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International Investing – FDI

April 11, 2014

The world is a big place – there are over 190 countries and 7 billion people in the world, which really boggles the mind if you sit down and think about it. In addition to being an interesting intellectual exercise, this fact can also have broad implications for your investments and your financial future. It is easy to stay focused on U.S. firms, news, and events during the day-to-day grind, but it is always important to be aware of your surroundings – especially when it comes to your investments. With that in mind, this series of articles will focus on countries and investment opportunities outside the United States that you might not usually hear about.

As always, be sure to consult a financial services professional familiar with both the potential investment and your unique financial situation before embarking on any investment program.

Foreign Direct Investment

This week, instead of focusing on a specific country we will be focusing on an the amount of foreign capital that flows from the international arena into the United States.

The international arena has been an area for growth for the last several decades as multinational firms from across the globe have spread, grown, and diversified into new countries and markets. It is important, however, to remember that there is still a tremendous amount of opportunity available domestically in the United States. Warren Buffet, possibly the most well-known investor in the world, has stated several times (including at this year’s shareholder meeting in Omaha) that the best investing and business opportunities in the world lie within the United States.

It can be easy to forget that, while there is so much discussion on emerging markets, frontier markets, greenfield opportunities, and expansion overseas, there is an enormous flow of investment into the Unites States. A perfect recent example is the acquisition of Anaheim-based Questcor Pharmaceuticals by Irish pharmaceutical firm Mallinckrodt. The acquisition will cost the Irish firm $5.6 billion in cash and stock and be headquartered in Dublin, with research facilities in both Ireland and the U.S. In addition to the pharmaceutical industry, mining, wholesale trade, non-bank holding firms (like Buffett’s Berkshire Hathaway), and finance/insurance attract a large amount of FDI.

Two statistics that jump out:

•Since 2006 the U.S has received $1.5 trillion in FDI, even during the worst financial crisis in global history

•Firms funded and/or majority- owned U.S. affiliates of foreign firms account for 5.6 million jobs and 15.9% of private research.

Happy Reading!,0,5224525.story#axzz2yDL0Tx3n


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