http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-investments Intrinsic Value of Overseas Investments Long term investors in US stocks commonly look for intrinsic stock value before buying. In general, one looking for offshore investments should apply much of the same thinking when buying foreign stocks and engaging in other offshore investments. What is intrinsic stock value when we are considering the intrinsic value of overseas investments? At its basis, the intrinsic value of an investment is its fundamental value. One predicts the future income of an investment and compares that income to a baseline such as US Treasury bills. The intrinsic value of overseas investments can likewise be calculated by comparing expected income to a baseline, whether US Treasuries or US stocks or any other US based investment. Calculating the intrinsic value of overseas investments can be a standard procedure when an investor buys foreign stocks listed as American Depository Receipts on the New York Stock Exchange. It can get more complicated when looking at direct investment in a foreign country, changing currency values, political stability or instability, and other “offshore” factors. A Relatively Easy Calculation Limit your offshore investments to American Depository Receipts (ADR’s) of foreign companies. Level I ADR’s must comply with the same SEC rules as US companies. This allows for sound fundamental analysis of these equities. It is reasonable in this case to use US Treasury yields as a base for comparison or simply a composite yield of a basket of US stocks. If your offshore stock investment promises a better yield than a comparable US stock it should be valued higher. If it is not, the foreign stock has an intrinsic value higher than its current market value and you should buy it. A More Complicated Appraisal There are certainly many more offshore investment opportunities than buying foreign ADR stocks. US companies that do business offshore offer a diluted version of foreign and stocks are amenable to the same intrinsic value calculations as foreign ADR’s. Foreign stocks purchased on a foreign stock exchange, however, may be a little harder. The issue often times when investing in foreign stock markets is that the amount of hard information that a prudent investor requires is simply not there. Thus the investor needs to use a large “fudge factor” when making his calculation. In a really difficult foreign market this is not stock investing but rather pure speculation or gambling. To the degree that one has insider information it may still be profitable. To the degree that the foreign government does not bar insider trading it may not even be illegal. Nevertheless proceed with caution when trying to calculate the intrinsic value of overseas investments in non transparent markets.

1. www.ProfitableInvestingTips.com.
INTRINSIC VALUE OF OVERSEAS
INVESTMENTS

2.  Long term investors in US stocks commonly
look for intrinsic stock value before buying.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

3.  In general, one looking for offshore
investments should apply much of the same
thinking when buying foreign stocks and
engaging in other offshore investments.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

4.  What is intrinsic stock value when we are
considering the intrinsic value of overseas
investments?
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

5.  At its basis, the intrinsic value of an
investment is its fundamental value.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

6.  One predicts the future income of an
investment and compares that income to a
baseline such as US Treasury bills.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

7.  The intrinsic value of overseas investments
can likewise be calculated by comparing
expected income to a baseline,
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

8.  whether US Treasuries or US stocks or any
other US based investment.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

9.  Calculating the intrinsic value of overseas
investments can be a standard procedure
when an investor buys foreign stocks
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

10.  listed as American Depository Receipts on the
New York Stock Exchange.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

11.  It can get more complicated when looking at
direct investment in a foreign country,
changing currency values, political stability or
instability, and other “offshore” factors.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

12. A Relatively Easy Calculation
 Limit your offshore investments to American
Depository Receipts (ADR’s) of foreign
companies.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

13.  Level I ADR’s must comply with the same SEC
rules as US companies.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

14.  This allows for sound fundamental analysis of
these equities.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

15.  It is reasonable in this case to use US Treasury
yields as a base for comparison or simply a
composite yield of a basket of US stocks.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

16.  If your offshore stock investment promises a
better yield than a comparable US stock it
should be valued higher.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

17.  If it is not, the foreign stock has an intrinsic
value higher than its current market value
and you should buy it.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

18. A More Complicated Appraisal
 There are certainly many more offshore
investment opportunities than buying foreign
ADR stocks.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

19.  US companies that do business offshore offer
a diluted version of foreign and stocks are
amenable to the same intrinsic value
calculations as foreign ADR’s.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

20.  Foreign stocks purchased on a foreign stock
exchange, however, may be a little harder.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

21.  The issue often times when investing in
foreign stock markets is that the amount of
hard information that a prudent investor
requires is simply not there.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

22.  Thus the investor needs to use a large “fudge
factor” when making his calculation
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

23.  In a really difficult foreign market this is not
stock investing but rather pure speculation or
gambling.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

24.  To the degree that one has insider
information it may still be profitable.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

25.  To the degree that the foreign government
does not bar insider trading it may not even
be illegal.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

26.  Nevertheless proceed with caution when
trying to calculate the intrinsic value of
overseas investments in non transparent
markets.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

27. And More So
 A common approach to offshore business is
to set up production close to growing
offshore markets,
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

28.  use cheap offshore labor, and take advantage
of tax breaks offered as enticements by local
governments.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

29.  These sorts of strategies can be very lucrative
if done well and an absolute disaster if done
poorly.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

30.  Calculating the intrinsic value of overseas
investments of this sort requires a very clear
view
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

31.  of the business involved, the available
markets, and the ease or difficulty of doing
business in countries where bribes are a way
of life.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

32.  To the extent that one can get a clear view of
the profits that one will gain from
international investment strategies,
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

33.  the potential intrinsic value of overseas
investments of this sort may be so high as to
make it foolish not to invest.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments

34.  For more insights and useful information
about investments and investing, visit
www.ProfitableInvestingTips.com.
http://www.profitableinvestingtips.com/investing-trading/intrinsic-value-of-overseas-
investments