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Author: buyforeign Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 195  
Subject: Re: Buy ADR vs. directly from exchange Date: 4/27/2007 1:17 AM
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I'm amazed about how well the BoNY manages to hide from the consumer the huge ripoff behind the ADR system; about the intricate means (Reg. S, Reg. 144A, PFIC, and what do I know else) that the U.S. government uses to keep their citizens caught in the inflationary US$ system, which seems to be designed to expropriate the hard-working, saving people from their money, benefiting only those smart enough to buy real assets (and leverage them); and finally I'm amazed how hard it is to buy (real, not ADR ripoff) foreign stocks from within the U.S. "We don't do that"; "too dangerous"; "but not if there is an ADR of that stock trading in the OTC" etc. etc. In other, free, countries that I know, brokerages usually allow to trade on any major exchange in the world, including U.S., for a pretty small fee, with the currency automatically converted using daily interbank rates. Only not U.S. banks/brokerages. I personally don't see any freaking advantage in the ADR system (originating from some 100 year old antiquated regulations), as almost every foreign company that I looked at so far has their shareholder information in plain, clear English on the internet. BoNY's frivolous arguments don't make sense to me except in view of the huge, mass-stupidifying marketing machinery that they are running. When you ask them by mail or telephone why your US$-dividends paid by them from your ADR is less than the dividend of the ordinary, you get all kinds of excuses and stories from dumb call center agents. When you ask to send you the form to convert to ordinaries, they never arrive at your address (and are not downloadable, as opposed to their marketing crap). They never tell you the real reason of the "mysterious" disappearing of parts of your dividends. Fact is if you build a long-term (e.g. retirement) portfolio with ADRs, and BoNY's fee is between 10 and 25% of the yearly dividend of typically, say, 3%, you can possibly forego about 1/3 or more of your retirement assets to BoNY fees (do your math with compounded yield)! For nothing! Outrageous! (Only the few NYSE-traded ADRs are legally exempt from fees.) Question: Has anybody verified their ADR dividends? Or do most people not care about dividends?? For the buy-and-hold investor, the effect of the possibly higher commission for ordinaries seems to be negligible compared to this.
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