid the China craze in January paid a 50% premium to the underlying assets of the fund… they're down over 30% now. The Best Book on Global Investing: Investment Biker Jim Rogers…"Adventure Capitalist" If you're interested in putting your money to work overseas, I recommend reading the book Adventure Capitalist, written by former hedge fund manager Jim Rogers and one of the best investors of all time. Jim Rogers has made a career (and millions of dollars) by visiting and investing in foreign countries. He knows that the secret to making real money through global investing is to buy stocks when nobody wants them… when there's "blood in the streets." Jim Rogers will get you up to speed on the state of the world… He'll even tell you about the opportunity in Tanzania. And speaking of world-traveling investors who do their "kicking the tires" research in country, my friend Dan Denning is undertaking a massive tour of Asia and India right now in search of the next great investment opportunities overseas. Dan is editor of Strategic Investing, and has a great eye for value… in any language. To follow along on his investing adventure (he's about halfway through now), I encourage you to check out his web log, or "blog": Journey to Asia: Dan Denning On the Ground, On the Case, and Always in Trouble (http://www.eastprofits.blogspot.com/). A recent outtake - and a tip - from Dan's visit to Bombay: With the most mobile global capital, India is still perceived as a speculation, to be indulged in when interest rates make risk taking relatively cheap. That's bad for the image of India. But it' s probably good for you as an investor…
The Best Deals in the World One last resource to help you find the best investment values in the world: the London-based Financial Times. The FT not only has the best daily financial coverage in the world, its "World Markets At A Glance" section lists all the major world stock markets and their P/E ratios. Right now, it tells us that Israel, Russia and South Korea are trading for P/Es of less than 10. (This is very cheap when you consider the Nasdaq is trading for a P/E of 56!) With the five resources I mentioned - ADRs, ETFs, country funds, Jim Rogers' book and Dan Denning's website - you've got a good start on international investing. And just imagine how impressed your friends will be when you take a vacation to Argentina… to check on your investments. Today's IU Cribsheet - A good place to get familiar with ADRs is www.adr.com. On the home page, click on the "ADR universe" tab, then click on the "All" button next to the word "Browse." You're presented with hundreds of foreign stocks that can be grouped by country and industry. For info on ETFs, you can go to www.etfconnect.com, type in the fund symbol, and check to see if the fund is trading at a premium or a discount to the assets it actually holds. This site also gives you the top 10 holdings for a fund, along with historical returns. It's a great resource.
- Cresud is a good Argentine company. For more on past investment trips we've taken to Argentina, check out Investing at the Bottom of the World.
Good investing, Brian Hunt Related Articles: Investment U Archives
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