The Double Edge of International ETF Investing

Senior Market Analyst Chris Johnson of Investor's Daily Edge warns investors of the double-edged sward of international ETF investing.

Delray Beach, FL (PRWEB) June 2, 2007 -- International investing through exchange-traded funds, or ETFs, makes sense to many investors today. But, there are obvious risks associated with international investing, regardless of the vehicle.

According to Senior Market Analyst Chris Johnson of Investor's Daily Edge, "We've become spoiled from the regulatory web created in the United States, all of course in the best interest of the investor. But with international companies, understand that you move far away from the wealth of information available on domestic stocks."

The second risk is associated with the potential volatility of these investments due to structural differences. Johnson adds, "The governance of some international markets is less structured than what we've become accustomed to with our domestic markets. Wednesday's trading activity in the Asian markets serves as a great example. The Shanghai Composite tumbled 6.5 percent after the Chinese government tripled the tax on stock trades in order to cool their growth … international ETFs can take investors for a quick ride, both up and down."

However, investors haven't been able to swing a dead cat without hitting an analyst telling them that the grass is greener on the other side of either ocean. This is another sign that the crowd is moving money internationally, and fast.

Johnson points out, "The danger with the rapid increase in international ETF investing is that we begin to form, dare I say, a bubble. And now Mr. Greenspan is throwing comments around about how some of these international markets are due for a slowdown. The upshot is that the crowded trade created by the herd of lemmings jumping off domestic shores into international waters increases the chance that when the decline comes, it will be magnified because the "crowd" contains a lot more potential sellers."

For more information and to read the full article, visit Investor's Daily Edge at http://www.investorsdailyedge.com/archive/index.php

About Chris Johnson
Chris is a contributor to Investor's Daily Edge and frequent commentator on financial markets and is regularly seen in national print media, such as Barron's, Wall Street Journal, Financial Times, Bloomberg, USA Today, and the AP Newswire. In addition to being a guest on several radio shows, Chris appears regularly on CNBC, Bloomberg TV, and the Fox News Channel as an expert in the field of sentiment and investor behavior as well as technical analysis.

Investor's Daily Edge (www.investorsdailyedge.com) is a free investment newsletter that's delivered by email before the market opens. In each weekday issue you'll receive clear recommendations and practical strategies for protecting your portfolio and multiplying your money - whether the market is rising or falling.

For more information about our editors, or to set up an interview, please contact Wendy Montes de Oca at 561-921-0001 or visit www.investorsdailyedge.com.

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