The Investor Diary Entry #33: April 29, 2023
It is a well-known fact that being able to invest in the global market is much better than being confined to one market. This applied to any kind of investing whether it is investing in stocks, real estate, Forex … etc.
There are Global Markets investing challenges that are specific to a certain type of investment, and there are challenges that are shared amongst the different investment tools.
In this entry we will discuss our view on those challenges and divide them into two main categories; broker provisioning challenges, and political challenges.
Broker Challenges
It is not easy to find a broker who would give you access to investing in global markets. Those brokers are very limited in numbers, and if you do find such brokers you would find that there are other issues on their platform that don’t satisfy your needs.
Another major challenge is that brokers, especially online brokers, have limitations to countries that can open accounts on their platform. Furthermore, outside the western countries, or countries that have opened up retail investment or allowed small investors to invest in financial markets, domestic brokers have very complicated and hardly transparent procedures for investors.
When it comes to real estate investment, things can get a lot shadier. Being able to trust a real estate broker in a country other than the one that you are residing in is the major challenge on many fronts.
In a previous entry I mentioned that I was able to find one broker who would allow me to open an account from my country of residence and it is not the one I am promoting on this diary. Fortunately, this broker has access to global markets, but not without many challenges including not knowing why still I have limitations on some markets, and the rules of investing that appear only when trying to open a position.
Firstrade, which is the broker promoted here, allows accounts from several countries, but gives access to investing only the US market. I wrote more details on this issue here.
On the real estate front, we are on the verge of finding a local broker who has access to some international markets. We are still studying this option and I presume that this will take several months before making any positive investment moves.
Political Challenges
I love the value investing strategy, and I try to apply it as much as I can. I say as much as I can, because when small cap companies in new industries attract my attention, it is impossible to evaluate those companies and define the price at which such a company is at value.
There are many experts who say that it is extremely difficult to find value stocks within the US stock market. They also say that now, value stocks are easier to find in Europe and in some Asian markets.
Last week three headline news caught my attention; Recep Tayyip Erdogan fallen sick during a live broadcast, China to send envoy to Ukraine to mediate on the Russian – Ukraine war, and Biden announcing his reelection bid for 2024.
I will not indulge here in my personal views of those headlines, but those headlines made me think of the countries that were involved in them.
There are countries that are run by individuals, and others that are run by systems. An individual comes and goes, but systems stay and evolve over time. I know it is not as black and white as those simple statements are projecting, and I know that each statement is highly debatable.
Those statements explained to me why am I reluctant to invest outside of the US and European markets. Another reason, is that I don’t have access to business news and company analysis outside of those two major markets.
Just yesterday I heard of a Chinese company that went from $6 a share to #250 in one session. The two major challenges here are the fact that there is too much interference from the government on the private sector and the major example is what is happening with ANT Group, and the second challenge is that I have no clue how to analyze companies in the Chinese market.
I am not talking here about investing in Ali Baba, because this company is traded in the US stock market, I am talking about Chinese companies that are traded only in China.
Let us say that I found a way to analyze Chinese companies, or someone wrote me a comment below this blog post saying here is a place where you can find Annual Reports and financial statements of any Chinese company. Better yet, here is a platform which allows you to screen for Chinese companies on various indicators. Would I be encouraged to invest in the Chinese market?
The idea is the following; by investing in Chinese companies, I would be sending my money to China. The main issue here, is how stable and transparent the system in the Chinese market that I would trust to send my money there. Of course, Chine and the Chinese market is only an example. From my standpoint, the same argument can be drawn on the Vietnamese market and the Romanian market, and all those are examples and not case studies.
Is There A Solution?
Currently I cannot think of any. Today I am struggling to figure out why I am not able to open a position in a Swedish company with my broker, although the broker’s platform says that my request to invest in this market has been approved. This has been going on for a couple of months now.
If the procedure of investing in Sweden is not clear, how can I trust investing in less organized markets?
The Chinese strategic move into becoming a player in international conflict presented by their brokered deal between Saudi Arabia and Iran, and now with the Russian – Ukrainian war, are increasing my concerns about the future of the US political positioning.
Add to that the BRICS VS. US Dollar strategic play which brings us to the headline of Biden bidding for reelection. This deterioration of US position in world politics and economics happened on his watch. Therefore, what are the possible consequences on the US financial market?
Conclusion
One major challenge here is that we’re afraid of what we don’t know, but in this case, I don’t know because things are not transparent.
If the process of knowing is transparent, then knowing is easy, and once I know things become clear. Therefore, my decision to invest or not to invest will not be based on ambiguity, but on facts.
In value investment if the answer to investing in a certain company is an absolute yes, then it is a no. Therefore, if a market is ambiguous to me, and it is hard for me to know how safe is money in that market, then the whole list of companies in that market is a no. If it is a definite yes, then it is a no.
Therefore, it is currently a no to invest in the global market.
If 2024 brought back a Biden – Trump elections would I be saying the same about the US market?
The Investor
Saturday 29 April 2023
About The Author
I started to look into individual stocks in January 2022. I created this diary initially for myself to track my investing progress, and second as a place that I can share my ideas publicly hoping that others will share their ideas and learn from each other, and lastly as an online business where some links that I share are affiliate links, and if anybody bought anything by clicking those links I will get a commission based on that successful sale, which of course will not affect the price that you are buying the product or service at.
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