Hungarian Heritage Review, 1986 (15. évfolyam, 1-12. szám)
1986-07-01 / 7. szám
] 26 HUNGARIAN HERITAGE REVIEW JULY 1986 Shearson Shearson LEHMAN v /ftV HííliT LEHMAN BROTHERS iiitvtniÄ tlF?ni>f>’ Ill rrmnr BROTHERS An American Express company /mi/ArX' VI/ V VA' X V l V U An American Express company a C CT-by-B © MARK MOCHARY © INTERNATIONALIZING YOUR INVESTMENTS The idea of buying foreign securities may be “foreign” to some Americans, but to a growing number, it is an idea whose time has come. Many investment experts now recommend putting from 5 % to 15% of your portfolio into foreign securities for a variety of reasons, including the following: • Investing abroad can smooth the cyclical peaks and valleys in your portfolio, since foreign stock markets (especially those in Europe) are often up or rising when the U.S. market is down or declining. This is due largely to the fact that economic recoveries or recessions abroad lag behind those of the U.S. • Some countries and regions enjoy higher longterm economic growth rates than the United States. Skilled investment professionals can often spot fast-growing companies in such areas that present attractive investment opportunities. • Expanding your horizons provides twice as many investment choices. The U.S. stock market represents only about half the publicly traded corporations in the world. The value of the dollar can be a plus or a minus in international investing. To maximize your return, the dollar should be strong when you buy foreign stocks (because, in effect, you’ll pay “bargain” prices) and decline after you buy them which automatically raises their dollar value. Some international investment analysts believe this favorable situation is occurring right now. Although the dollar has been declining, they say it is still high enough to make foreign stocks attractive. And, since it is expected to keep falling, those securities will gain in dollar terms whether or not the stocks themselves appreciate. If you want to invest in foreign stocks, you have two choices: purchasing individual foreign stocks yourself or buying shares of mutual funds that concentrate on foreign stocks. The latter is by far the most convenient, safest and most sensible route for the average investor. Internationally-oriented mutual funds provide all the advantages of mutual funds generally — diversification, professional management, liquidity — while seeking investment opportunities around the globe. You may choose a fund that invests only in foreign securities (called an international fund) or one that also invests in some U.S. issues (called a global fund). For example, the Shearson Global Opportunities Fund has about 70% of its assets outside the United States, 30% within this country. On the other hand, the International Equity Portfolio of the Shearson Lehman Special Equity Portfolios, invests primarily in foreign securities. When you invest in a mutual fund, you don’t have to worry about such matters as converting dollars to purchase shares priced in foreign currencies, physically holding foreign securities and determining what portion of your gains are taxable under U.S. law. (The mutual fund sends you this tax information.) Investing on your own, though easier than in the past, is still a bit complicated — and the full range of foreign issues available to a mutual fund manager is not readily available to you. Just over 100 non-U.S. companies are listed and traded on the New York and American Stock Exchanges, although many more trade in the over-the-counter market. However, if you buy anything but foreign blue chips, you will probably not get much financial information on the company — and what you do get is unlikely to be in English. When a foreign company lists its stock on an exchange as a U.S. security (Canadian companies, in particular, do this), you can acquire actual shares, just as you would with a U.S. stock. In other cases, what you get is called an American Depository Receipt (ADR), a document representing shares in a foreign company that are held at an overseas bank. You can buy and sell foreign companies’ shares and ADRs through your Financial Consultant. Shmrson Mark P. Mochary LEHMAN BROTHERS Financial Consultant An American Express company Shearson Lehman Brothers Inc. 666 Fifth Avenue New York, New York 10102 212 974 3200 1 800 223 6024
