Offshore Investing
Forbes magazine advises that in order to invest in foreign stocks, we can choose between buying American Depository Receipts (ADRs) which are traded in the U.S., or the home-based shares themselves.
The rule of thumb generally is to go with the ADRs for convenience sake, unless the average daily volume is less than 10% of the stock's home-market value.
If the trading volume is thin, even a modest order could push up the purchase price in the U.S.. And thinly-traded ADRs also may have a wide bid-ask spread, which means that you buy high and sell low.
Depending on the foreign market involved, you could set up an account with E*Trade or EverBank in order to buy foreign stocks directly in their home market.
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The rule of thumb generally is to go with the ADRs for convenience sake, unless the average daily volume is less than 10% of the stock's home-market value.
If the trading volume is thin, even a modest order could push up the purchase price in the U.S.. And thinly-traded ADRs also may have a wide bid-ask spread, which means that you buy high and sell low.
Depending on the foreign market involved, you could set up an account with E*Trade or EverBank in order to buy foreign stocks directly in their home market.
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posted by Bob Moser at
8:22 PM
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