Investors can build fantastic wealth by picking winning stocks and holding them for a long time. One way to identify multi-baggers is to explore overseas markets. Hundreds of foreign stocks trade on the US markets for easy investment.
Some people invest in a mutual fund or an ETF to cover a region, sector, etc. or follow a strategy. However though both of these products offer diversification and other advantages, they are not the best way to generate very high returns. Performing research on many companies and then identifying individual stocks to invest in for the long haul is difficult but offers high satisfaction and rewards.One can hold a high-quality stock at least 5 years in order to ride out the ups and downs in the markets and to take advantage of any dividend investment opportunities and tax rates.
In a hypothetical scenario lets say an investor had $100,000 to invest five years ago. This investor opted to put in $10,000 into 10 different Latin American stocks that he/she selected. The table below lists the performance of these stocks in 5 years with dividends reinvested:
[TABLE=864]
Source: S&P Quantitative Stock Report
Note: Past performance is not a guarantee of future performance. So investors have to use the above data with caution. Before making any investment decisions, please do your own research.
In the example scenario noted above, the original investment of $100,000 grew to $462,009 in just five years. The ten stocks are of course focused on just one region but diversified into a few sectors. Mining stocks such as Brazil-based Comp Siderurgica Nacional (SID), Vale SA (VALE) and Chile-based Sociedad Quimica Y Minera (SQM) performed extremely well due to the commodity boom in recent years. Financial institutions such as Credicorp Ltd (BAP) of Peru and CorpBanca (BCA) of Chile also yielded high returns in line with economic growth in those countries. Mexico-based Coca-Cola FEMSA (KOF) and Chile-based Embotelladora Andina – B (AKO.B) are beverage makers who produce and distribute Coca-Cola and other products.
To conclude, the point of this post is to emphasize the importance of selecting stocks and also the tremendous growth that can be attained in a few years. Investing in equities is risky especially when it comes to emerging markets. However if one can allocate some part of their portfolio to these markets and held their investments for some years, the returns can be spectacular.
Disclosure: No Positions
