The old fishing rule popularized by famous investor Charlie Munger suits investors well. Let’s see where the fish are when it comes to investing.

Markets

Can’t shake your home bias? Maybe this helps. Below are the three biggest stock exchanges:

1. NYSE (New York Stock Exchange)

2. NASDAQ

3. SSE (Shanghai Stock Exchange)

Are you exposed to all three? Most investors are not.

Investing “abroad” is a big threshold for a lot of investors – regardless of where they are located. Despite globalization, markets are not as accessible as one would think. Foreign investors (non-Chinese) can access the SSE even though it is not as easy as the #1 and #2 on the above list. (I bet that was the market you are not investing in, so I will focus on it).

A weary investor can use ADRs (American Deposit Receipts) or ETF’s (Exchange Traded Funds) to comfortably trade on the SSE in the US. But a truly global investor might use the Shanghai-Hong Kong Stock Connect instead of a cozy ADR. The Hong Kong-Shanghai Stock Connect offers a broader range of investment options compared to ADRs. ADRs typically represent a specific class of shares in foreign companies, while Stock Connect allows access to a more extensive range of Chinese stocks, including those listed on the Shanghai and Shenzhen exchanges.

Also, when investing through ADRs, the stock is often denominated in U.S. dollars. This exposes investors to currency risk, as changes in the exchange rate between the U.S. dollar and the Chinese yuan can impact returns. Using the Stock Connect, investors can trade in the local currency, potentially reducing currency-related risks.

But.. why do we want to fish in a big pond? That is where the liquidity is and where the historical growth is (that’s what made the pond large, obviously).

Companies

What about the biggest companies? Are you exposed to the top 3?

1. Apple

2. Microsoft

3. Saudi Aramco

Wild guess: You have no exposure to number 3.

Let’s fix that.

You probably won’t find Saudi Aramco listed on your broker’s platform. In this case an ETF, such as the iShares MSCI Saudi Arabia ETF, might actually be your best bet. Over 90% of the shares are owned by the state and foreign ownership is restricted. As an accredited investor with a big enough investment you could perhaps be accepted for their QI (Qualified Investor) setup, but that becomes costly really quick.

Momentum

Besides the size of the market and the companies, we are of course interested in following the movement of the fish. Here’s how you find out what is hot and what is not.

Visit https://www.msci.com/end-of-day-data-search

Export the data to Excel, sort and create a dashboard.

Final note: location – location – location