by Travis Johnson, Stock Gumshoe | April 4, 2014 1:54 pm
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Source URL: https://www.stockgumshoe.com/2014/04/michael-kao-akanthos-capital-the-tao-of-asymmetric-investing/
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Not sure why all the talk about investing outside of the good old USA. Once I see it’s a foreign investment, I’m done reading the article.
There are some good reasons to invest outside the USA. The most obvious one is diversification. Just as you should diversify your investments across several sectors you should also diversify across other countries.
The bigger reason though is foreign exchange. For example I purchase a lot of Canadian oil producers. They have gained 9% just on the US dollar vs the Canadian Dollar.
The dollar has been weak against several currencies so by having foreign stocks you also have earnings on the dollar play as well as the value of the investment.
A third reason is interest rates. The US is artificially holding down interest rates partly to reduce the interest cost of their debt. Other countries often pay higher interest rates.
Most of the investments in US companies may much of their money outside the US anyway such as Apple whose products are manufactured in China and a significant portion of their earnings are outside of the US. They also keep that capital outside of the US because the US has the highest corporate tax rate of any country in the world.
That same arguments carried further would be I only invest in my home state or I only invest in my home city. The irony is that many investors do just that investing in companies they know because they are local.
Up over 12 % today! Somebody really likes it!