Join the NASDAQ Community today and get free, instant access to portfolios, stock ratings, real-time alerts, and more! Even 10 years ago it was almost impossible to be a global investor.

Five years ago, it was still pretty difficult. But today, we're lucky.

For the first time in the history of investing, we're able to tap into a variety of far-away markets, asset classes and investments that were never before available to individual investors. Globalization is changing the rules for investing - and for the better.

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Now you have the opportunity to buy shares in some of the best international small cap stocks on their own foreign exchanges, and denominated in their domestic currency. I am ecstatic about the opportunity to invest in foreign companies on their own exchanges and want to share with you why you should be as well. The chart below from Bloomberg shows why it is important to be exposed to stocks within the global market by comparing relative returns of different markets over the last decade.

As you can see, emerging markets have significantly outperformed the U. But this outperformance is not limited to just emerging markets - many other developed nations and their respective stock indices have outperformed the U. These countries include Canada and Germany. There is another reason why investors should be interested in increasing foreign stock market exposure right now, and it has everything to do with Ben Bernanke and his magical printing press.

How to Buy Stocks on a Foreign Exchange - idonayojujid.web.fc2.com

Wyatt Investment Research's own Kevin McElroy, editor of the Resource Prospector , believes that the U. If you agree, or just want to create a hedge against a falling dollar, then buying stocks in the currency of the country in which it trades reduces exposure to a declining U. Let's say I invested in a junior mining company that was listed on the Toronto Stock Exchange TSX eight years ago. During this time, the stock doubled in value while at the same time the Canadian dollar gained 58 percent against the U.

Relative to a U. It's important to remember this critical point - when you buy stocks on a foreign exchange your investments are protected against the depreciation of the U. These are the reasons why it's attractive to consider investing abroad. But how does an investor actually purchase these securities? Small Cap Research Analyst Tyler Laundon recently addressed this very same question from a reader.

Some brokers, like TD Ameritrade, require that foreign listed stocks be purchased through U. This means using the over the counter OTC market, and these stocks will most likely be listed on the Pink Sheets. First they must convert funds to the currency used in the market that the stock trades. An investor converts U. The best thing for investors to do is call their broker and ask how best to gain access to foreign markets through their brokers system.

If they have never purchased an OTC stock through TD Ameritrade for instance, they should call a customer service agent and get them to explain how this market works, and why they use it. They'll find that TD Ameritrade uses a five character code to identify the security. Use the information I've discussed above as a basis for your questions. Since each broker has its own system it's good to go directly to the source and have the broker explain it so that investors will be informed if and when trading in these securities.

As Tyler points out, there are a variety of factors that investors should understand before purchasing foreign securities. But once they do, they will have a much broader understanding of the global stock market, and how to pounce on trends that exist beyond just U. The broader economic logic behind foreign stock purchases is relatively simple - if the U.

Moreover, if the dollar continues to plummet, like it has over the past several years, then it would be a wise investment decision to diversify some of your portfolio outside of the dollar. We've received a number of reader questions lately pertaining to the above. Feel free to send us yours. Our address is editorial smallcapinvestor. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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