What is an ADR #globalinvesting #shorts #investor #currency #adr #banks

Gary Brode of Deep Knowledge Investing and Robb Fahrion of Flying V Group discuss the 5 Things to Know in Investing This Week: The Bitcoin to $100k Issue

-The risks of international investing. We’re not against it. We just think you should understand your exposure.

DKI Summary:

Investing internationally presents a wide range of opportunities for investors, including greater diversification and potentially higher returns from emerging markets. One of the easier ways to invest internationally is through an American Depositary Receipts (ADR). Here’s how it works: a domestic financial institution purchases shares of a foreign stock, converts the shares’ currency into U.S. dollars, and holds them as inventory. The stock then operates like a typical stock on a U.S. exchange. However, one important consideration is that currency risk still applies as the ADR’s value depends on the exchange rate between the US dollar and that of the home country’s currency. One of the largest ADRs in the U.S. is Taiwan Semiconductor $TSM, which operates as an ADR since the company is based in Taiwan.

DKI Takeaway:

At DKI, we focus primarily on U.S. equities for several reasons. First, currency risk can significantly impact your returns when investing abroad. While emerging markets may offer the potential for higher returns, there are sometimes concerns about fraud in some markets. In the U.S., the SEC enforces a wide range of laws intended to protect investors from fraud. Internationally, however, regulatory systems are often less stringent. China is one example as it prevents its companies from complying with US audit regulations. A critical component of U.S. regulations is the accounting requirements for companies reporting earnings. In contrast, international policies may vary, making it more difficult for investors to ensure they are basing their decisions on accurate information. Right now, money is flowing into US markets partly because of exposure to high-growth companies and partly due to reporting transparency. If you're interested in learning more about our positions, we encourage you to subscribe to a DKI premium membership.

Your links:

This week's written version of the 5 Things with graphs:

https://deepknowledgeinvesting.com/weekly-points-december-5th-2024/

Deep Knowledge Investing Subscription Page: https://deepknowledgeinvesting.com/we...

Tony Nash

X: https://x.com/TonyNashNerd

Website: https://completeintel.com/

Flying V Group: https://www.flyingvgroup.com/

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Видео What is an ADR #globalinvesting #shorts #investor #currency #adr #banks канала Deep Knowledge Investing