How to Buy and Sell Stocks Around the Globe Without Leaving Home

Transcription

1 How to Buy and Sell Stocks Around the Globe Without Leaving Home

2 How to Buy and Sell Stocks Around the Globe Without Leaving Home By Jeff D. Opdyke ARE you ready to go global with your greenbacks? Until recently, putting money to work in overseas stock markets was largely the province of institutional investors and the über-wealthy, whose deep pockets attract the interest of private bankers and white-shoe U.S. brokerage firms that cater almost exclusively to the moneyed crowd. But today, you re no longer locked out of that game. Now, you too, have the opportunity as an individual investor to trade stocks directly overseas, regardless of the size of your wallet. And you don t even have to set up private-banking relationships with financial institutions in foreign lands. In the last couple of years, a small collection of discount and online U.S. brokerage firms has begun offering individual investors direct access to foreign stock markets. Today, you can sit at your kitchen table in Boston or San Diego or Mountain Home, Arkansas, and trade stocks directly in markets stretching from Paris to Hong Kong, Sydney to London and numerous places in between. Gone are the days of being limited to the 10,000 or so securities on the U.S. exchanges many of which have been analyzed to death by the financial press and manipulated to extreme highs or lows by the rating services that move markets, one upgrade or downgrade at a time. You can also put behind you the eternal quest for the next Apple or Google. These explosive opportunities do exist but not on the Nasdaq or NYSE. The next instance of Google-like growth is taking place east of Wall Street and sometimes west, and sometimes south. Sometimes north, too. In fact, you can start building your overseas wealth with as little as $2,000, typically the minimum needed to open a brokerage account. In practical terms, though, you ll need to invest at least as much as it costs to make your first trade. Diving Headfirst Into a World of Overseas Opportunities The truth is, you ve had the opportunity to buy and sell foreign securities directly overseas for years. It s just that most investors never realized they could open a brokerage account in a foreign country. Nowadays, though, if you want to directly trade in the world s major stock markets you don t even have to leave home. There are many ways to trade the world s markets on the U.S. exchanges, from exchange-traded funds to ADRs to the Pink Sheets. But in comparison to the tens of thousands of stocks that exist outside America, those U.S.-listed opportunities are exceedingly confining. 1

3 What many investors don t realize is how easy (and lucrative) it is to invest in those foreign stocks, directly on foreign exchanges, in the heart of the hundreds of local markets that span the globe. And the fact that you can do so from a U.S.-based account makes the prospect that much more compelling. As economies around the world have grown over the past decade, America s weight has shrunk. The U.S. used to be more than half of the world s total market capitalization. Today, it s less than half and it promises to continue shrinking as China, India, Brazil, Indonesia and others continue to expand their own economies and their own stock markets. Given that, why limit your investment universe when you don t have to? Why let other savvy investors grab all the profits in foreign markets when you can invest there, too? Because I don t think you should limit your options. I m not limiting mine. For years, my research has included trekking to the far corners of the globe kicking the tires on the companies that capture my attention, immersing myself in the culture and witnessing firsthand the economies of these countries in action. So, given the expansion of U.S. brokerage firms that make several foreign markets available to U.S. investors, I will be writing increasingly about the opportunities that exist directly on foreign markets. My primary focus will be the major markets in Asia, such as Singapore, Hong Kong, Japan and Australia. Not only are these the places where consumerism among a booming middle class is escalating at a rapid clip, but you ll also find it easy to open, fund and manage trading accounts here in the U.S. that give you access to these markets. Best Overseas Trading Brokers But First, Know This There are a lot of overseas markets, and U.S. brokers don t let you trade in all of them from your account in the States. This is why my recommendations will focus on major Asian exchanges. One or more of the brokerage firms I detail below will let you trade on those markets from inside the U.S. As a general rule, our recommendations typically fall into one of three categories: Deep value: These are typically blue-chip stocks that are undervalued. The trades may take 12 to 18 months to play out, and they are ideal for patient, income-oriented, conservative investors. GARP (Growth at a Reasonable Price): This kind of growth drives the trades I place in rapidly expanding emerging-market economies. The companies that fit this category are typically small- to mid-cap stocks that have the same explosive growth potential of the economy they are in. But they re more than just momentum-riders they tend to represent good value, which helps minimize risk. Real assets: Unlike traditional stocks and bonds, commodities like gold are real assets traded on a global scale and subject to a different world of market forces, but with incredible opportunities for profit. My reasoning behind the trades I recommend will become clearer the more you use this service. Now let s turn our attention to making your first trade. Where to Find the Brokers That Let You Trade Overseas For the most part, you can forget about the big-name Wall Street brokerage firms. Merrill Lynch, Morgan Stanley and the like will not trade in overseas markets for individual investors unless those clients are, generally speaking, putting $50,000 to $100,000 to work per trade. Instead, if you want to start building your global portfolio by owning shares in the local markets, you should 2

