Before investing, learn about foreign stocks

What are the best opportunities in foreign stocks?
–Mephime
BE Bulletin Board

You can invest in individual foreign stocks or mutual funds. If you’re risk-averse, you should invest in mutual funds, since you will own a portfolio of equities and other investments monitored by a manager or team of investment experts. First, make sure that you know the difference between “global” and “international”. For example, Morningstar labels as “foreign funds” those that invest their assets exclusively overseas, while “global” or “world” stock funds place dollars in companies that have a significant presence in the U.S. or abroad. Of course, the international fund that is tied to, say, Indonesia will be far more volatile than a global fund that has some U.S. exposure-especially if you own an Indonesian fund with holdings in a turbulent country like East Timor.

For the best bets in global stocks, we suggest that you consult the highly acclaimed 1999 edition of Global Investing: A Guide to the 50 Best Stocks in the World by Andrew Leckey (Warner Books, $14.99), which includes such household names as Microsoft (Nasdaq:MSFT); Citigroup (NYSE:C); Johnson & Johnson (NYSE:JNJ) and FDX Corp. (NYSE:FDX), the parent company of Federal Express. You can purchase individual shares of U.S.-based companies, but those located overseas must be purchased through American Depositary Receipts or Shares (ADRs or ADSs), vouchers representing blocks of stocks that are held by intermediaries such as banks or brokers.

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