# Investing in Mexican Stocks



## eastwind (Jun 18, 2016)

Periodically on the forum somebody asks about moving their financial assets to Mexico, and people talk about whether Mexican banks are trustworthy, and some people talk about their term deposits in Mexican banks that have relatively high yields.

One thing I've not seen on here is any discussion of investing in Mexican stocks. Like, for example, buying shares of Movil, Bimbo, Cemex or Banorte etc.

I have invested in US stocks since the 90s, doing my own stock picking as well as buying into various mutual funds and ETFs. I am now thinking about investing in some Mexican companies. 

One way I could go about this would be to buy, from my US account, a US ETF that invests in Mexico (EWW and FLMX are two examples). And some foreign companies list ADRs on US exchanges, I've owned SCCO in the past (but both of these approaches are somewhat limited in terms of options and flexibility).

So could I, if I wanted to, open a brokerage account with a company here in Mexico that offers such accounts, move money to it, and then use the money to buy Mexican stocks directly? Has anyone on this forum done that? I'm not sure I want to, it might complicate my tax situation substantially, but I'm just wondering if it's even possible for non-citizens (I have an RP) and what considerations there might be.

I guess this thread is going to be of fairly narrow interest, or perhaps no interest at all. Sorry if I've left you behind with the acronyms and stock symbols. But maybe somebody has some info to get me pointed in the right direction.


----------



## MangoTango (Feb 8, 2020)

Yes you can open a brokerage account here in Mexico.
Are you a ThinkOrSwim type person or are you a Merrill Lynch type person ?
I put a sizable amount of time investigating what is available maybe five years ago - sitting down with several people. I opened an account with GBMHomebroker (like eTrade) but never did that much with it. I believe you can do some sort of online paper trading with them. I also liked Actinver (like Fidelity). There is also Banorte (like Merrill Lynch). And others.
You have to find what you are comfortable with. I assume you already read El Financiero regularly.


----------



## eastwind (Jun 18, 2016)

Thanks. With respect to ThinkOrSwim vs Merrill Lynch, I guess you're asking how self-directed I am vs wanting advice. I don't want advice or somebody calling me up to sell me some investment ala Merrill Lynch. But I'm no day-trader either, I buy infrequently and am picky about my buy timing, and then I hold almost everything I buy for years. I read a lot, but not Spanish. I research my own ideas, looking up fundamentals not technicals, so I don't use a lot of charts.

In the US I use Vanguard and Schwab. I only started with Schwab when I moved to Mexico because I wanted their visa card, most of my trading has been done at vanguard. Schwab had some guy bugging me for a while, but I was able to discourage him from calling me. Vanguard offers me personal advice but I don't go for it.

So I'd like a low-cost broker with cheap or free commissions, no minimum number of trades, a reasonable account minimum (or none), decent online experience, reasonably easy movement of money in and out, and no advice. I don't need or want a margin account, options trading, forex, futures or other fancy stuff. 

I would like to understand what insurance the account provides equivalent to SIPC, and it would be nice if the sweep account money market attached to the account gave decent interest as I might end up with funds parked there for a time while I seek a buying opportunity.

So given all that, any specific advice about brokers (even based on 5-year-old research) would be appreciated. What would your top 2 or 3 picks be for me?


----------



## MangoTango (Feb 8, 2020)

Well - things are a little different here in Mexico. There is no 'loss leader' mentality. I doubt you are going to find free commissions. In fact I was shocked at some of the commission schedules. Perhaps that fits in well infrequent trading. Don't assume things work the same as in the US.

GBM had, by far, the lowest costs. They also had the best technology. Their offices are in Mexico City and there was never a problem finding an intelligent English speaking person. They are the cutting edge. 

Sounds like you should sit down at your local Actinver branch in Cancun (they have one). Make sure they have no problem with FATCA. 

I've never used it but Banamex has this feature AcciTrade. They have some information on their website. (Looks pricey to me).

Let us know what you turn up.


----------



## breanntisien (Jun 9, 2021)

Which stock to invest in Mexico?


----------



## TundraGreen (Jul 15, 2010)

breanntisien said:


> Which stock to invest in Mexico?


If you have to ask, you probably would be well advised to not invest in any stock.


----------



## timmy45 (Mar 22, 2021)

breanntisien said:


> Which stock to invest in Mexico?





TundraGreen said:


> If you have to ask, you probably would be well advised to not invest in any stock.