4 consider the firms listed below. These are brokerage houses that not only cater to individual investors, but they offer trading directly on foreign stock exchanges, either online or with a phone call: EverTrade, the St. Louis brokerage unit of the Jacksonville, Fla.-based EverBank ( Fidelity, the online brokerage, mutual funds and retirement-services giant ( Interactive Brokers, an online brokerage firm ( Charles Schwab, the original discount trading firm ( Each of these firms offers varying degrees of access to overseas markets, and each has its pros and cons. I ve pulled apart the offerings and compared them to one another so that you can determine which account makes the most sense for your needs. Ultimately, your decision should center on three variables: cost, breadth and access. Cost: Fees for trading overseas run from standard, low-cost online commissions of less than $10 a trade to as much as $100 per trade. Breadth: Some firms offer trading in a relatively small number of major markets, while others provide access to a score of markets, including several developing economies. Access: Do you demand online trading? Or, are you OK calling to place your orders over the phone? The challenge is that no firm offers both the lowest cost and access to the greatest number of countries via online trading. That would be too easy. As such, you have to weigh the different variables to determine what is most important to you. So let s take a look at what each of these firms has to offer: FIDELITY Only non-retirement accounts are eligible for international trading at Fidelity. Here s what the firm offers: Access: 25 markets: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, and the United Kingdom. Remember: Access to the Hong Kong market also means you have access to the Chinese A shares through the new Hong Kong/China link. Trading: You can trade online, unless you want broker assistance and if you do want broker assistance, your commission costs will increase. Live trades only execute during the hours in which the market you re trading is open. So, if you happen to be trading Tokyo or Hong Kong, for instance, then you ll have to be at your computer in the evening when tomorrow s trading day is getting under way in Asia. Or you can place limit orders and not worry about it, knowing your orders will fill when (and if) the stock price reaches your predetermined level. Cost: Online trades are: Australia, AUD$32; Canada, CAD$19; Denmark, DKK$160; Hong Kong HKD$250; Japan, JPY$3,000; Mexico, MXN$360; New Zealand, NZD$35; Norway, NOK$160; Poland, PLN$90; Singapore, SGD$35; South Africa, ZAR$225; Sweden SEK$180, Switzerland, CHF$25; United Kingdom, GBP$9; Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, and Spain, EUR$19. For broker-assisted trades: Australia, AUD$70; Canada, CAD$70; Denmark, DKK$420; Hong Kong HKD$600; Japan, JPY$8,000; Mexico, MXN$960; New Zealand, NZD$90; Norway, NOK$400; Poland, PLN$235; South Africa, ZAR$600; Singapore, SGD$90; Sweden SEK$480, Switzerland, CHF$65; United Kingdom, GBP$30; Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, and Spain, EUR$50. 3

