Icon8888 Gossips About Stocks
(Icon) Why You Should Learn To Invest In Overseas Stocks
1. Misperception
All this while, I invested only in Bursa Malaysia. Occasionally, I saw people wrote articles about investing overseas such as US, Indonesia, Thailand, Hong Kong, etc. I seldom paid attention. To quote a relative of mine, "I would rather stay within my circle of competence."
And also, Malaysia is a developing nation, that is where the growth is going to be, right ? As an investor that craves capital gain, why would I want to invest in blue chips in developed countries such as the US ? They are mostly sleepy giants, aren't they ?
How wrong have I been.
2. Plenty of Multi Baggers
Last year I spoke to a friend that happened to have invested in US stocks. Nothing fancy or exotic, just some well known names such as Apple, Broadcom, Disney, etc. He told me he made quite a bit of money. Out of curiosity, I studied the historical prices of some famous names. It struck me how easy it is to find Multi Baggers.
(Over the past 10 years, Adobe share price rose from USD30 to USD297, a gain of 900%)
(Over the past 10 years, Airbus share price rose from EUR11 to EUR136, a gain of 1,136%)
(Over the past 10 years, Amazon share price rose from USD138 to USD1,739 a gain of 1,160%)
(Over the past 10 years, Apple share price rose from USD13 to USD265, a gain of 1,900%)
(Over the past 10 years, Boeing share price rose from USD42 to USD371, a gain of 783%)
(Over the past 10 years, Booking share price rose from USD91 to USD1,848, a gain of 1,900%)
(Over the past 10 years, Broadcom share price rose from USD17 to USD312, a gain of 1,700%)
(Over the past 10 years, Microsoft share price rose from USD20 to USD150, a gain of 650%)
(Over the past 10 years, TSM share price rose from USD8.5 to USD53, a gain of 523%)
(Over the past 10 years, Disney share price rose from USD23 to USD144, a gain of 526%)
3. Key Observations
(i) Unlike in Malaysia, multi-baggers are much much more abundant in developed countries. This comes as a shock to most of us. Aren't the US and Europe matured economies ? Why are their companies growing so well ?
Because of two reasons : (a) These companies have moat. As such, they are able to register compounded growth over an extended period of time. (b) Despite from developed countries, these companies are world class and sell their products and services all over the world. There is no limit to their market size.
(ii) Fair enough, PE multiples of these companies are not low. They range from 20 times to 50 times. But this is the characteristics of strong companies. When you invest in good stocks, don't expect to buy cheap. You are supposed to pay a fair price for quality. Since they are growth companies, over the years their earning will catch up, making your original cost of investment looked cheap.
4. Concluding Remarks
(a) There are two ways you can invest in the stock market.
The first way is Value Investing. You buy stocks that are undervalued, wait for them to be re-rated within one to two years (sometime it takes shorter or longer than that), then you sell them and switch to other undervalued stocks, when the opportunity arise.
The second way is Growth Investing. You buy stocks that have moat. You hold on to them for ten to twenty years, or even longer. Due to earning growth, the stock price will rise conitnuously and deliver you few hundred to few thousands percent return.
(b) I practise both Value Investing and Growth Investing.
For Value Investing, I stick to Bursa Malaysia.
For Growth Investing, I will park my money with great stocks in developed economies such as US, Europe, Japan, etc. Why not Malaysia ? Because based on my observations, very few Malaysian companies have moat. The chance of picking wrong stocks is much higher compared to those in developed countries. The last thing I want is to hold on to a stock for 10 years only to find out that I was wrong, and the stock stagnated and did not generate the return I aim for.
(c) For my foreign portfolio, I will not put my money in developing economies (Indonesia, Thailand, Hong Kong, etc). Companies in these economies are likely similar to Malaysia. It is likely that not many will have real moat, and very few will eventually become multi baggers. For Value Investing involving switching from one stock to another every one to two years (not due to lack of patience, but due to cyclicality), I would rather play at my homeground, Malaysia whereby I will have the advantage of familiarity.
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Discussions
12 people like this. Showing 50 of 76 comments
Hehehe, Icon please change yr profile photo. Hard to explain but its uncomfortable
2019-11-19 13:43
that is Calvintaneng photo
========
Targeted Hehehe, Icon please change yr profile photo. Hard to explain but its uncomfortable
19/11/2019 1:43 PM
2019-11-19 13:58
you cannot be more wrong, I don't really belong to your world and circle
I have explained many times to you that I am not against Buffetology whereby you buy good companies at fair price and hold on for long term so as to enjoy compounded growth year after year. I think it is a fantastic concept
I disagree with you on two things :
(1) how you practise Buffetology. Your Nestle is a good company, but it is trading at 50 times PER, and its only market is Malaysia. As such, it is difficult to convince me that it will continue to grow and deliver capital gain over extended period of time. At most, it will be paying you good dividend (which is not so fantastic, for me).
