Why should we consider investing in International markets?  Diversification  Growth – some markets may be growing faster than U.S.

What are the risks of International investing?  Currency fluctuations – exchange rates  Instability – emerging markets  Accounting standards – less financial disclosure  Taxes – may be different than U.S.

 Bolsa – Mexico  Bovespa – Brazil  FTSE (Footsie) – England  DAX – Germany  CAC – France  Hang Seng – Hong Kong  Nikkei – Japan cas/ MAJOR FOREIGN INDICES

How do you buy stock that is traded on a foreign exchange? 1.Invest in International Mutual Funds 2.American Depositary Receipts (ADRs) enable you to “indirectly” purchase foreign stocks easily 3.If there is no ADR for the stock you want, your broker may be able to purchase it for you directly from the exchange.

You may be indirectly invested Internationally. Many domestic companies generate significant profits from their International operations. Company NameDescription2010 Revenues 2010 percentage of revenues from international markets Coca-ColaSoft Drinks$35 Billion75% McDonald’sFast Food$24 Billion60% PfizerPharmaceuticals$43 Billion55% Procter & GambleConsumer Products$79 Billion32%

 What is an emerging market?  BRIC = Brazil, Russia, India and China  MINT = Mexico, Indonesia, Nigeria and Turkey  Projections on the future power of the BRIC economies vary widely:  In 2010, however, while the four BRIC countries accounted for over 25% of the world's land area and more than 40% of the world's population, they accounted for only 25% of the world gross national income. EMERGING MARKETS

What NOT to do when investing Internationally:  Lesson 1: don’t chase what’s hot  Lesson 2: country growth does not equal stock growth  Lesson 3: don’t forget to research! TIPS

Converting dollars to yen. How many shares can be purchased with $10,000?  1 U.S. dollar = 76.8 Japanese yen  A Japanese company’s stock sells for 3,800 yen per share  $10,000 x (76.8 yen / $1) = 768,000 yen  768,000 yen / 3,800 yen per share = shares CURRENCY EFFECTS

STRONG DOLLAR, WEAK DOLLAR  What is a strong dollar?  The value of the dollar rises compared to another currency.  More foreign currency is necessary to purchase U.S. dollars.  The value of the dollar is appreciating  What is a weak dollar?  The value of the dollar falls compared to another currency.  More U.S. dollars are necessary to purchase foreign currency.  The value of the dollar is depreciating.

Lizzy invests $10,000 in a foreign company. The current exchange rate is $1 = 1 Euro. So she buys 10,000 shares. At the end of the year, her stocks are worth 11,000 Euros, so she has made a 10% gain (excluding broker fees). But, her statement says her portfolio is only worth $9, What happened?