Friday, September 7, 2007

What are American Depository Receipts?

These receipts known as ADRs, represent shares of stock in a foreign company. The shares are actually held at a US based bank, which issues the ADR. The advantages to an ADR are obvious. They make investing in foreign companies much easier because they are traded like normal stocks, money doesn't need to be exchanged into foreign currencies, and they provide exposure into foreign markets. There can be some downsides to the ADRs as well. Foreign companies may not be required to disclose as much information as US companies, therefore they can carry added risk. Investors may not have easy access to information or be able to translate it if they did.

For a better look into ADR's, check out the Bank Of New York site HERE.

That's it for today. Hope everybody is holding on tight, the market is crazy today.
------Sincerely, Trevor Stasik

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