Go For Profits With International ETFs (FAA, THD, GDXJ, EPU, GXG, ECH, TUR, IDX, AMJ, PXQ, EWZ, FXI, ILF, EWM, EWS, PGJ, EWW, EZA, VWO)

Let me ask you a question. Suppose you have the ability to invest in any stock market in the world. One of the largest markets has lagged badly for many years now. And there are few reasons to think the situation will improve.

Would it make sense to put the bulk of your assets in that relatively weak market?

“No, of course not,” you will probably say. Good for you!

Unfortunately, most U.S. investors are making the wrong choice … and many so-called “experts” are cheering them on. How can this be?

Simple: The weak lagging market I mentioned above isthe U.S.! And sadly, thousands of professional financial advisors tell their clients to stick with the “safety” of U.S. stocks.

I wish I knew why so many of my peers refuse to face reality. Maybe it’s just a force of habit.

However, those investors dohave the ability to invest around the world — with hundreds of international exchange traded funds (ETFs).

So today I’m going to give you three challenging questions you should ask any investment advisor, stock broker or newsletter editor who tells you to keep most of your money in U.S. stocks, mutual funds or ETFs.

Challenging Question #1:
Is it hard for me to invest in
non-U.S. stock markets?

There was, in fact, a time when practical considerations made it very difficult for American investors to get overseas exposure. Many brokers couldn’t process foreign trades, the tax paperwork was complicated, and it was hard to get news from off-the-beaten-path places.

These barriers are no longer relevant — and anyone who tells you otherwise is sadly uninformed. Let’s look at them in order …

  • With a few mouse clicks or a quick phone call, you can buy or sell an ETF like iShares MSCI Singapore (NYSE:EWS) just as easily as an S&P 500 index fund. Both trade on the same exchanges. No need to get up in the middle of the night and call a broker on the other side of the world.
  • Tax paperwork? You’ll have to speak with your Congressman if you want to get rid of it completely. A good interim step is the simple tax reporting that you can get even from discount brokers today. You don’t have to frustrate yourself trying to calculate your cost basis … unless you just enjoy that sort of thing.
  • International news is easy to find on the web now. Sometimes the sources are questionable. But there is no shortage of basic news and analysis, even on the most obscure exchanges. You can read the local newspapers online at the same time as Wall Street’s analysts.

Therefore, the argument that investing overseas is somehow hard for the average investor just doesn’t hold water.

Challenging Question #2:
Which ETFs have the best short-term
and long-term performance?

The table below shows you the top ten best-performing unleveraged equity ETFs for the one-year and five-year periods ended 11/12/2010. All are readily accessible to U.S. investors.

International ETFs dominate the winner's list!
International ETFs dominate the winner’s list!

ETFs mentioned in the table: Claymore/NYSE Arca Airline (NYSE:FAA), iShares MSCI Thailand Invest Mkt Index (NYSE:THD), Market Vectors Junior Gold Miners ETF (NYSE:GDXJ), iShares MSCI All Peru Capped Index (NYSE:EPU), Global X/InterBolsa FTSE Colombia 20 ETF (NYSE:GXG), iShares MSCI Chile Investable Mkt Idx (NYSE:ECH), iShares MSCI Turkey Invest Mkt Index (NYSE:TUR), Market Vectors Indonesia Index ETF (NYSE:IDX), JPMorgan Alerian MLP Index ETN (NYSE:AMJ), PowerShares Dynamic Networking (PXQ), iShares MSCI Brazil Index (NYSE:EWZ), iShares FTSE/Xinhua China 25 Index (NYSE:FXI), iShares S&P Latin America 40 Index (NYSE:ILF), iShares MSCI Malaysia Index (NYSE:EWM), iShares MSCI Singapore Index (NYSE:EWS), PowerShares Gldn Dragon Halter USX China (NYSE:PGJ), iShares MSCI Mexico Investable Mkt Idx (NYSE:EWW), BLDRS Emerging Markets 50 ADR Index (NYSE:ADRE), iShares MSCI South Africa Index (NYSE:EZA), Vanguard Emerging Markets Stock ETF (NYSE:VWO).

You’ll notice that most of the top-ranked ETFs for one year, and ALL of the top-ranked for the last five years, specialize in international markets, particularly emerging markets. Yet relatively few investors have money in them!

This brings us to our third and most important question:

Challenging Question #3:
Why should I invest my money anywhere else?

To me, the answer to this question is quite obvious. Global economic power is shifting away from North America and Western Europe. The new leaders are in Asia and Latin America.

I’ve written about that mega-trend many times. Of course, I’m not saying there are never any opportunities to profit in the U.S. Obviously there are. My point is the potential is even greater elsewhere.

And to me, the logical answer is to follow the momentum wherever it leads.

Are international and emerging markets ETFs volatile? Yes, of course. They’re subject to political unrest … currency turmoil … natural disasters … and assorted other risks.

These are pretty much the same risks you take in U.S. stocks!

Like it or not, risk is everywhere. You can’t escape it — but you can use it wisely. I think international ETFs are one of the wisest risks an investor can take. That’s why I use them extensively. You should do likewise if you want to survive and profit in the coming decades.

You can get specific buy and sell recommendations for many global ETFs in my International ETF Trader service. Martin Weiss and I made a free video presentation to tell you more. Click here to check it out.

Written By Ron Rowland From Money And Markets

Money and Markets (MaM)is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaMare based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Selene Ceballo, Amber Dakar, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com/.

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