Comments on: Investing in ADRs: The Most Powerful Way to Reduce Market Risk

By: alister chilton

alister chilton — Sun, 20 Sep 2009 14:27:02 +0000

thanks for an extremely informative article on adr’s. what i’m wondering is – who is/are the brains behind all the financial fenegling required to accomplish a successful result, so that there is a fine balance between money, politics, corruption, exchange rates, etc; that will allow me/us – the unwary investors to profit from all these negotiations?

By: jennifer smith

jennifer smith — Sun, 20 Sep 2009 10:45:44 +0000

great article but nobody ever mentions the ASX is that because it’s all just too insignificant?

By: Alan

Alan — Thu, 17 Sep 2009 19:18:25 +0000

Great opportunity for us! I would like focus on Asian market which is the very strong now, as China fortunately is pioneering the world economy recovery on track, plus U.S. goverment tried its best to bottom the recession and catching up the greenback…it’s a win-win resolution if on the right way to every side.

Still high stock risk for area people don’t live there, but we don’t want to miss the great trends, so add stop-loss limits…hehehe

One idea is the fair stock markets can grow real democracy in each country that backboned by free-trade business.

By: Dr. Scott Brown

Dr. Scott Brown — Wed, 16 Sep 2009 19:43:31 +0000

Again, the point I am making is that stocks in different countries don’t move together. This makes ADRs very important investments. Going direct into foreign stocks is not a good idea. The added dimension of currency risk is a BIG deal. Fx markets have many problems ranging from whether not the foreign currency is the other side of a major trading pair — minor currencies have huge costs due to very wide bid-ask spreads — to the simple fact that you can’t ride two horses well — Forex analysis and stock analysis. Another problem is dealing with increased restrictions in transferring money out of and back into the U.S. Then there are overseas taxation issues investors would face in terms of taking a capital gain in a foreign stock investing account. Also, many foreign countries require little if any external financial reporting whereas ADRs must comply with U.S. reporting regulations giving you greater transparency for financial analysis and due diligence. Moving your money overseas and then back again would seriously reduce the amount of mental focus and concentration to do proper initial analysis of the stock in the foreign country.

ADRs solve all of these problems.

-Scott (Dr. Brown)

By: Joker

Joker — Wed, 16 Sep 2009 08:19:42 +0000

Not sure that this is true:), but thanks for a post.

By: Dr. Scott Brown

Dr. Scott Brown — Tue, 15 Sep 2009 22:19:34 +0000

Hi Joseph, there is a typo in this article. It was supposed to say that if the Greenback strengthened you’d lose on the transaction. The main point is that if you are investing directly in foreign stocks there is a second dimension of risk. A stock investor doesn’t want exchange rate risk making ADRs a very important investing tool.

Thanks as well,

-Scott (Dr. Brown)

By: Investing in ADRs: The Most Powerful Way to Reduce Market Risk - Contrarian Stock Market Investing News - Featuring Bargain Stocks

Mon, 14 Sep 2009 20:52:17 +0000

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