5 Note: Fidelity imposes additional fees in some markets. In Hong Kong, fees on all buy and sell orders include a transaction levy of 0.004% of principal, a trading fee of 0.005% of principal, and a stamp duty of 0.1% of principal. In the United Kingdom, fees include a PTM Levy of 1 on transactions where the principal amount is greater than 10,000 and a stamp duty of 0.5% of principal on buy orders only. Paperwork: Assuming your accounts meet eligibility requirements, you can sign up online for Fidelity s International Trading platform by logging into your account and navigating to International Investments. EVERTRADE EverTrade (part of EverBank) has been developing for a while and now offers you a world of trading opportunities with its leading online trading platform, giving you access to investments in 25 countries. So take control and start researching, evaluating and executing real-time global trades of foreign bonds, equities, stocks, options, and funds. There is no minimum to open an account and it offers expert support, research tools and brokerage assistance. Access: Online and broker assisted in 25 foreign markets: Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Mexico, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom, Greece, New Zealand, Poland, South Africa, Canada, and Euroclear trades. Trading: Online real-time trading and broker assisted trades. Costs: Australia, AUD$50; Austria, EUR$75; Belgium, EUR$55; Denmark; DKK$475; Finland, EUR$65, France, EUR$50; Germany, EUR$50; Hong Kong, HK$390; Ireland, EUR$55; Italy, EUR$50; Japan, YEN$4,705; Mexico, MXN$800; Netherlands, EUR$55; Norway, NOK$470; Portugal, EUR$50; Singapore, SGD$100; Spain, EUR$60; Sweden, SEK$480; Switzerland, CHF$65; and United Kingdom, GBP $35. Please note that each of these Tier A online and broker assisted trades incur an additional fee of 25 basis points. Online and broker assisted Tier B trades include Greece, EUR$75; New Zealand, NZD$125; Poland, PLN$390; and South Africa, ZAR$575. Each Tier B trade has an additional fee of 35 basis points. The fee for Canada is CAD$40, plus CAD$0.01 per share. Euroclear trades are $35. Paperwork: All you need do is open a basic EverTrade brokerage account. You can fill out the account application online and send the signed document to EverTrade. (Note that The Sovereign Society has an advertising relationship with EverBank, and may receive compensation if you choose to open an account.) CHARLES SCHWAB The Schwab Global Account allows you to trade stocks online in 12 of the top-traded foreign markets. Charles Schwab also offers broker-assisted trades to more than 30 international markets. Access: Online access to 12 markets, all generally developed: Australia, Belgium, Canada, Finland, France, Germany, Hong Kong, Italy, Japan, Netherlands, Norway and the United Kingdom. Trading: Trade stocks directly online in 12 foreign markets and get real time quotes during foreign market hours. Global investing specialists are available 24/7. There is no account or trade minimum for The Schwab Global Account. Costs: Trading Australia online has a fee of A$32 and A$70 for broker-assisted trades. Belgium, Finland, France, Germany, Italy and the Netherlands trade for a fee of EUR$19 online and 50 for broker-assisted trades. Canada trades online for a fee of C$14 and C$70 for broker-assisted trades. Hong Kong trades online with a fee of HK$250 and HK$600 for broker-assisted trades. Japan trades online for a fee of 2000 and 6000 for broker-assisted trades. Norway trades online for a fee of 160 krone and 400 krone for broker-assisted trades. The United Kingdom trades 4

