Dear rss free blog,
The weatherman predicted 1 to 3 inches of snow today and the
white stuff is falling as I write. The ability of forecasters to get short-term
predictions right does not mean anything when you consider global warming, or
stock markets. Our 21st century attitude is that every risk has to
be tallied and provided for. My grandchildren wear helmets when they ride their
tricycles. Neither my generation nor my children’s did. In San Francisco, even dogs riding in the
baskets of bicycles wear helmets, with little holes for their ears.
That is why terrorism is so terrifying. It seems to come out of
the blue. We have another stock recommendation in this sector today for paid
subscribers.
Readers reacted to the news I broke yesterday for US
publications of Israeli banks cracking down on USA residents’ brokerage accounts.
PR wrote:
In all fairness you should know that Israel is not alone in its action –
the net is slowly closing against US citizens; e.g. Bank of Montreal is
refusing to accept deposits from US domiciled citizens also.
LM wondered if an Israeli friend’s son who is about to take a
real estate management job in New York on behalf of an Israeli bank will have
to shut his Israeli bank account. I suspect not if his posting here is
temporary, but don’t know.
CV, a dual-national with an overseas bank trust fund for her
disabled American child established by her non-American parent asked what to
do. Again I don’t know.
The
disgruntlement of Americans at these rules is serious; but blanket enforcement
of the rules can be tragic.
PR is also annoyed that JPMorgan Chase is now charging annual
maintenance fees on ADR’s in Dec., in addition to fees on dividends as you may
have noticed – on three of his shares: $40, 30, 12 respectively nickel &
diming us to death. I have not noticed.
He is also fed up about how depositaries handle Australian
companies “having been several times misinformed by my US bank), when companies have
issued rights at discount, US citizens are not entitled to them and therefore
cannot sell them either.” (In my experience the depositary sells the rights and
takes a hefty fee for doing so, but in the past some money did go to the US
shareholders.)
PR also is
annoyed that “for years too, there are many foreign bonds overseas banks are
not allowed to sell to US citizens. In this Kindergarten, the US Govt. needs to
protect us from the wicked foreigners who don’t want to comply with our
endless, increasingly useless regulations; just stay home and lose your money
here!”
He asks plaintively: “Is there no alternative to ADRs, like
world listing, for foreign companies to avoid onerous reporting requirements,
simultaneously robbing US banks of their fee racket?”
There are several answers. First such global vehicles exist but
only for institutional investors.
Secondly you can buy ordinary shares traded on foreign markets
through a US
discount brokerage account with outfits like E-trade and Interactive Brokers. But this is not a piece of cake as you can see below with our latest tip. To buy in London with E-trade I would have to shell out the equivalent of $16,500 for a round lot which is too much for this poor editor to place in her own share idea. (Maybe if more of you sign up for a fully paid subscription I can feel flusher. And you can invest with me.)
Third, you
can also use full-service accounts crafted by specialized brokers and banks to
do such trading. It will not be as cheap as ADRs and may be less liquid and
less transparent. They will cheat you on the foreign exchange purchases and
charge much higher brokerage commissions. In my experience, these charges are
more severe than the nickel and diming Mr. PR referred to. Now for the paid
subscribers,
*Because I am attending the Inaugural
2010 Microcap Stock Conference sponsored (Peter) Sidoti & Co. on Monday morning, there will be no blog
Mon. I will file a quickie with weekend updated news Sunday night. I hope to meet the brass from one of our stocks.