(2) the way you condemn anything other than Growth Investing. I am open minded and accept both Growth Investing and Value Investing as valid investment philosophy.
3iii Icon8888 Finally, you acknowledged growth investing. Welcome to my investing world and circle.
19/11/2019 1:43 PM
2019-11-19 14:25
overseas market is to vast and complicated
need spend lots of time & effort to monitor
buy unit trust that have overseas exposure is smarter choice
2019-11-19 14:46
"overseas market is to vast and complicated "
That was exactly how I felt at the beginning (please read Section 1 of my article)
However, after I started investing overseas, I realised that due to the high quality of the companies (applicable to those strong companies in US), stock picking has actually become substantially less complicated
there are less risk factors to be considered
that is why in the Concluding Remarks, I mentioned that I will only invest in strong stocks in developed countries
so far, my only pick is Taiwan Semiconductor Manufacturing Company. It fulfils the criteria for long term hold due to its technological supremacy that almost makes it a monopoly OVER THE NEXT FIVE YEARS AT LEAST
2019-11-19 14:53
Icon8888 sifu, u bought Taiwan Semiconductor Manufacturing from Taiwan stock market or the US stock market? I think it is also good to invest in Taiwan
2019-11-19 15:31
Icon's article only applicable to the top 2% of Malaysians who are extremely knowledgeable and filthy rich.
2019-11-19 15:59
Icon, I support you... when you go to overseas investing, one will discover the number of quality companies that's available... watchout for Disney too...
2019-11-19 17:00
Thats why i say u must use peter lynch strategy instead of buffet strategy bcos LYNCH offer u more investment choices mah...!!
Posted by Sslee > Nov 19, 2019 5:25 PM | Report Abuse
Hahahaha
3iii, Incon8888's gruesome stock Armada is now RM 0.53.
2019-11-19 17:28
If u can get more than 100% in 4 mts like armada...are u not compounding leh ??
Posted by 3iii > Nov 19, 2019 5:29 PM | Report Abuse
>>>>
Posted by Sslee > Nov 19, 2019 5:25 PM | Report Abuse
Hahahaha
3iii, Incon8888's gruesome stock Armada is now RM 0.53.
>>>>
The power of compounding long-term is truly amazing. Beats these short term gains many hundreds of time over each year.
2019-11-19 17:31
Everytime my portfolio value doubled, the incremental value of the last doubling period exceeds the gains derived from all the period before since inception of my portfolio.
That is the true power of compounding over the long term.
2019-11-19 17:35
U slowly tunggu loh...NESTLE PE 50x will take at least 30 yrs to double loh....!!
Posted by 3iii > Nov 19, 2019 5:35 PM | Report Abuse
Everytime my portfolio value doubled, the incremental value of the last doubling period exceeds the gains derived from all the period before since inception of my portfolio.
That is the true power of compounding over the long term.
2019-11-19 17:37
>>>>
stockraider U slowly tunggu loh...NESTLE PE 50x will take at least 30 yrs to double loh....!!
>>>>
Since 2009, Nestle price has gone up 7 multibaggers. At every price, raider asked those with Nestle to sell!
2019-11-19 17:46
Raider should be honest.
Nestle has delivered hugely to its long term investors.
2019-11-19 18:00
lack of sleep shortens lifespan irrevocably
takes more than 2 weeks to recover disturbed sleep patterns
rich people are usually educated nowadays.
the illiterate rich have all died
educated people know how to take care of health.
for the rich, there is no reason to invest in the US.
for the poor, they just cannot afford it.
leaving just those extra greedy semi-rich people who want more money at the expense of shorter lifespan. Die faster never mind. The money fanatics.
2019-11-19 19:08
wei..is that image really calvintan? but it matches the image i had on him quite closely!...really handsome man.
the singer who sang pen-pineapple-pen also looks similar i think...cant remember!
Posted by Icon8888 > Nov 19, 2019 1:58 PM | Report Abuse
that is Calvintaneng photo
========
2019-11-19 19:58
I think those accumulated reasonable capital from local stocks...should venture overseas slowly with small capital first...to feel the depth of the water...at least for 6 months...before going heavy...
Icon, soojinhou...kindly post your recommendations in i3...
easy for part-time man like me to monitor in a single location.
2019-11-19 20:01
Malaysia stock:
1. Boss earn money for continuously few years positive net profit and thinking to listed in KLSE.
2. After listed in Bursa, Boss start how to draw the graft, earn huge profit, high enumeration and so etc.
3. This cycle can repeat at least 10-20 years.
4.No value, less dividend, less attractive.
