Australian vs. International shares

[mcowa13]

I have just started into buying stocks to keep long term, have done some day trading previously which allowed me to buy from all markets.
Is it worth paying the overseas taxes and organizing an international broker to buy the bigger and possibly better stocks or am I better off sticking with Australian market?

 

[Zaxon]

Is it worth paying the overseas taxes and organizing an international broker to buy the bigger and possibly better stocks or am I better off sticking with Australian market?

Here is the comparison between the US and Australian markets over the last 10 years:


So you would have been better off investing in just the ASX over that period. Plus you get to own your shares outright via CHESS, rather than being a beneficial owner via a holding company. That's the reality.

However, the theory says you should diversify across sectors and regions to reduce risk. This is a good idea. Will the ASX outperform the US in the next 10 years? There's no reason to suggest that past performance will necessarily repeat.

 

[BoNeZ]

Here is the comparison between the US and Australian markets over the last 10 years:
View attachment 94285

What metric are you using to compare the USA and Australian markets?

Since the GFC lows in 2009 the ASX all ordinaries has risen from 3090 to 6400 and is still below it's all time high while the S&P 500 has risen from 666 to 2945 and is well above it's pre GFC highs.

If you want exposure to overseas markets you can do it via ETF's or some Australian brokers allow you to trade directly.

 

[Zaxon]

What metric are you using to compare the USA and Australian markets?

One which I mixed up, by the look of it. OK. Let's try this again.

VAS = Australian S&P 300 (coloured)
IVV = US S&P 500 (black)
Both "Australian" ETFs, so that should zero out the currency difference, since IVV isn't hedged.

So, the US market has outperformed the Australian market over the last 10 years.

 

[BoNeZ]

So, the US market has outperformed the Australian market over the last 10 years.

That's what I was expecting

There are other things to consider like dividends, franking credits and exchange rate changes but if you wanted to keep things simple just buy IVV or another international ETF.

 

[Zaxon]

There are other things to consider like dividends, franking credits

If we want to include dividends (but I guess we're still not considering franking credits here), we can compare their Total Return:

VAS:


IVV:

 

[noirua]

When buying UK shares or rather those quoted on LSE, LSE AIM, and AQSE there are several things to be aware of. Most LSE shares will be subject to Stamp Duty at 0.5% though a few Foreign shares will not be. AIM market shares are not subject to stamp duty unless they are Irish. An Irish company will be subject to 1% Stamp Duty. The AQSE market is not subject to stamp duty.
Trades will be done in a full lot or not traded at all, unlike Australia where a lot may only be partly filled.

Beware of the AQSE market from Australia. It covers companies that usually can't keep to AIM rules or simply cannot afford the fees. Companies are usually new up-and-coming companies complete chancers or those dropping out of AIM.
Sometimes a broker may put a share sale or purchase through the AQSE even if a company is not listed there. Some companies are listed on AQSE and AIM.

All shares on AIM are conducted by Market Makers and companies controlled by Nomads. There is a market spread shown that could be 0.1% but in a few extreme cases up to 50%. So there is a need to do research. The Australian Market Depth is completely foreign to the UK and mostly not understood. Trading a share near the opening at 8 am could lead to a price paid completely out of kilter to the market price - bad luck you were robbed - so a Limit Price is wise unless you have Level 2 which is expensive or live prices and trades going through also quite expensive.

On AIM you can set a 'stop loss' with most brokers. As Market Makers MMs are known or at least accused of maneuvering prices. Beware trading at best as MMs must give a price by LSE AIM Rules. This price could be high when buying or low when selling.
Usually, you will be given a price and you choose to accept within 15 seconds. The MM can withdraw it at any time during the 15 seconds and you won't know until you try to accept.

The AIM market usually trades in 'O' trades but the price traded may be shown as the last UT trade.

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There are on some shares 'A' trades shown up as 'AT' trades that control the market price as the last time a share was traded rather than the Middle price - similar to Australia but sold or bought in complete lots. These are mixed up with 'O' trades and UT trades.

Trading AIM share in Australia is wisest staying up at night and doing it manually. Giving an order to a broker then going to sleep on it and waking up in the morning might leave you being pleased, upset, or annoyed.

On AIM MMs are allowed to hide trades and they are reported one to three hours late. Sometimes very big trades are reported days later. Officially they should be reported immediately but it does not always happen on AIM.

Many people leave a 'stop loss' and MMs are often accused of dropping the price causing a stop loss to be triggered if they are short of shares. Then it surprisingly rises again. Tough luck you were robbed.

Outside AIM and with FTSE 100 shares most will have very miner market spreads so trading most of these is very simple to quite simple. Remember many shares are not UK companies at all, not just in AIM, and foreign rules may apply. Watch out for Chinese, Hong Kong, Indian, and South African companies, particularly on AIM.
Institutions often trade on a separate marketplace so as not to disrupt markets with very large trades - TradeWeb and Iris.

Just in Australia a Chinese company can disappear and hard luck you lose everything. African companies can be just the same. Notorious for making up new contracts and profitability. UK microcap miners are at times dodgy as directors just want monthly pay, expenses, trips around the world, free shares, and good pension pots. Some small miners can 10 or 20 bags if you've done great research. People often say research, research, and research - but how good is your research? Have you checked on all the directors and even then gone back and checked all the companies the director was past a director of. Go to many past bulletin boards and you should get the picture. Is one hour of research enough or 20 hours spread over several years or something in between? Can you understand all a company's Financial Reports? Be self-critical and find out what you are both good and pathetic at - never blame others in any respect. You lost it is your fault always.