The stock market has reached a record high.
For once I'm not talking about the ASX, although with dividends included, our market is riding at close to record highs.
I'm talking about the Nasdaq Composite Index. It closed Friday night at a record high, finally eclipsing the level it first breached way back in 2000, at the absolute height of the dot com bubble.
Unlike those heady days, when companies with minimal sales and massive losses could be valued at billions of dollars, this time around the Nasdaq is being powered higher by real companies producing real products and generating real profits.
No wonder angel investor Jason Calacanis is quoted on the front page of The Australian Financial Review saying…
"… it's an all completely different time now."
We're talking about companies like Apple, Google, Microsoft, Amazon.com and Facebook.
With the exception of Amazon.com, all are hugely profitable companies.
Not that the small matter of profits seems to be bothering Amazon.com shares. On Friday, after reporting better than expected sales growth, shares in the world's largest online store jumped 14% to close at a new record high of $US445.
14% in a single day — not bad at all for a company that's bigger, in terms of market capitalisation, than every single ASX-quoted company, including BHP Billiton Limited (ASX: BHP), rising iron ore price or not.
As my wife reminded me on the weekend, we can add Amazon shares to the long list of "ones that got away."
Silly really, given our own Motley Fool Share Advisor stock picking service first tipped Amazon shares to subscribers way back in February 2012 when they were trading at $US157.
In US dollars, since then Amazon shares are up 183%. In Aussie dollars, you'd be sitting on a gain of 287%.
No wonder "FX translation" was one of the three secrets to the success of my SMSF in 2014.
In case you're wondering, "FX translation" comes about when my US dollar holdings are converted back into Australian dollars. The falling Aussie dollar has done untold wonders for my SMSF.
And if comments from AMP Capital chief economist Shane Oliver are right, the party looks set to continue this year, and into 2016 and beyond too.
As quoted in the AFR, Mr Oliver believes the RBA is on track to cut interest rates in May, commodity prices are to remain subdued, and the US Federal Reserve is to raise interest rates this year.
Add it all up, and it's no wonder Mr Oliver says about the Aussie dollar…
"We expect a fall to US70 cents this year and a probable overshoot into the 60s in the years ahead."
Step right up, Foolish investors.
Although the easy "FX translation" gains have already been made, if the Aussie dollar does fall as low as say US65 cents, we're looking at further 16% upside from here, just from the currency translation alone.
Any capital appreciation is on top.
You may have seen our own Scott Phillips on Sky News Business or the ABC's The Business.
He also heads up Motley Fool Share Advisor, one of the most popular stock picking newsletters in the country.
With huge winners like Retail Food Group Limited (ASX: RFG) and M2 Group Ltd (ASX: MTU), it's no wonder Scott's ASX share recommendations are soundly out-performing the market.
Here's something most Motley Fool Share Advisor members themselves don't even realise.
BY FAR the service's biggest winner to date has been a US-quoted company called Netflix.
You may know them today, seeing as they have recently launched their video streaming service here in Australia.
Back in July 2012, it might have been a different story. Although Netflix were big in the States, they were virtually unknown to most Australian share market investors. But that didn't stop Scott Phillips and I recommending Motley Fool Share Advisor subscribers buy Netflix.
Since then, in US dollars, the shares are up an astounding 846%. In Aussie dollars, the gain is a stunning 1300%.
Sadly for me, you can put Netflix down as another "one that got away."
In the case of both Amazon and Netflix I passed on the shares because I thought they were too expensive. Not in nominal share price terms, but in terms of traditional valuation ratios like price to sales and price to earnings.
I'm the first to admit a bull market can make many people look like stock picking geniuses.
But regardless of the state of the market, you'll always do well, over the long-term, buying great companies, with strong competitive advantages who have long growth runways ahead of them.
Think Netflix, which has only just opened its doors in Australia.
Think Facebook and its global reach.
Think how utterly dominant Google is in the search engine space.
Think about how Visa and Mastercard dominate credit cards, and how much further the trend towards a cashless society has got to run.
All those companies are expensive today on traditional valuation metrics. They've always been expensive. Quality doesn't come cheap.
Yet it hasn't stopped their share prices marching relentlessly forward as they've continued to grow, continued to increase their competitive advantage.
Warren Buffett used to ply his trade as a strict value investor, buying companies on the cheap.
Not any more. For at least the last 30 odd years, Buffett has been willing to pay up for quality.
He did so when he first purchased shares in Coca Cola back in 1988. Prior to him buying them, Coke shares had increased by 20% per year for the eight preceding years. Traditional value investors would have thought him crazy.
Buffett, now worth an estimated $US70 billion, thought differently, his priceless piece of investing advice being…
"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
Speaking of fair, the ASX has its fair share of wonderful companies.
Although I'm not a fan of bank stocks today, based on the extraordinary shareholder returns over the last 25 years, it's hard to argue that Commonwealth Bank of Australia (ASX: CBA) doesn't fit the bill.
Another wonderful company is REA Group Limited (ASX: REA), the company behind realestate.com.au. For sure it is riding the current property boom, but it's one heck of a business with a strong competitive advantage.
But it's Stateside where BIG opportunities lie.
The opportunities to find the next Netflix. Or the next Amazon. Or Amazon itself, even at $US445 per share. You don't invest well by looking in the rear view mirror.
Investing in US shares today couldn't be easier, or cheaper.
1) In terms of how to do it, hot of the presses, exclusively to subscribers of Motley Fool Share Advisor, Scott Phillips has just updated our How to Invest in International Share Markets guide. If you are already a subscriber, click here to access the guide. If you are not a subscriber, and you want to give us a try, click here now and sign up to TWO full years of Motley Fool Share Advisor for just $299, a whopping 60% off.
2) In terms of which US shares to buy, look no further than the three US stocks we have just named as our Best Buys Now, again for subscribers to Motley Fool Share Advisor. Yes, on traditional valuation metrics they look expensive. But heck, each of them sports a wonderful competitive advantage, and have long growth runways ahead. Subscribers can click here to instantly access the names of the three stocks.
3) In terms of cost, nabtrade have recently reduced the price of trading US shares to as low as $14.95 a trade. It sure beats paying $100. Click here to check out nabtrade's offering.
It should be noted The Motley Fool Australia has no commercial relationship with nabtrade.
In fact, we don't accept advertising from anyone. We make our money when you subscribe to our stock picking newsletters, and when you renew your subscription.
Nothing focuses us more on picking winning stocks for our subscribers — ASX or US-quoted.
Like the thousands of subscribers to Motley Fool Share Advisor, we'll take our BIG winners any way we can find them.
