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Are companies from emerging markets more corrupt than companies here? ¯\(ツ)/¯ There is corruption everywhere. To avoid investing in immoral companies, you should pick companies based on their behavior, not their country of origin.
 

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Discussion Starter #22
@MrMatt : I see. That is a good point.

@Just a Guy : Yes for sure. Getting accurate info is another thing that was of concern for me. What would you say is your way to get info on individual companies? go to yahoo finance and just read up on them?

@latebuyer : That is interesting. Although I always check the breakdown of the fund before i buy it.

@Tostig : Yeah for sure. There are definitely companies in NA you should avoid. I usually invest in ETFs but try my best to do research on companies I am buying individual stocks from.
 

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Personally I don’t like finance sites too much, they tend to have very biased advice, but I’ll use them for financial papers like annual reports And stock price. Most of the time I’ll just research the company in general. I want to know more about public opinion and their products.
 

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Discussion Starter #24
I see. That makes sense. I find sometimes it is hard to get information on companies because most of the information is on their own website and of course it will be biased towards showing their company in a really good light.
 

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True, but if everyone use Heinz ketchup, uses an iPhone, drinks coke, that kind of bias points to good investments usually, at least a starting point. I never saw hardwood floors from sino-Forrest, and shocking they turned out to be a scam. If nortel is selling and financing its products while reporting both as profits, something strange may be going on.
 

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I just go international with VDU or I-XUS and buy a bunch of big companies and financial services in countries around the world. I am not at a stage where I need every best point at a higher risk so I do not chase anything emerging by explicit design.

I might go lighter on VTI and swing to VBR on a small cap tilt in month or two in the US market - that is as flamboyant as I go chasing more returns.
 

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Here's another reason I stick to North American & European stocks: regulatory concerns on our side.

Recent US executive orders have banned the holding of certain Chinese stocks. It includes American ADRs and even a Canadian cross listing.

According to my connections on Bay Street, this will adversely affect even Canadian ETFs which had positions in these stocks. This forces Canadian fund managers to modify their holdings for a variety of reasons, to be compliant with US regulations.

I think that illustrates one problem with "emerging market" or distant foreign holdings. Because they're not on our turf, there are variety of potential regulatory or legal problems -- both on the foreign side and our own side.

Thinking about regulatory / legal smoothness, Canadian and American stocks are definitely the most predictable. Europe would be next, and Japan too I think (since it's a mature first world country with a well-developed regulatory framework and good relationship with the western allies).

But once you venture into other zones I think these kinds of problem scan start popping up. Who knows, in a few years it might not even be legal to hold Chinese stocks. What are you going to do if you committed to a large emerging/China position? You will be forced to liquidate at a low point.
 

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Here's another reason I stick to North American & European stocks: regulatory concerns on our side.

Recent US executive orders have banned the holding of certain Chinese stocks. It includes American ADRs and even a Canadian cross listing.

According to my connections on Bay Street, this will adversely affect even Canadian ETFs which had positions in these stocks. This forces Canadian fund managers to modify their holdings for a variety of reasons, to be compliant with US regulations.

I think that illustrates one problem with "emerging market" or distant foreign holdings. Because they're not on our turf, there are variety of potential regulatory or legal problems -- both on the foreign side and our own side.

Thinking about regulatory / legal smoothness, Canadian and American stocks are definitely the most predictable. Europe would be next, and Japan too I think (since it's a mature first world country with a well-developed regulatory framework and good relationship with the western allies).

But once you venture into other zones I think these kinds of problem scan start popping up. Who knows, in a few years it might not even be legal to hold Chinese stocks. What are you going to do if you committed to a large emerging/China position? You will be forced to liquidate at a low point.
Yes, I agree, Political risk is one of the single biggest investment risks.
It's also obvious that we also have a pseudo political risk from big tech.

Just be sure to include this risk premium in your investment decisions.
Unfortunately this again hurts the emerging markets and further restricts their ability to raise capital.

So when you look at those pictures of extreme poverty, you have to consider what are their opportunities, and by restricting their ability to access capital, how are they going to improve their situation.

That being said, India, despite it's internal politics, does benefit from the European influence. Very messy, but a LOT of opportunity.

