Jeff Opdyke's The World Is Your Oyster was written especially for the individual investor. You don't have to learn a foreign language to comprehend the book. I hope you're aboard for the week-long journey through this book.

Why would you want to invest outside the U.S. when there are an abundance of great companies here in the fruited plains? At first, it seemed like an entirely unnecessary if not utterly extravagant exercise to this finance writer for The Wall Street Journal. But once he got started, he was convinced that he was onto a good thing.

The world has entered an age where there is no longer the financial barrier that prevented the flow of money across borders. American companies buy competitors in Germany and Italy while British companies buy American companies while Japan annexes with resource companies in Australia.

Part of the reluctance of investing overseas comes from not being schooled in world affairs. Consider these statistics that were compiled in survey by the British telecom behemoth, Vodafone:

97% of Tanzanians can access a mobile phone but only 28% can access a landline phone.

85% of small businesses in South Africa rely on mobile phones for communications.

59% of businesses in Egypt linked mobile phone use to greater profits despite the higher costs of mobile service.

Only 6% of the African population own a cell phone.

Jeff Opdyke did the math in his head, then went in search of a publicly-traded mobile phone company in Africa. Orascom Telecom is an Egyptian wireless phone company that links its subscribers to people in Algeria, Tunisia, Pakistan, Bangladesh and yes, even Iraq.  If you want to own it, your choices are the Cairo, Alexandria, or London stock exchanges.

The United States is the world's largest market and economy.  The chance of the Standard and Poor's 500 stock index or the Dow doubling in a year is quite a stretch. The chance of a small emerging market, say Egypt, doubling in a year has happened twice in this decade.

It makes sense to invest in several countries that are non-correlating. When you diversify into foreign stocks, you not only diversify across markets, you diversify across currencies as well.

Even if you diversify a U.S. portfolio across many asset classes and investment styles, you are still 100% exposed to the U.S. market. And if the U.S. market suffers a broad decline, your U.S. assets will all devalue to some degree. Perhaps the most obvious reason to invest overseas is because you can!

Sheryl Sostarich

I know many investors who don't want anything to do with investing overseas because they fear market risk, currency risk, political risk, acts of terrorism, or the flare-up of a major military conflict. The good news is, you don't have to invest directly overseas because you have the options of:

Buying U.S. companies that sell their products overseas

Buying foreign companies that are listed on our domestic stock exchanges

Buying mutual funds or exchange traded funds that own stocks in single countries, select regions, or across the world

If you want to know how important an international presence is for multinationals, you need only read the headlines. Hewlett-Packard handily beat analysts' estimates in the third quarter led by robust sales in foreign markets. While sales of Harley Davidson motorcycles have consistently grown by ten percent annually in developed markets such as Canada and Europe, sales in South Africa, Turkey, Egypt, China and Borneo have grown by an astounding thirty percent annually.

Prior to the passage of Sarbanes Oxley and Regulation Fair Disclosure, financial statements for some U.S. companies were less transparent and more deceptive than what we were receiving from foreign companies. That's because accrual accounting and special purpose entities made it easy for companies to doctor the books. Foreign companies that list their shares on the New York Stock Exchange or the NASDAQ are required to report their results in accordance with international reporting standards. Though the reporting frequency is not necessarily quarterly, you will usually receive a financial report twice a year.

When Jeff Opdyke started buying foreign stocks directly, Charles Schwab & Company was the sole broker to handle his trades. Today there are several brokers to compete for your business – E-Trade, Interactive Brokers, and Ever Trade. Two years ago, Ever Trade, a division of Florida-based EverBank, began offering trading access to a score of markets from Finland to Peru.

Currency exchange is handled electronically so you don’t need to bring Japanese yen or Indian rupee to the trading desk. Transaction fees have come down a lot. If your interest in global investing extends beyond London, Tokyo or Paris, not all U.S. based brokerage firms will be set-up to handle your trades. Keep in mind that direct investing in foreign markets does require a larger minimum trade, generally $5,000.

Research reports are hard to come by because only a few foreign companies have broad analyst coverage. I like to set up alerts on the company website to keep apprised of company news and product information. If you are a self-directed investor as I am, this is the same due diligence as what you’re doing to track your domestic holdings.

