During the 1990s, many investors held to a fixed idea that global stock market equities would be more profitable than North American stocks. This was especially true, so they claimed, of companies based in China, India and other emerging markets.

We advised our readers to resist investing heavily in emerging markets during those years. Instead, we recommended that investors look to their U.S. holdings, and the buys we recommended in Wall Street Stock Forecaster, for overseas exposure. U.S. blue-chip stocks operate in many countries. And we felt that the domestic U.S. market offered opportunities that simply weren’t available in Canada.

In the end, this advice paid off handsomely for our readers.

That’s because the results of investing in emerging markets were generally mediocre, especially in light of the risk they exposed investors to.

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Global stock market investing now holds potential for big profits

Now foreign investing has fallen out of favour, and many investors feel that China and other emerging markets expose investors to a lot of risk. We think that’s a healthier attitude than the gotta-have-it viewpoint that was common a few years ago. And these markets do have more potential than ours, because the people are generally younger, and more of them have the potential to advance into the middle class.

As well, these markets now seem more attractive compared to the U.S., where ballooning government spending and expanding government control over health, automaking and other businesses could hinder growth over the next few years.

Global stock market investing: volatile and risky — but also very appealing

Global stock market investing still remains riskier in many ways than investing in North America. That’s because many emerging countries have language barriers, weaker investor protection laws, less commitment to openness, fairness and so on.

You can lower risk by sticking with American Depositary Receipts (ADRs) of emerging-market companies. An ADR is an investment unit for foreign companies that trade on a U.S. stock market. These units can represent fractions of shares, whole shares, or multiple shares in the foreign company. They help investors simplify their offshore investing by letting them buy foreign shares on U.S. exchanges without the complications of foreign transactions.

They also help investors cut risk, because ADRs have to follow some U.S. Securities and Exchange Commission and New York Stock Exchange rules.

But above all, we think the best way to invest in emerging markets is through ADRs we recommend, including those we list as buys in Wall Street Stock Forecaster. Click here to learn more about how you can get one month free when you subscribe today. You have no risk and no commitment.