US stock:
1. Boss start a business, the whole mindset is thinking about creating value.(this value mean value and impact to society but not the money value)
2. After company get profit, boss absorb more talent, R & D creating more value.
3. The counter in US basically have 2 important characteristics (cpital growth and dividend growth)
4. The rise in stock price is not cycle or goreng , but the value they sell their service to entire world.
2019-11-20 10:51
IN Malaysia: Many good company creating value...but wrong marketing in whole world and less creativity...
Eg. Topglov, Kossan, Airasia, Penta....Only Glove company in Malaysia creating value. But the power is too low...For Airasia, due to political issue.....
The should learn, AIA, ALlianz, GE how they penetrated into other country even their own country have their own firm.
2019-11-20 10:55
you can trade with etrade. just open a trading account outside...just be aware that trading involve the risk of "currency exchange" on top of the stock performance.
2019-11-20 13:07
Any recommendation on a good, low cost broker to invest in foreign equity? I trade options with saxotrader and tastyworks. Both aren't so great for long term investing because of the maintenance costs. There is saxo investor which looks great but it's not available in Malaysia. TD ameritrade seems reasonable, I'm in the process of opening an account with them. Anyone uses TD? Or hv other suggestions.
I use maybank to invest in bursa. I hv a foreign trading account but it seems too much of a hassle and even my remiser doesn't suggest I use it.
2019-11-20 17:35
I agree with most of your points.
And my comments are similar to ricky's.
Anybody who is looking for a broker, go for interactive brokers.
2019-11-20 19:25
As soojinhou said,
PE 10 in malaysia is actually not that cheap, when interest rates are 3%, you are getting a premium of only 7% assuming you are perfectly right and the money is reinvested right.
2019-11-20 19:28
just a simple reminder : if u cannot make money in your own tuff .. u cannot make in other ppl, if u lose money in your tuff, u will lose even more .. on top of poor info, late news, poor grasp of other country, foreign exchange eating up your money, got scammed, any development u will be the last to received, ... i've known personally a lot of ppl ... real ppl ... who started with bursa, go to FX, then oversea stock, then option, then ... disappear. THEY LOSE and LOSE and LOSE. One thing they wish ... to turn back the time, and never touch anything at all. These are TRUE STORIES. Sekian.
2019-11-21 09:33
leno, my article says that you should invest in good foreign companies that can be held for real long term so as to enjoy compounded growth (I argue that such companies are rare in Malaysia, it is like looking for fish in desert)
I never ask people to punt forex, option, or speculative trade at foreign market
for those kind of activities, do it in Malaysia, if you want, so as to enjoy home advantage
I thought my article makes it very clear ?
2019-11-21 09:54
>>>>
Posted by leno > Nov 21, 2019 9:33 AM | Report Abuse
just a simple reminder : if u cannot make money in your own tuff .. u cannot make in other ppl, if u lose money in your tuff, u will lose even more .. on top of poor info, late news, poor grasp of other country, foreign exchange eating up your money, got scammed, any development u will be the last to received, ... i've known personally a lot of ppl ... real ppl ... who started with bursa, go to FX, then oversea stock, then option, then ... disappear. THEY LOSE and LOSE and LOSE. One thing they wish ... to turn back the time, and never touch anything at all. These are TRUE STORIES. Sekian.
>>>>>
I have to agree with Leno totally.
You will know the local companies a lot better than the foreign ones.
As long as these companies are "WITHIN YOUR CIRCLE OF COMPETENCE", you will do alright.
2019-11-21 11:18
I have nothing to add
TSMC also doing well. I have reserved 10% for TSMC, still got 90% to trade/ speculate in Malaysia.
2019-11-21 12:12
I like Icon8888 open minded and humble, most importantly willing to share :)
I dont know about moat but i do know those companies like Airbus/Boeing, Adobe/Microsoft do have global moat. If i open an airline company, where else i buy airplane other than Airbus/Boeing?
If i open a company need softwares to install on the PCs, wherelse i go other than Adobe/Microsoft etc.Same goes to TSMC hehehe, Such companies are really not easy to find in Malaysia market.
I believe in business world if there is no growth,the value will be destructed over time. 逆水行舟，不进则退。 So growth is always no.1 priority then only how much to pay for it :)
Btw what is the difference of TSMC listed in Taiwan and listed in NYSE?
2019-11-21 13:24
hi icon
wa
just curious, wats ur take on inari after yesterday big selloff???
2019-12-20 10:17
Dow now already break 30k snd klci still ding dong ding dong to break 1600, it is obvious grass is greener at overseas
2021-02-07 21:34
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Icon8888
I am suggesting people consider overseas
But no recommendation on when or where to enter
Investing is a life long undertaking. Many years ahead
2019-11-19 13:22