I heartily agree. Have been making my own investment decisions for over 40 yrs. At least I know that if there is a bad decision made, who is responsible. Buying stocks is not like playing the lottery or the horses, at least for those that get good results.


----------



## breanntisien (Jun 9, 2021)

timmy45 said:


> I heartily agree. Have been making my own investment decisions for over 40 yrs. At least I know that if there is a bad decision made, who is responsible. Buying stocks is not like playing the lottery or the horses, at least for those that get good results.


looks like you don't understand what I mean but never mind


----------



## eastwind (Jun 18, 2016)

by the way, so far I haven't bought any stocks in mexico. I did invest a little bit in a US ADR of a Mexican company, that was easier, I could do that without setting up any new accounts. Those will come eventually.


----------



## breanntisien (Jun 9, 2021)

Well, I can’t say if moving your cash to Mexico is good or not. I’m not very deeply involved in these types of investments, but I’ll say what I know. I’ve once tried some investments during my final year, but to what you may have already guessed, I ended up in disappointment. After discussing my failure with a teammate, he recommended another type of investment to me. He sent me a webpage from 12 of the Best 5G Stocks to Buy in 2021 | Tim Thomas containing some stocks I can invest in. But I haven’t even started yet because I’m kind of broke and still trying to study them.


----------



## timmy45 (Mar 22, 2021)

breanntisien said:


> Well, I can’t say if moving your cash to Mexico is good or not. I’m not very deeply involved in these types of investments, but I’ll say what I know. I’ve once tried some investments during my final year, but to what you may have already guessed, I ended up in disappointment. After discussing my failure with a teammate, he recommended another type of investment to me. He sent me a webpage from 12 of the Best 5G Stocks to Buy in 2021 | Tim Thomas containing some stocks I can invest in. But I haven’t even started yet because I’m kind of broke and still trying to study them.


Tim Thomas touts his version of "timing the market" which has proven the downfall of many an investor. A detailed and diversified investment plan is critical to a sound financial future. Too often we see single sector stocks as the ticket to riches. Mr. Thomas is selling his theory of profiting from market volatility, a surefire track to failure except as a small part of an overall investment strategy that includes all types of long term investments. The market is very much overheated right now, quick fixes are not the answer for most of us. Maybe bitcoin/crypto is the answer.....not!


----------



## eastwind (Jun 18, 2016)

Right now, from a fifth to a quarter of my retirement spending is in dollars, that goes for insurance products priced in dollars, airfare for trips back to the US, and various minor expenses billed in dollars.

With the rest of my spending in pesos, and all my investments and income in dollars, about 3/4 of my spending is exposed to dollar-peso exchange rate risk, so it seems prudent to try to have some investments that reduce that risk. 

That could obviously be anything that pays interest or dividends in pesos, but it can also be a stock in a company that makes its profits in pesos, because if the dollar weakens vs the peso that stock's profits will grow in dollar terms and so should its stock price. Either Mexican growth or income stocks will fit the bill.

I won't be moving a big portion of my investments, but I wanted to start small and build up a couple positions in Mexican stocks. So far I'm not making much progress on that, I've got 100 shares of an ADR of a Mexican company, which was my starter position in that. It's doing ok so far, in line with the market.

I've got other to-do's I need to get to first, so it will be a while before I get around to opening a real Mexican brokerage account so I can expand the space of what I invest in. 

As to timing the market, it's pretty easy to identify market bottoms. Blood on the streets, sheer mindless panic, armageddon consensus, that sort of thing. If you have cash to invest and can remain calm you can pick up some deals in solid companies that are likely to survive the hurricane. I think tops are impossible to predict, or at the very least the odds of successfully predicting a top are too low to be worth trying.


----------



## timmy45 (Mar 22, 2021)

In my mind, the bottom of any market is equally as difficult to predict as the top.....nonetheless, 
your thinking is accurate in my opinion. One key is to not put ANY pesos or dollars into any security that you will probably need to have available for necessities in the near term like 4 to 5 years. As for me, I have become 99.9% risk adverse over the past 10 years, consequently missing the massive bull of the last 5 years.....but, I have not lost a minutes sleep over any of that. That was my long term investment goal for the last 40 years and I do not miss the anxiety at all.