Myself I'm very leery of political risk, I'd prefer to invest in a major international (Unilever or P&G) and let them sort it out.
 

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Yes, I agree, Political risk is one of the single biggest investment risks.
It's also obvious that we also have a pseudo political risk from big tech.

Just be sure to include this risk premium in your investment decisions.
Unfortunately this again hurts the emerging markets and further restricts their ability to raise capital.

So when you look at those pictures of extreme poverty, you have to consider what are their opportunities, and by restricting their ability to access capital, how are they going to improve their situation.

That being said, India, despite it's internal politics, does benefit from the European influence. Very messy, but a LOT of opportunity.

Myself I'm very leery of political risk, I'd prefer to invest in a major international (Unilever or P&G) and let them sort it out.
Yeah I generally agree with what you wrote. I am NOT comfortable with regulatory, legal, and political risk of many foreign countries. Add to that concern about the quality of their investor protections and enforcement of financial crimes. To be honest, even Canada is weak on enforcement of white collar/corporate crime.

Many US multinationals, plus many Canadian companies, have significant operations in these countries and "sort it out", as you say. Scotiabank has big operations in Latin America. Brookfield shows only 9% of revenue based in Canada, with the rest from global.

Currently my equities are entirely Canada + the S&P 500, and I think it's fine.
 

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Yeah I generally agree with what you wrote. I am NOT comfortable with regulatory, legal, and political risk of many foreign countries. Add to that concern about the quality of their investor protections and enforcement of financial crimes. To be honest, even Canada is weak on enforcement of white collar/corporate crime.

Many US multinationals, plus many Canadian companies, have significant operations in these countries and "sort it out", as you say. Scotiabank has big operations in Latin America. Brookfield shows only 9% of revenue based in Canada, with the rest from global.

Currently my equities are entirely Canada + the S&P 500, and I think it's fine.

James I agree with you there are many issues in the world that make investing in foreign countries uncomfortable at times. Have you ever looked as ESG ETFS ? They tend to only invest in companies that are socially and environmentally responsible and the funds consider a lot of the issues that you have brought up. One of the main things that ESG fund managers consider is governance and how companies actually operate, do they respect their workers, the countries that they operate, what is executive pay like how are the business ethics of the corporation etc..

Here a link to a great piece from BMO on responsible investing and what it actually means:https://thehub.bmosalessupport.com/...e_investing_eng.pdf?file=1&type=node&id=96012

There are many different ETFS now that invest in different parts of the world that have the ESG mandate built in. So in the end you can avoid certain areas of the world and invest in only the areas of the world that you prefer and also take an ESG approach, take a look at this for all the options that BMO has: https://bmogamhub.com/system/files/understanding_bmo_esg_etfs_4_en.pdf?file=1&type=node&id=96366

Hope this helps
 

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James I agree with you there are many issues in the world that make investing in foreign countries uncomfortable at times. Have you ever looked as ESG ETFS ? They tend to only invest in companies that are socially and environmentally responsible and the funds consider a lot of the issues that you have brought up. One of the main things that ESG fund managers consider is governance and how companies actually operate, do they respect their workers, the countries that they operate, what is executive pay like how are the business ethics of the corporation etc..

Here a link to a great piece from BMO on responsible investing and what it actually means:https://thehub.bmosalessupport.com/...e_investing_eng.pdf?file=1&type=node&id=96012

There are many different ETFS now that invest in different parts of the world that have the ESG mandate built in. So in the end you can avoid certain areas of the world and invest in only the areas of the world that you prefer and also take an ESG approach, take a look at this for all the options that BMO has: https://bmogamhub.com/system/files/understanding_bmo_esg_etfs_4_en.pdf?file=1&type=node&id=96366

Hope this helps
At the risk of getting political, ESG is a political marketting tool.
Quite honestly I seriously question any group that puts systematic racism and sexism as an investment criteria.

I'll make exceptions if it's a government regulation, evil or not, if the government demands discrimination, you have to play the game.
Or if they have sufficient market power that blatant discrimination is unlikely to have a material impact on their finances. That's how I can justify companies like Scotiabank, which has recently announced racial quotas.
 

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At the risk of getting political, ESG is a political marketting tool.
I agree. It feels like politics and social justice beliefs... that's not a sector, and I don't see any reason to group or filter companies this way, even if I do support those ambitions for corporate governance.

