It hardly seems fair.
Today it’s easy to invest in international markets.
It’s easy to open a brokerage account to buy revolutionary tech companies.
It’s easy to buy a UK biotech stock or a Japanese electronics stock.
And it’s super easy to buy shares in any one of the thousands of US-listed internet and tech companies.
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That’s great, but don’t you wish you could have invested in Silicon Valley right at the beginning, just as the whole tech sector was lifting off from the ground floor?
If only it were possible. Well, as it turns out, it might just be. And you don’t need a time machine to do it either…
The concept of Silicon Valley as the home of technology is fairly new.
It grew to prominence in the 1970s and 1980s. As a place, Silicon Valley is about an hour to the south of San Francisco. It includes the city of San Jose.
But as a concept, ‘Silicon Valley’ is borderless. It has generally grown to encompass any high-tech company, even if it’s not physically in the Silicon Valley area.
Today Silicon Valley is home to the likes of Google [NASDAQ:GOOG], Facebook [NASDAQ:FB], and Apple [NASDAQ:AAPL]. These companies are thriving. And there’s still a lot of growth in Silicon Valley.
But there is an alternative. And it could be even more lucrative than the current Silicon Valley.
A new ‘Silicon Valley’ on Australia’s doorstep
Yesterday’s Financial Times reports:
‘When the bosses of US video messaging app Tango were on the lookout for a strategic partner, they turned in the direction of Hangzhou, China – home of ecommerce company Alibaba.
‘Within weeks, Tango’s founders met Alibaba’s executive vice-chairman Joe Tsai, before selling a quarter of the company for $215m.
‘Deals like this, where Asian capital goes into a young tech company from another part of the globe, are becoming increasingly common.’
It almost seems too good to be true.
Could it really be possible that a new Silicon Valley is taking shape almost on Australia’s doorstep…right at a time when it has never been easier to buy and sell overseas stocks?
If this report from the FT — along with others we’ve seen, and the contacts we’ve spoken to — is right it certainly looks like it.
So, just how easy is it to trade international stocks?
Well, we’re not about to tell you it’s zero effort. Few things require zero effort. But if you’ve ever opened up an Aussie share trading account, the process is almost exactly the same.
The forms are pretty much the same, and it takes roughly the same amount of time to complete them. The best news is that there’s a good chance that your existing broking firm can set up an international account for you.
If your broker can’t do that, then find one who can. The Australian market’s biggest online broker, Comsec, offers an international share trading service, as does one of the country’s biggest advisory firms, Bell Potter. (That’s not an endorsement one way or the other, just an example; Money Morning remains independent and has no ties with either of those firms.)
Even so, you may wonder if it’s all really worth the effort. If the history of Silicon Valley Mk I is anything to go by, then yes, it’s definitely worth it.
How much do you really know?
Now, that’s not to say that you should only invest in overseas shares. We’re not saying that at all.
Any investor will always have a ‘home bias’. That is, investors will always prefer to buy shares in companies they feel they know best.
However, we will say that in the modern economy the concept of a ‘home bias’ is becoming less and less tenable.
For instance, can any investor really say that they have a better understanding of the ins and outs of BHP Billiton’s [ASX:BHP] mining business than they do of The Coca-Cola Company’s [NYSE:KO] soft drinks business?
Do you know QBE Insurance’s [ASX:QBE] underwriting and risk management policies any better than you know the engineering behind the cars made by Volkswagen AG [ETR:VOW]?
Odds are that most Aussie investors know as little about each of those industries as the next, and yet it’s far more likely that an Aussie investor will own BHP and QBE shares than own Coca-Cola and Volkswagen shares.
It just doesn’t make sense. Especially when you stop and think about the potential Silicon Valley Mk II that’s building on Australia’s doorstep.
Make sure you invest in the right market
Just look at some of the returns investors made from the original Silicon Valley from 1978 through to 2000:
Let’s be straight about this.
If you had the power to go back in time to invest in the Silicon Valley boom, in which market would you invest? You probably wouldn’t buy French, British or Japanese stocks to profit from the Silicon Valley boom.
You would buy US stocks. Specifically, you would buy US tech stocks.
So with a new frontier opening up for technology stocks in China and Hong Kong…and given that it’s easier to buy overseas stocks today than it was in 1978, why wouldn’t you take advantage of Silicon Valley Mk II and invest directly in that market?
In our view, it’s a no-brainer. When was the last time you had the chance to invest in an opportunity like this?
The market is changing, and it’s changing fast. And investor attitudes need to change with it.
Cheers,
Kris+