----------



## MangoTango (Feb 8, 2020)

My two cents... The only true sizable money I have ever made in the US stock market was when I held founders shares in a young tech company which made it big. I paid 15 cents/share and sold much higher than that. As an investor, I managed to actually lose money on Microsoft in the late 80's. As for Mexican ADRs the very same day of the second Mexican financial crisis I purchased sizable positions in Telmex and Televisa - only to watch their values drop in half the next day. From my experience, owning an ADR is NOT the same as owning the underlying stock. 

When I was still working in the US I was very comfortable keeping my money in a money market account at 5%. In fact - had that never changed I might not have ever moved to Mexico. Today - we have about half our money in the US which is invested in 1 year T-bills earning like 0.06%. The other half of our money is invested in Mexican CETES earning around 5%. The national debt of Mexico is around 47% of its GDP. The national debt of the US is around 117% of its GDP. Yes Mexico has had problems in the past but times change. Mexico also is a very wealthy country overall. Mexico is by far the world leader in silver production (and like number 2 in rare earth minerals).


----------



## timmy45 (Mar 22, 2021)

MangoTango said:


> My two cents... The only true sizable money I have ever made in the US stock market was when I held founders shares in a young tech company which made it big. I paid 15 cents/share and sold much higher than that. As an investor, I managed to actually lose money on Microsoft in the late 80's. As for Mexican ADRs the very same day of the second Mexican financial crisis I purchased sizable positions in Telmex and Televisa - only to watch their values drop in half the next day. From my experience, owning an ADR is NOT the same as owning the underlying stock.
> 
> When I was still working in the US I was very comfortable keeping my money in a money market account at 5%. In fact - had that never changed I might not have ever moved to Mexico. Today - we have about half our money in the US which is invested in 1 year T-bills earning like 0.06%. The other half of our money is invested in Mexican CETES earning around 5%. The national debt of Mexico is around 47% of its GDP. The national debt of the US is around 117% of its GDP. Yes Mexico has had problems in the past but times change. Mexico also is a very wealthy country overall. Mexico is by far the world leader in silver production (and like number 2 in rare earth minerals).


Very insightful indeed. Your point about ADR and individual issues is a good one. Living in the Seattle area for 25 years, I watched companies like MSFT, SBUX, COST, and many others very closely and did very well from 1980 to around 1990 with them. I have owned many dogs (not the furry ones) and quite a few diamonds. 100% of our investments are in USD and in the US. We began building a CD ladder in the late 90s and still have a number of 5%+ CDs and were not bashful about buying 30 year CDs at 5-6%. We can live very comfortably on the interest with close to zero risk. 

Moving to MX 3 yrs ago was a culture and life experience decision. not a financial one, but the cost of living has been a very pleasant surprise. We love the people and the culture, have more or less immersed ourselves in the local (Merida) community with a little mix of Expats. We have always been far more lucky than good when it comes to investing. 

I have a good deal of faith in the MX economy and people and was a little surprised about the Debt/GNP number, but not at all surprised about the US numbers. Thank you for your input.


----------



## MangoTango (Feb 8, 2020)

I am on thin ice here - but if you are relying on FDIC insurance for your security blanket - there are aspects you need to investigate.
I'm an old man and it has been a long time ago - but even with our money market I had to be very aware of where our monies were deposited.
I believe the correct term is 'sweep'.
Please correct me if I am wrong but - let's say you have money market accts at Schwab and Fidelity. They both sweep your monies at the end of the day to various banks. There is a finite limit PER INSTITUTION when it comes to that FDIC insurance. So for purposes of this conversation let's say the per 'bank' limit is 250K (I have no idea anymore). If both Schwab AND Fidelity sweep 250K into the same bank - well then you have exceeded your FDIC coverage.


----------



## eastwind (Jun 18, 2016)

MangoTango: FDIC insurance applies to accounts at banks, not brokerages. The sweep accounts at fidelity and schwab are money market mutual funds, and not FDIC insured, rather than money market deposit accounts (which are insured). Schwab is tricky because they have a banking arm and a brokerage arm. The bank side is FDIC insured. And FDIC insurance is 250k per account, not per account holder, so if you have multiple accounts at the same bank (checking and savings, say) you get 250k coverage on each.

At a brokerage, while there's no FDIC insurance, you have SIPC insurance, which covers some losses (e.g. fraud/theft by the brokerage or its employees) but not others (e.g. bad investment choices). Half a million per account, I think. SIPC covered a lot of the losses of Bernie Maddof's investors (but some people had more than half a million in their accounts and had to sue and wait years for any more).

