My stock buddy has recently fallen in love with foreign currencies…just not trading them in the Forex market as I do.

No instead, he’s buying international stocks. As I mentioned yesterday, he called me recently to find how I choose my foreign currency trades. I told him you always want to pick a stock from the strongest fundamentally strong country.

That way, hopefully the local currency will also sail higher as the stock does, and you’ll earn extra currency profits when you sell your foreign stock.

My insider information is exactly what he needed. Now he’s calling me for all his foreign stock research. We even decided to team up when he goes looking for another foreign stock.

He will have me do what I do best…point out the best pond (economy) to fish in. Then he’ll do what he does best and tear into the fundamentals of each security to see which ones have the best fundamentals.

It’s been a beautiful thing for him. We’ve both been ecstatic with his results.

Now, based off of all of this …I bet you can guess that the U.S. stock market is not my top pick for stock investments. The U.S. is literally drowning in its own debt right now, not to mention stuck with high unemployment, the run-off of this recession, and still mostly weak data across the boards.

Why would you buy strictly U.S. stocks when you can get stronger, better-performing stocks abroad?

Not to mention any U.S. stock is obviously dominated in U.S. dollars, so you don’t have any chance of extra currency profits if you’re a U.S.-based investor.

This is why it’s good to learn about investing in other countries…and you can do that more comfortably once you know about their currencies and their macroeconomics that push those currencies higher.

Once again, your currency knowledge provides somewhat of a safety net for your international stock investing.

Find out where the fundamentals are the strongest and you’ll find out where most of the money will be flowing. THEN drill down into the stocks or sectors that you want to invest in within those countries.

However, never forget…that these “stock plays” are, in the end, currency plays too. So know your currencies and you will do much better in your “international investing” over time.

Happy Trading,
Sean Hyman, aka Professor FX