Sheryl Sostarich

Anyone with a TV, radio, newspaper or magazine knows that China is growing at an explosive rate. We’re not all able to visit the mainland but we can learn from the experiences of Jeff Opdyke. The degree of modernization is amazing, even to those who have been to the continent recently. While Hefei isn’t Beijing or Shanghai or Guangzhou, this city is as large as Philadelphia or Phoenix. Hefei is a burgeoning consumer center, where half a million new residents arrive each year.

Haier, the Chinese version of Wal-Mart, is where the locals buy everything from brand name foods to home appliances. These well-stocked and well-designed stores provide a level of service that often exceeds that found in the United States. To own shares of Haier, you have to be able to trade on the Hong Kong exchange.

China offers great promise to those investors who are prepared to cope with country risk, currency risk, political risk and the inevitable market corrections. The process of finding companies to invest in is no different than in any other country. You will need:

To be knowledgeable about the company you will invest in

To have a feel for the trends that define the company’s future growth prospects

To understand how the company generates revenues so you can calculate a fair value for the company

Your objective is to not overpay for the assets of any publicly traded company. Investing in China is not for those with a short-term mentality. Political and social unrest can erupt without warning, sending Chinese stocks into a freefall and holding them down for weeks or months. The Chinese government periodically tries to restrain the securities and currency markets against their desire to move in an unfettered fashion.

And then there are the social epidemics like SARS and the avian flu that not only wreak havoc on the Chinese exchanges, but the world exchanges as well. The income gap between the aristocrats and the peasants is wider than most people realize. Until there is a more equal distribution of wealth between the coastal cities and the less affluent provinces, the social risks of investing in China will be ever present.

For those who don’t want to make direct investments in China, there are many foreign companies that are helping to build out the infrastructure in China. Consider the Taiwanese glassmakers that supply glass for the high-rise towers, the Japanese construction companies that are clearing the land and raising the towers, the Australian mining companies that are extracting copper and other precious metals, or the Hong Kong and Singapore banks that are building financial centers in China.

China Daily and People’s Daily are the English versions of China's official news agency Xinhuanet. Both agencies hire their own staff of reporters who provide a less biased analysis of the news than Xinhuanet.

The Association for Asian Research is a non-profit, non-governmental research institute that provides current affairs stories ranging from whether the Bank of China is overvalued to news about revaluing the renminbi. China is in the early stages of multi-decades of growth and there are plenty of investment choices for every type of investor.

Sheryl Sostarich 

It would be easy for Jeff Opdyke to argue a case for investing in Central and Eastern Europe but he isn't the type to do your research for you.

Jeff's basic research for CEE comes from two reports: "The 2006 Analysis of the CEE" by Deloitte Touche Tohmatsu and a 2005 report titled "Of Tigers, Dinosaurs and Gazelles" by KPMG. Finance majors will recognize Deloitte & Touche and KPMG as world leaders in accounting and business consulting.

Their reports are extensive so I shall only give the highlights:

Central Europe is now in the fold of the European and global business environment. Many CEE countries have sharply reduced their tax rates to attract foreign investment.

Ever since the fall of communism, Central European countries are growing at a rate greater than most Western European countries.

Foreign investors mistakenly believe that the entire region is under the rule of an inefficient bureaucracy.

Local businesses are competing with multinationals in all business sectors and the quality of local prodcuts is improving.

Local businesses are achieving greater efficiencies in production.

Many regional companies have been restructured and are producing much-needed products. The author cites Wallmark, a Czechoslovakian drug company that rose to prominence after the fall of the Berlin Wall.

Central Europe has a population that is 90% the size of Russia yet is 30% richer in terms of GDP.

Real risks do remain, with excessive administration, bureaucracy, and corruption being cited as the key risks you will have to cope with. And keep in mind that these reports are just two documents in the file cabinet of documents you will find on the Internet.

A key point that Jeff Opdyke makes over and over in The World Is Your Oyster is to do your own thorough due diligence before you invest in any foreign country. Despite the risks that exist in Central Europe, you are bound to discover several true growth companies for your portfolio.

Sheryl Sostarich