In 2007 a number of money market funds had losses. Most fund companies offering them elected to cover their shareholder's losses rather than "break the buck" (have the thing trade for less than $1 per share). A very few funds broke the buck, to my knowledge none more than 3 cents on the dollar. So while that was one of those "never supposed to happen" things that happened, it was more of an annoying loss than a catastrophic one, especially given the backdrop of other big losses in all directions at the time.

If I'm incorrect, please let me know.


----------



## timmy45 (Mar 22, 2021)

eastwind said:


> MangoTango: FDIC insurance applies to accounts at banks, not brokerages. The sweep accounts at fidelity and schwab are money market mutual funds, and not FDIC insured, rather than money market deposit accounts (which are insured). Schwab is tricky because they have a banking arm and a brokerage arm. The bank side is FDIC insured. And FDIC insurance is 250k per account, not per account holder, so if you have multiple accounts at the same bank (checking and savings, say) you get 250k coverage on each.
> 
> At a brokerage, while there's no FDIC insurance, you have SIPC insurance, which covers some losses (e.g. fraud/theft by the brokerage or its employees) but not others (e.g. bad investment choices). Half a million per account, I think. SIPC covered a lot of the losses of Bernie Maddof's investors (but some people had more than half a million in their accounts and had to sue and wait years for any more).
> 
> ...


All good information..... In the case of FDIC insured CDs, the FDIC rules are determined per holding in each *individual *issuing bank. Further, the limit of 250k per bank is further determined by the account. Each unique account is protected by the current FDIC limit (lets say 250k) but INDIVIDUAL accounts are just that (held by either person in a couple *individually*) and JOINT accounts are separate and distinct. Trust accounts for grandchildren or others and other TRUST accounts are also separate for purposes of FDIC coverage. Even an account held jointly with an an individual and one of their children are separate and distinct for FDIC purposes. *Money market and sweep accounts are NOT FDIC protected.*

As you can see, with appropriate planning the limit of $250k PER BANK CD can be spread over many banks and several accounts without increasing risk. We have had ( in times past) several banks that defaulted on CDs that were settled by FDIC when each of us held over $200k in individual accounts. The CD ladder concept is worth consideration for those that are risk intolerant. The problem is that at this moment, US CDs are in the 1.8% annual range....(20 or so years) but minimal risk. Just some thoughts....


----------



## MangoTango (Feb 8, 2020)

This sounds like a better description of what I was attempting to describe :

"
*Fidelity Cash Sweep Account Options and Rates*

Several options are available for uninvested cash in a Fidelity brokerage account. The broker provides an FDIC sweep program with its Cash Management Account. This is a hybrid brokerage-bank account. Securities can be traded in it, but it is designed primarily for cash management purposes. It comes with free checks and a Visa debit card. All deposits that aren’t used to purchase securities are swept into FDIC-insured banks that Fidelity has partnered with. Each Cash Management Account can have up to 5 program banks, which creates a maximum insurance limit of $1,250,000, much higher than the government’s normal $250,000 cap.

Interest is paid on funds swept to program banks. The APY is 0.01% for balances above $100,000. Accounts smaller than that earn just 0.01%. Besides the Cash Management Account, the FDIC sweep program can be used for an IRA and a 529 college savings plan"

Yes - the registrations on the accounts were important.
Fidelity provided a menu of eligible banks to select from (with percentage of desired participation). I could select a particular bank and permanently exclude it from the menu.
The menu changed constantly based on the commitments between Fidelity and the various banks.
Fidelity would help review my selections from time to time to make sure I had no exposures. But it was on me to set it up.

Now that I am an international client at Fidelity (and Schwab for that matter) these sort of options are no longer available to me.
I don't quite understand the reasoning behind that. There is nothing in the FDIC rulebook which mentions anything about residency...


----------



## eastwind (Jun 18, 2016)

Interesting. I'm not a fidelity client so I'm not aware of their offerings, looks like they're using 3rd party banks to get FDIC cover for their sweep accounts. That cash management account you posted above looks to be set up for "high net worth individuals", maybe you fell out of that category when you became an international client because their HNWI program only applies to US persons? Just speculating.


----------



## MangoTango (Feb 8, 2020)

I guess my message is _everyone_ needs to do their own homework. 
Neither MangoTango not Eastwind nor timmy45 are the definitive source for information.

And I'll share this - I no longer trust information I get from a single source from say Fidelity or Schwab. If I have a conversation today - I will call again tomorrow to confirm what I was told.


----------