6 online for a fee of 9 and 30 for broker-assisted trades. Paperwork: If you already own a Schwab account, there is no additional paperwork. You just phone Schwab to place an order to buy/sell foreign shares and you will be connected with Schwab s foreign-trading desk. INTERACTIVE BROKERS Interactive Brokers is largely designed for traders rather than investors. The firm s commission structure is built around relatively active trading, and if your account does not generate a certain amount of income each month, either from commissions or other fees, the firm will impose a minimum charge on the account. As such, if you are not an active trader, meaning that you are more of a buy-and-hold investor, then you will have to pay money each month to keep your account in good standing. Interactive Brokers imposes an account minimum of $10,000, or $5,000 for an IRA. Access: 18 markets, all generally developed: Australia, Austria, Belgium, Canada, France, Germany, Hong Kong, India, Italy, Japan, Mexico, Norway, Netherlands, Singapore, Spain, Sweden, Switzerland, United Kingdom. Trading: Trading is online and tied to various types of platforms Interactive Brokers offers. The firm, for instance, offers a Trader Workstation that you download to your computer. It is, as the company calls it, relatively complex with a steep learning curve. Conversely, the firm also offers a basic Web Trader platform that is simplified for those who don t need the complexity of a workstation. Costs: Compared to other firms, Interactive Brokers commission structure is, like its workstation, relatively complex. You can choose to pay based on a bundled or unbundled commission structure. All new accounts, by default, are bundled, which means all fees, duties, levies and such are wrapped into a fixed commission rate per contract. Active traders might want to unbundle for various reasons, though for an average investor the bundled approach seems to be more cost-effective. Minimum bundled costs are: Canada, CAD$1; Mexico, 60 pesos; Euro markets, 4; India, 50 rupee; Sweden, 49 kronor; Switzerland, 10 francs; United Kingdom, 6; Australia, AUD$6; Hong Kong, HKD$18; Japan, 480; Singapore, SGD$2.50. (In U.S. dollar terms, those fall in the $1 to about $9 range.) Paperwork: Applications are available online. You must choose which market you want to trade in, and once the account is open you can add additional markets. Sometimes, I find that visuals help. That s why I ve included a chart at the end of this trading manual that examines these brokers side by side. Now You re Ready to Make Your First Trade At this point, the next step is up to you. You have to determine which of those accounts best fits your investment needs. Once you decide, contact that firm and get the process going. If your plan is to trade according to the recommendations I make, remember that the bulk of my trades require access to major Asian markets. It d be wise to factor that into your decision. With that completed, you re ready to go global and you re ready to follow me into the opportunities I see emerging all over the world. As I uncover those opportunities, I will tell you exactly how to place the trade using whichever brokerage firm you ve chosen. And that s it. That s how easy it is to go global without ever leaving the comfort of U.S. shores. You won t have 5

7 access to all the opportunities that exist overseas; for that you ll need to venture outside America and open brokerage accounts directly in foreign countries (also very easy). Still, you will have a great many chances to put your wealth to work in the world s major equity markets, such as Tokyo and Hong Kong. In doing so, you will be protecting your wealth against the long-term decline of the U.S. dollar, and you ll be profiting off the growth of companies that are serving the needs of consumers and businesses in other economies around the world. In the modern age, where cash easily flows across borders, the truly sovereign individual has money at work globally. That s where the real opportunities are these days. And now you have an easy way to access those global markets through U.S. brokerage accounts offering you access to the wider world of stocks. Until next time, stay sovereign Jeff Opdyke Editor, Sovereign Investor Broker EverTrade com/investing/brokerage Minimum Investment No Minimum Commission Available Markets Comment Tier A: Australia, AUD$50; Austria, EUR$75; Belgium, EUR$55; Denmark; DKK$475; Finland, EUR$65, France, EUR$50; Germany, EUR$50; Hong Kong, HK$390; Ireland, EUR$55; Italy, EUR$50; Japan, YEN$4,705; Mexico, MXN$800; Netherlands, EUR$55; Norway, NOK$470; Portugal, EUR$50; Singapore, SGD$100; Spain, EUR$60; Sweden, SEK$480; Switzerland, CHF$65; and United Kingdom, GBP $35. Tier B: Greece, EUR$75; New Zealand, NZD$125; Poland, PLN$390; and South Africa, ZAR$575. Canada is CAD$40, plus CAD$0.01 per share. Euroclear trades are $35. Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Mexico, Netherlands, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, United Kingdom, Greece, New Zealand, Poland, South Africa, Canada, and Euroclear trades. With EverTrade, there is no minimum to open an account and you get expert support, research tools and brokerage assistance. You have access to 25 overseas markets online. Tier A online and broker assisted trades incur an additional fee of 25 basis points. Each Tier B trade has an additional fee of 35 basis points. 6

