The World Is Your Oyster The Trick Is Learning How to Shuck the Thing!
On July 2, 1997, few U.S. investors regarded the collapse of the Thai bhat with much more than bemused interest; one of the Asian tigers, and a minor one at that, had finally caught its tail in a wringer. However, as succeeding waves of currency devaluation swept over adjacent countries, complacency gradually turned to terror. The currency collapse spread like a fever from Thailand to Malasia, Indonesia, and the Philippines. It swept through Singapore and threatened China and even steadfast Hong Kong.
The advantages of investing in foreign markets continued to be touted by an ever-increasing volume of advertising from many sources, as though nothing had happened. Clever TV spots trumpeted the expertise of international fund managers; mailings solicited subscriptions to market letters from unknown gurus promising guidance; and brokers interrupted your dinner, each claiming to have the best international research.
Who can you believe? All of those people were telling you to spread your investments globally, to be an active participant in the world markets. Should you have? Within the next four months, the advertising for mutual funds disappeared and U.S. holders of closed-end trusts and mutual funds that concentrated on the tiger economies of Asia bailed out, losing as much as 50 percent on their investments. Only those who recognized the tell-tale signals from the currency markets were able to preserve their capital before the panic began.
1. The World Is Your Oyster 1
2. World Trade 101-How the World Works 15
3. Factors in Choosing the Best Countries for Investment 23
4. Measuring Your Investment Risk Tolerance 43
5. Help from Professionals-Investment Trusts, Closed-End
Funds, and Mutual Funds 51
6. Investing in U.S. Multinational Companies 61
7. Investing in Foreign Currency Certificates of Deposit 69
8. Investing Directly in Foreign Securities 79
9. Investment and Speculation 89
10. Speculating with Spot and Forward Markets,
and Currency Options 99
11. Speculating with Futures and Options on Futures 115
12. The 10 Keys to Successful Global Investing 131
Appendix A Open-End Global Bond Funds 139
Appendix B Open-End Global and International Equity
Regional Mutual Funds 149
Single-Country Mutual Funds 153
Closed-End Funds 155
U.S.-Based Multinational Companies 161
Direct Investments in Foreign Securities 165
Currencies of the World 177
Glossary 1 85
You will find answers to many of your questions about the mechanics of global investing, including the role played by currency markets, in this book. A knowledge of market mechanics, however, will not be enough to ensure success. Investment strategies, tailored to individual needs, must be employed if the rewards from global investing are to be collected and dangers avoided. Unfortunately, no book can provide a magic formula for wealth. Although entry into international markets has become easy, no strategy yet devised can replace your own good judgment.
Thirty-five years of condensed, investment experience has been organized to provide you with the knowledge necessary to profit while others panic. You will also find that several time-honored precepts of investing are questioned. Common sense must outweigh any maxim when it is your money at risk. Each chapter deals with a particular segment of international investing. Consideration is given to the advantages and disadvantages of each area, always with the hope that knowledge of the various investment avenues will lead you to the one that will serve you best.