Andrew Goldman has been writing for over 20 years and investing for the past 10 years. He currently writes about personal finance and investing for Wealthsimple. Andrew's past work has been published in The New York Times Magazine, Bloomberg Businessweek, New York Magazine and Wired. Television appearances include NBC's Today show as well as Fox News. Andrew holds a Bachelor of Arts (English) from the University of Texas. He and his wife Robin live in Westport, Connecticut with their two boys and a Bedlington terrier. In his spare time, he hosts “The Originals" podcast.
So you’ve made a controversial life choice and identified as Team Samsung. While so many of the cool kids won’t shut up about their iPhones, you have decided that you are a Galaxy person in your bones. Apple can have its Tim Cook. You happen to be partial to Samsung’s novel three CEO system. Don’t worry. We won’t make you choose a favorite between Ki Nam Kim_,_ Hyun Suk Kim, and Dong Jin Koh. Too difficult!
You love Samsung so much that since you can’t marry it you want to at least own a little piece of it. But here’s the problem. Unlike Apple, which is a publicly traded American company traded on the NASDAQ exchange, and therefore, super simple to invest in, Samsung is a Korean company. Becoming a Samsung investor is a bit tougher. It’s certainly doable, so read on and we’ll explain how.
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1. Decide if Samsung stock is the only stock you want to buy
We’d like a word before you buy anything—Samsung or any other stock for that matter. Are you absolutely sure you want to buy an individual stock? Stock picking is extraordinarily hard to do well. Famously rich stock picker Warren Buffett has spent the last decades discouraging pretty much everyone not named Warren Buffet from trying to make money picking individual stocks, he proclaimed: “The goal of the non-professional should not be to pick winners — neither he nor his ‘helpers’ can do that — but should rather be to own a cross-section of businesses that in aggregate are bound to do well.” One stock does not a cross section make. An aggregate of companies, not to mention bonds and real estate, can easily be bought by investing through a robo-advisor. It’s up to you to decide if you know better than the financial Yoda with the $81 billion net worth.
Picking individuals stocks is a lot like playing the lottery. In the case of American stocks, the top best performing 4% stocks accounted for the entire wealth creation of the US stock market since 1926, which means there were lots and lots of losing stock pickers. Are you sure Samsung is going to be the stock with the kind of upward trajectory you want for the long haul?
If you’re sure you want to own some Samsung, there’s a lot to said for the “mad money” philosophy of investing. If you own a properly diversified investment portfolio and have a little discretionary, or “mad” money on hand you’d like to use to speculate, great. Roll the dice. But a good rule of thumb is that you should gamble with no more than 5% of your entire portfolio.
2. If you’re sure you want to buy Samsung stock
If you’re certain you want to acquire an interest in Samsung Electronics Co. Ltd., you have a few choices.
Though an ETF. The absolute easiest way to acquire an interest in Samsung is by buying an ETF that invests in Korean companies. By far, the dominant South Korean ETF in terms of assets under management is called iShares MSCI South Korea ETF, which trades under the ticker symbol EWY. BlackRock, who issues the ETF, writes in its literature that EWY “seeks to track the investment results of an index composed of South Korean equities,” however Samsung is such a dominant player in the Korean economy, it makes up a surprisingly large percentage of of EWY’s total holdings—currently nearly 25% in fact. Other ETF options that will invest heavily in Samsung include Xtrackers MSCI South Korea Hedged Equity Fund (DBKO) and Franklin FTSE South Korea ETF (FLKR). The advantage of investing in Samsung through an ETF is not only ease but also added diversification that you wouldn’t get by purchasing shares in any one company, Korean or otherwise. Why not get a little side of Hyundai with your Samsung entree?
Through a global depositary receipt. According to Samsung’s website, those who would like to trade shares in Samsung may also do so by buying something called Global Depositary Receipts (GDRs) for Samsung that are listed on London Stock Exchange (LSE) and Luxembourg Stock Exchange (LuxSE). You can learn more about GDRs and their cousin, American Depositary Receipts (ADRs) here. Sadly, Americans are prohibited from purchasing Samsung this way thanks to Rule 144A of the US Securities Exchange Act. All others should be wary of high fees that are sometimes associated with trading GDRs.
Over the counter. Another way to invest in Samsung would be to trade them over the counter, or OTC. Basically, OTC trades cover purchases of securities that aren’t available on major exchanges like The New York Stock Exchange. Though OTC changes are regulated by government agencies, for example FINRA in the US, they are far less regulated than central exchanges.
Directly on the Korean stock exchange. You can trade stocks on the Korean Stock Exchange (KRX) without setting food in Korea, though some legwork will be required. According to Samsung’s website, this may be accomplished by obtaining an investor registration certificate (IRC), and opening a a stock trading account at a Korean securities firm. If this sounds onerous—which it is, to be honest—a local broker with a major investment bank may be used to execute the trade, though the fees could certainly be cost prohibitive.
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