Silly question you may say! You can buy stocks through your broker or online with your brokerage account, of course.
But ...
If you want to buy foreign stocks, it's not always that easy, which is something you shouldn't really under- or overestimate. There are a lot of great foreign stocks out there that you can't get in your country or can only get with a lot of trouble.
And that's why this article is here. Several of my subscribers wrote me emails saying they were interested in a stock but couldn't buy it because it wasn't available in their country. Why is that, then?
If you want to buy stocks in companies like Microsoft or Wall Mart, you won't have any trouble at most stock exchanges, let alone in the USA. Wall Street already trades over $10 million worth of these two stocks every single day. Even small stock exchanges like the ones in Chicago, San Francisco, etc., do a lot of business with Microsoft and Wall Mart. People buy and sell in a matter of seconds.
But even though most foreign stocks are also traded in New York and other international markets, there are a few that aren't. Like Loblaw, which is a Canadian company. The largest stock exchange in Germany is in Frankfurt, but you won't find any Loblaw stocks there. The regional stock exchange in Berlin doesn't do much business. About 17 stocks a day, on average. That's not much!
The same goes for other big trades as well! Not every stock will be in New York, London, Frankfurt, Sydney, or Hong Kong. It is just a matter of supply and demand. If there isn't much interest in a stock in XYZ country, for whatever reason, you won't have enough of it. So either the stock isn't available at all in your country or it's only available in very small amounts.
The problem with trading volumes that are very low is that if you want to buy more than, say, 10 or 20 stocks, maybe 500 or even 1,000, it will be hard to do so and may take hours or even days.
The other thing that could happen is that your order will be split up into several orders until the whole amount you ordered is bought. A few years ago, this is what happened to one of my orders. And a commission is added to every order. Since there are extra fees for each order at your local stock exchange, it might be cheaper to buy the stocks at a foreign stock exchange where the volume is much higher.
And that's exactly what you do if you find a good stock that you want but can't buy anywhere in your country. You buy stocks at a foreign exchange, which is most of the time the stock's home country. You'll also have to pay more because you'll have to go through two brokers.
So let's take another look at the Canadian Loblaw. If I want to buy this stock, I'll have to talk to my broker here in Germany. He or she will then buy the stock at the Toronto stock exchange, which will cost me a lot more in fees and commissions. Because not only my broker but also the broker in Canada will charge a fee. So, I'll have to pay two brokers because they are both involved in my deal.
So, that's how it all works. My broker will talk to a broker in Canada, who will then buy the stock on my behalf. Not only will there be extra fees, but the transaction will also take longer to go through.
But you shouldn't put too much value on these extra commissions. If you find a great, solid stock that you really want, go for it. If you're an investor and not a trader, you're probably thinking about a long-term investment anyway. And commissions and other fees don't matter much in the long run.
At the end of the day, it doesn't matter where you buy your stocks, only which ones you buy.
Yours in Succeeding in Business
Ricky Schmidt
