Opinion – Matt Leibowitz, CEO and Co-founder at Stake.
It’s actually the complete reverse. It can be easier and cheaper than ever to invest overseas than it is in Australia.
As we all know, the US market is the world’s stock market and is where the world trades. The dollars traded in Apple shares in one day is more than twice the total amount traded on the ASX. That’s right — Apple trades double as much as the entire Australian market on any given day. For those Australians who invest in stock markets overseas, approximately 85% of their investment dollars go to the US stock market, into stocks like Amazon, Microsoft, Netflix, Berkshire Hathaway and Alphabet (Google). If it’s not going into these household names, it’s typically invested in emerging companies that are growing on a global scale like Shopify, Nvidia, Square and Atlassian — these companies are all up in value more than 100% over the last year.
Some Aussies have been sold on the idea that to invest outside of Australia, you need to get into a managed fund for overseas exposure. This simply isn’t true either and when you do invest through a managed fund, you could be paying unnecessary management fees for something you can do yourself while being limited to what the manager buys.
Platforms like Stake.com.au make it easier to find and invest in overseas stocks for Australian consumers. When we consider the current hype around Bitcoin and cryptocurrencies — with a news article on crypto surfacing almost every day — it’s clear that many Australians don’t want to just put their money in local investments, they want the global exposure too.
As technology continues to develop and impact our lives more and more, the next generation of companies like Airbnb, Dropbox and Uber are likely not going to be listed on the ASX.
Aussie traders can win, even as US markets fall
It’s not only the world’s largest companies that can be traded on the US markets. There are also over 2,000 Exchange Traded Funds (ETFs) that allow investors to get exposure to asset classes not available in Australia — whether it be Artificial Intelligence, the Defence Sector or Corn, there is an ETF for the willing investor. Even if you are fearful and believe the market is going to fall, you could make money with the raft of inverse ETFs that make gains when stock markets fall.
Most recently, when the US markets fell in February amid the anticipation of a Government shutdown and a rise in interest, the S&P 500 declined more than 4% and was considered the worst point decline in history during one trading day.
When markets look shaky, Australians have two options — you either sell, or hope. Yet at a global level, traders have access to returns when markets go up or down. For those who have access to the diverse range of products in the US markets, the ability to profit from a downturn is very real. Boiled down to raw figures, there are just three ETFs available to get short exposure to markets on the ASX, compared to more than 130 inverse ETFs on US markets. For those who stay focused on Australian shores, they could be missing a huge opportunity to make money when markets fall.
About Matt Leibowitz
Matt launched Stake with co-founders Jon Abitz and Dan Silver after returning to Australia from the US, and finding it difficult to continue trading US shares. Having run global trading teams in the most sophisticated financial markets using the most advanced technologies, Matt was frustrated that investment opportunities for Australians he found confusing, lengthy and expensive.