Should I buy a US stock using a local broker or an American broker?
I am a Singaporean and currently a trader in hedge funds. I often provide my investment philosophy in my personal blog, some of my investment philosophy is US stocks.
This is a frequently asked question from my readers:
Buying US stocks through US brokers is cheaper? Or should we buy it through a local (Singapore) broker?
There are several questions before making a decision. Concern is not just commission.
If you are dealing with a local broker, it is likely that they have an account with an American broker. So when you trade, you trade directly to a US broker. Of course, local brokers are not free to do so, so they will charge an intermediary fee. You pay your transaction on T + 3.
If you trade with a US broker, you automatically stop the middleman fee, so you end up paying a lower commission. But you must deposit your money into your US brokerage account prior to the transaction, and you will pay on the T-day. You can not often transfer funds to the United States to Singapore, because it will incur a lot of wiring fees.
I use local brokers to trade because sometimes I see US stocks Chances are that if I trade with a US broker and decide to overspend the Singapore market and reduce my portfolio in the US market, I will need to transfer my money from the US to Singapore, incurring unwanted wire transfers.
From my own experience, it is always good to allocate a portion of your portfolio to US equities; because the international investment community classifies them as developed markets, and from Singapore and other Asia (Malaysia, Hong Kong , Indonesia) are classified as emerging markets. Emerging markets can get into trouble every time bad news comes to America! Even though emerging markets may not have problems. The investment community believes that if the US economy has problems, then the emerging markets will be more affected. Although I do not agree, but this is the market response.
If you notice during this sub-turn, many Singapore stocks fell by 30% -50%, while the US index barely declined.
Always buy Gold ETFs when you buy US stocks. You do not want to expose yourself to unwanted foreign exchange risk. You do not want your US stocks up 10%, but the dollar fell 12%, and ultimately your US investment is still down 2%. I believe the dollar will continue to fall in the medium term, so by buying gold you hedge some of your currency risk.
Then the next question will be asked:
Then we should not just avoid US stocks, Expected to fall, the term?
In my opinion, most of the best stocks in different industries come from the United States.
In the oil drilling industry, the best investment stock is Transocean
In the oil exploration industry, the best stock investment is Exxon Mobil.
In the tech industry, the best stocks are Google and Apple.
In the mining sector, the best stock is free port McMoRan.
Whether you like it or not, most Asian companies are still NOWHERE compared to US companies. If you want to invest your favorite stocks in the favorite sector, the chances are high that they come from the US.