I'm not saying it's harmful but it's kind of like filtering stocks by whether they pay high dividends. Kind of a red herring, just the wrong criteria to apply to business analysis.
 

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I agree. It feels like politics and social justice beliefs... that's not a sector, and I don't see any reason to group or filter companies this way, even if I do support those ambitions for corporate governance.

I'm not saying it's harmful but it's kind of like filtering stocks by whether they pay high dividends. Kind of a red herring, just the wrong criteria to apply to business analysis.
I think high dividends (as a function of cashflow) is actually correlated to business operations and management strategy.

There is a big difference in how a company is run if it
1. Pays out 0% of cashflow in dividends
2. Pays out 50% of cashflow in dividends.

FWIW my decision to own Apple stock has nothing to do with Tim Cooks orientation, because quite honestly it doesn't matter. If it matters to you, you have the problem.
 

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I think high dividends (as a function of cashflow) is actually correlated to business operations and management strategy.
Yes dividend policies are more correlated with actual business than social responsibility governance policies.

That was a bad example. Some criteria (such as "does this stock pay a dividend at all") is good criteria for screening stocks. It serves as a cashflow/stress test and helps filter out bogus or mismanaged companies.

Other versions such as "highest dividend yielding stocks" is bad criteria and is pretty irrelevant to grouping companies; I wouldn't want to invest based on that.
 

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If ethics were the only factor in investing, I wouldn't own any stocks in BMO,TD, insurance companies or telecommunication and TV companies. It's companies like these that pissed me off as a customer. I looked at them as an investor because it's their kind of practices that are making money for them.

I'm sure shareholders are very happy with dividends from Extendicare but how many of them are willing to live or send their parents to live in facilities run by Extendicare?
 

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Not sure if it's really even possible to draw a line on ethnical/non-ethical with good accuracy for companies that most people invest in. What we see as outside is probably just a drop in the ocean of what is happening in the side - things that never surface. If you are going to get involved in a company - as in boards etc., then yea this is a more valid question. But for generic investing, I'm not sure if it's even worth thinking too much about.

Maybe in the future when we have enough real proponents and demand for "green" everything, those companies that have adhered to strict environmental rules could have an edge in bring a lot of people's primary pick - some day in the future. But at the moment, the truth (IMHO) is that there is very little ethics in the investment decision making process.
 

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Discussion Starter #38
@james4beach :Certain chinese companies getting banned seems similar to what another user said. Yes for now I am glad I did not go into emerging markets.

@MrMatt : What do you mean when you say india benefits from european influence? I am not too familiar with their market situation. Are you talking about european companies being in india? Also, I am invested in BNS as well. i was unaware they introduced racial quotas. Sounds like they are just pandering.

@dcris07 :That is interesting. I have not heard of those at all. I agree a bit with others it may be getting a bit political and just made for people in a niche but I will look more into it.

@Tostig :Can you elaborate on what kind of ethic/moral issues are there with those companies listed? I shudder thinking about LTC homes. I would not get into them at all as it seems like bad idea from a moral standpoint and a investing standpoint because of all the deaths and lawsuits happening right now but am open to seeing things differently.

@tradesviz :Yes that is for sure as well. I feel like it would be quite difficult for a company to cultivate a global image of themselves while their internal polices and employees are vastly different. When there is a disconnect sometimes it rises to the surface. I am thinking of blizzard employees getting upset with the company when the started censoring/banning hong kong players because of China's influence.
 

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@MrMatt : What do you mean when you say india benefits from european influence? I am not too familiar with their market situation. Are you talking about european companies being in india? Also, I am invested in BNS as well. i was unaware they introduced racial quotas. Sounds like they are just pandering.
India has Common Law and a Parlimentary system, heavily informed by the relevant English systems.

I agree they're just pandering, but I think any systematic discrimination is repugnant.
 

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I think any systematic discrimination is repugnant.
I think you should see this as "portfolio diversification". The market (world) contains different sectors, industries, market caps, etc. (genders, ethnicities, wealth, cultures, etc.) and you want your portfolio to be diversified to represent the market properly so that you get the best of everything (different opinions).

When I have to much tech in my portfolio, I start looking at what's best in other sectors.
 
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