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Benefits Of Investing In The US Market

Jun 23, 2008
Here are some of the benefits of investing in the US Stock Market.

1. A Much Wider Selection of Stocks & Financial Derivatives

The first and most obvious advantage of investing in the US markets is the much wider selection of stocks that you have to choose from. There are over 9,000 listed companies in the US compared to just over 620 companies on the Singapore course. So at any point of time, it is much easier to find a great stock that fits all the winning investment criteria and that could triple in value.

US stocks tend to also have a much higher potential to increase in value simply because the companies you invest in have a much higher potential for sales and earnings growth (the US consumer market is huge). Finally, with many of the companies stocks having options written on them, you are able to use a much wider range of trading strategies that allow you to make money even when the stocks go down or don't move in price at all.

2. Higher Liquidity and Volume

The other major reason why I prefer to trade US stocks is because of the high volume of securities that are traded every day. US stock markets also have market makers who will buy the stocks you want to sell or sell the stocks you want to buy if there is no one else willing to.

In this way, you are guaranteed to be able to buy and sell the stocks you want! Besides a handful of popular and actively traded stocks on the Singapore course, there are some great investment instruments that are very hard to buy or sell simply because of the lack of volume.

For example, I always recommend that people buy the STI ETF (Straits Times Index Exchange Traded Fund) which tracks the performance of the Straits Times Index (STI). Some of you may remember reading about it in my previous book "Secrets of Self-Made Millionaires". If you had bought the STI ETF a year ago (early 2006), you would have made an annual return of over 26% as the STI surged to an all time high of 3,000 points. The trouble is that it is very difficult to buy or sell this powerful security as the average daily traded volume is less than 10 shares per day!

3. Superior Research Data & Tools at Much Lower Costs

Making the right investment decisions depends very much on the timeliness and comprehensiveness of the research data available. In the US, hundreds of stock research sites provide you with every conceivable piece of research information you need to make a good decision and many of them are provided for free.

In fact, you have access to the same exact information that is used by professional money managers. At the click of a mouse, you can find out a stock's 10-year history of earnings, profitability, borrowings, valuation as well as the ratings of hundreds of stock analysis.

In the local market, the availability of research data is extremely limited and even when you can find it; you have to pay a high price for it. much based on trading in US stocks and options. However, the same methods can be easily applied to the local Singapore market or any other stock market for that matter. There are three main reasons why I prefer investing in the US markets.

In the past, it was very difficult and very expensive for an investor in Singapore (or any other foreign country) to think of trading in the US markets. High transaction costs and the convenience of going through a local broker (which closed when the US markets opened) made it not worthwhile.

However, with the explosive growth of the Internet and the emergence of online discount stock brokers, it is just as easy and cheap (in fact cheaper) to access the US stock markets as compared to the local markets!
About the Author
Adam Khoo is an entrepreneur, best-selling author and a self-made millionaire by the age of 26. Discover his millionaire investing secrets and claim your FREE bonus chapter of his latest bestselling book 'Secrets Of Millionaire Investors' at Secrets Of Millionaire Investors.
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