Investing overseas provides more for the investor to consider. The exchange rate of currencies, local government controls, company report filing methods (may be different than U.S.), and war can all have an effect on the company you invest in that is based in another country.
The investor can invest in a U.S. based company that has a portion of its revenues coming from foreign countries. An example of this is the S&P 500 for the year of 2009. The companies (stocks) in the S&P 500, representing (you guessed it ), 500 companies have a total revenue of $7.9 Trillion, coming from European exposure. A further break down is; Overseas revenue $2 Trillion, and Europe revenue $513 Billion.
Only half of S&P 500 companies report revenues region by region. Some companies only say 'Foreign Sales'. Example; Africa, and the Middle East are all placed on the same revenue line. High exposure to Europe, by percent of exposure are; Dow Chemical 33.5%, Johnson and Johnson 26%, GE 24%, Ford 16%, and Exxon Mobil 11%.
This information is based on SEC (Securities and Exchange Commission) filings. Europe represents only six percent of the total S&P 500 revenues. Half a Trillion dollars of exposure, from a total of eight Trillion, is only six percent. This ratio provides the investor with protection from local problems overseas like the European sovereign debt or the euro. U.S. companies have a low percentage of exposure, compared to an investor buying stock in a company entirely invested on foreign soil.
Buying American companies that have exposure overseas, adds to the safety an investor requires and should have when investing. The companies I listed in this blog, are just some that receive part of their revenues from other countries.
Another way to invest in other countries would be ETF's (Exchange Traded Funds). These trade just like stocks, and are each a package of several different companies. Be sure to see what is in the ETF your considering, and if you like what is in the package (do homework on some of the companies), then get in.
I encourge you to always do your homework (research), invest at your personal risk tolerance, and stay informed. For more information Email me, Bruce@YouControlinvesting.com, and visit our site http://www.YouControlinvesting.com/ to get more investing instruction. www.Twitter.com/StockMktTeacher provides current information of interest to the investor, as a way to receive more market information.
Good investing,
Bruce Cortez, Instructor, Founder of http://www.YouControlinvesting.com/
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Good advice again
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