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International Shares

Discussion in 'Shares' started by jingo, 26th Jul, 2007.

  1. jingo

    jingo New Member

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    Hi everyone,

    With the aussie $ now appreciating against the US $ is anyone thinking of topping up their international share portfolios?

    Regards Jason.
     
  2. pthm

    pthm Well-Known Member

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    We have bought some Berkshire Hathaway b shares - if the A$ gets stronger we will buy some more. :)
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    The question is - where will the AUD stop ? If you buy into US valued assets now, and the AUD hits parity against the USD, you've lost nearly 14% of your investment value without even trying :(
     
  4. crc_error

    crc_error The Rule of 72

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    there is a old saying - what does up, must come down!!

    Eventually other countries will raise interest rates which will cause the AU$ to fall back down..

    Anyway good opportunity for ozzies to buy up the world at the moment!!
     
  5. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    I don't believe in old sayings, and I certainly don't believe in setting my investment strategies based on them either - especially those which are completely irrelevant to the argument (and perhaps even completely wrong) !

    I also think it is foolish to buy into a market simply because it is cheaper based on currency - you need to understand that market, what drives it, what point it is at within its own (and international) cycles, as well as what impact further currency moves are likely to have.

    When you start investing BECAUSE of the moving currency price, you are no longer investing in the underlying market - you are investing in currency, and that's a very different ball game. Heck, not even the "experts" seem to be able to get it right all the time.

    I would prefer to see a change in momentum from the AUD, or at least a stabilisation of movement before I considered investing directly in the US or similar international assets - otherwise you are still swimming against the tide trying to get positive returns against the strongly rising dollar ... especially when the ASX is still performing strongly and you can make good money here without the currency risk.
     
  6. Tropo

    Tropo Well-Known Member

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    "I would prefer to see a change in momentum from the AUD, or at least a stabilisation of movement before I considered investing directly in the US or similar international assets - otherwise you are still swimming against the tide trying to get positive returns against the strongly rising dollar ... especially when the ASX is still performing strongly and you can make good money here without the currency risk."


    Currently the AUD is falling (at the moment 0.8803) due to the sharp fall in its cross, AUD/JPY.
    Now, you should track that cross, to see where AUD/USD could go.
    :cool:
     
  7. crc_error

    crc_error The Rule of 72

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    How many years do you think we will get of booms in the ozzie share market?

    If your stratergie is only exposed to Australian sharemarket then your limiting your gains.. ie international property has done well over the last 10 years, been the best performer over the period.. the ozzie LPT market was the out performer last financial year.. everything goes in cycles... and you will find the next few years ozzie shares may not be the best sector to be in..

    There is one old saying... buy in gloom sell in boom... our old friend warren make his money this way! Do you think he was there buying when the market was booming? No he was already positioned years earlier before the 'boom' began.. So old sayings sometimes have meaning!

    If you look at hedged international shares, some funds have returned 20%+ PA over the last few years so obviously the underlying markets are doing well.. heck the dow went above 14000 recently! another record.
     
  8. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    crc_error - I feel that you are making sweeping generalisations about long term strategies while answering a question about a specific short term strategy. I think it is dangerous to use generalisations when making short term investing decisions. However, if your strategy is invest and hold long term, regardless of the market cycle, then I don't think it matters as much - a long term hold-no-matter-what strategy is based on generalisations.

    FYI (and I've been through this before), I currently have exposure to:

    - Australian Blue Chip Shares
    - Australian Small Companies
    - Global Resources
    - Asia (ex Japan)

    I no longer have exposure to:

    - Australian Listed Property
    - Global Listed Property

    ... although I still favour these sectors long term, and will re-enter when the momentum swings back in their favour.

    I also have exposure via a structured investment product to the following sectors:

    - Global Blue Chip Shares
    - Global Infrastructure
    - Global Listed Property

    ... although I'm treating these differently due to the 7 year minimum term of that investment ... it's in the long term "buy-and-hold" category, while the structured product does actively monitor the funds and uses options to minimise downside risk.

    So I'm not saying don't invest in international shares - I'm saying be cautious about the impact of an AUD which may well continue to stengthen against the USD over the short to medium term, thus having a significant negative impact on your returns in Australian dollar terms.

    It doesn't really matter how well the Dow has done if you bought into those shares (using Australian capital) when the AUD was a lot lower - I'm pretty sure the AUD has outperformed the Dow in recent years, which means that you have in effect lost money - unless you are prepared to wait until the AUD drops back down to below 70c again (which could conceivably take 5 - 10 years!! ... although I think that's unlikely, more like 3 - 5 ... but again, I'm no expert in that area).
     
  9. crc_error

    crc_error The Rule of 72

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    Hi Sim,

    Looks like you have a clean simple collection of funds at the moment :)

    What I'm worried about is they the ozzie market has run so hard over the last two year, if it infact is sustainable.

    You probably made a good call to be out of Australian and global property for the moment, as its taking a big hit. I hate to see my unit price of global property tonight when the over night sell off is factored in!!

    My stratergie is more of a buy and hold one, so I use dips to top up my holdings.

    I also think its good to hold alternative asset classes as I have found with the share market was not performing, my LPT was kicking.. recently my LPT has been falling, but the share market has run records..

    I'm not in global infrastructure, and am considering expanding into this area as well..

    US stocks plunge on credit fears | NEWS.com.au Business
     
  10. pthm

    pthm Well-Known Member

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    Well, the A$ retreats today. Not sure when it will head north - maybe when the RBA raises interest rates! We are comfortable with buying US shares now as our strategy is to hold for at least 5 years. We won't say "never" that the A$ will hit parity against the US$ - but if it does, then we will buy more US shares (like Berkshire Hathaway) - dollar cost averaging?

    We bought into the Navra US fund when the A$ was around US$0.7000 mark :eek:, and now the A$ is above US$0.8600 and we have been "crying" ever since! So, buying US shares directly around the current A$ levels does not seem to be too bad after all.
     
  11. tropic

    tropic Well-Known Member

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    It is very difficult to quess where the AUD is heading for sure but the momentun is up. I prefer to wait until the trend is a bit more obvious ( I am not a chartist). I prefer to miss the first 2- 3 cents going up or down and then jump in. Presently it's looking North for AUD and I wouldn't want to stand in front of a raging bull. Personally I don't have faith in the US$, not in the next few months anyway. They have more economical problems than us even if the mining boom slows down.
     
  12. DaveA

    DaveA Well-Known Member

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    well what about opportunities to purchase companies like BHP who are listed on both the ASX and american stock exchange, this way you would get the same returns but in US dollars....

    this would be the best way if your wanting to bet on currancy as you should get the same return (except currancy flucuations)