8 Fidelity Broker Charles Schwab Trades are either online or broker assisted Interactive Brokers Platforms: Trader Workstation WebTrader IB-BRKR USD 2,500 Minimum Investment USD 1,000 USD 10,000; IRAs: USD 5,000 Australia: AUD$32, AUD$70 Canada: CAD$19, CAD$70 Denmark: DKK$160, DKK$420 Hong Kong HKD$250; HKD$600 Japan: JPY$3,000, JPY$8,000 Mexico: MXN$360, MXN$960 New Zealand: NZD$35, NZD$90 Norway: NOK$160, NOK$400 Poland: PLN$90, PLN$235 Singapore: SGD$35, SGD$90 South Africa: ZAR$225, ZAR$600 Sweden: SEK$180, SEK$480 Switzerland: CHF$25, CHF$65 U.K: GBP$9, GBP$30 Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Netherlands, Portugal, and Spain: EUR$19. Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Singapore, South Africa, Spain, Sweden, Switzerland, and the United Kingdom. You ll have access to 25 overseas markets in real time, all online. All are major markets, meaning no access to fast-growth emerging markets. Commission Available Markets Best Suited For: Australia 32 AUD, 70AUD Belgium 19 EUD, 50 EUD Canada 14 CAD, 70 CAD Finland 19 EUR, 50 EUR France 19 EUR, 50 EUR Germany 19EUR, 50 EUR Hong Kong 250 HKD, 600HKD Italy 19 EUR, 50 EUR Japan 2000 JPY, 6000 JPY Netherlands 19 EUR, 50 EUR Norway 160 NOK, 400 NOK United Kingdom 9 GBP, 30 GBP Fee is determined by volume of monthly trades, country, and type of trade (stocks, ETFs, or warrants). Australia, Belgium, Canada, Finland, France, Germany, Greece, Hong Kong, Italy, Japan, Netherlands, Norway and the United Kingdom. Australia, Austria, Belgium, France, Germany, Italy, Norway, Netherlands, Spain, Canada, Hong Kong, India, Japan, Mexico, Singapore, Sweden, Switzerland, and the United Kingdom. Direct online access to 12 overseas markets and there is no minimum. There are also broker assisted trades to more than 30 international markets and the account minimum is only $1,000. Investors may shy away from the word Active in Interactive. You can avoid fees if the account generates a minimum amount of income for the firm each month. IAB offers both a Web platform and desktop software designed with traders in mind, which means you can trade its 18 overseas markets online. 7

9 The Sovereign Society 55 NE 5th Avenue, Suite 200 Delray Beach, FL USA USA Toll Free Tel.: Website: Legal Notice: This work is based on what we ve learned as financial journalists. It may contain errors and you should not base investment decisions solely on what you read here. It s your money and your responsibility. Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed to address your particular investment situation. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments such as futures, options, and currency trading carry large potential rewards but also large potential risk. Don t trade in these markets with money you can t afford to lose. Sovereign Offshore Services LLC expressly forbids its writers from having a financial interest in their own securities or commodities recommendations to readers. Such recommendations may be traded, however, by other editors, Sovereign Offshore Services LLC, its affiliated entities, employees, and agents, but only after waiting 24 hours after an internet broadcast or 72 hours after a publication only circulated through the mail. Please note that due to our commercial relationship with EverBank, we may receive compensation if you choose to invest in any of their offerings. (c) 2015 Sovereign Offshore Services LLC. All Rights Reserved; protected by copyright laws of the United States and international treaties. This Report may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Sovereign Offshore Services, LLC. 55 NE 5th Avenue, Suite 200, Delray Beach FL