The best US bank for travel in Asia? Citibank.

I opened a Citibank account when I moved to New York back in 2004. It seemed like a good option for ATM access in the city, but I came to regret my choice when I moved to Dallas and then back to California. Citi was not everywhere and was often difficult to come by– luckily I was never a big cash user, preferring to use my credit card for monthly cash management. Still, it was inconvenient and I often thought of switching to BofA or another major branch when I enviously spied these locations much closer to home and work whenever I went.

In fact, today I do most of my banking with Chase. Their bank branch expansion has been nothing short of explosive over the last few years and they’re now everywhere. In addition, they seem to have the most advanced ATMs which can read and deposit checks directly with OCR technology and an app that can also handle check deposits under $2000. I realize other banks (such as Capital One) offer similar technologies and I think maybe Citi and BofA have ATMs that are as capable now as well but my point is that Chase seems to offer the best overall package, domestically.

However, in the three Asian cities we’ve visited, Citibank has been hands down the best option.

Now, I keep a decent balance with Citi so I get their Citigold service. This means I am entitled to ATM fee reimbursement at non-Citi ATMs and I get their best forex exchange rate with no forex fees. When we traveled to South America three years ago, I pulled cash from local ATMs (I don’t remember spotting a Citi there, maybe in Santiago or BA but I don’t remember) and never had to go to a money exchange like Travelex. The rest of the time I just ran my debit card when it was an option and I got the same benefit– pay for the meal, ticket, whatever, at the best exchange rate with no fees.

In the three cities we’ve visited so far, Taipei, Hong Kong and Singapore, I’ve found a Citi ATM within two or three blocks of our AirBNB as well as around the city while walking. Even better, in Hong Kong and Singapore I found Citi ATMs in the baggage claim area of the terminals so I had cash for cabs, airport trams, etc. immediately upon arrival. I probably could’ve found one in Taipei as well but didn’t bother checking as we were being picked up by relatives and I planned to exchange money with them.

My Citi MasterCard debit card has been accepted anywhere the merchant offers credit card payment services, which has been just about everywhere but local food stands and some cabs.

I haven’t seen one other major US bank ATM or branch office here– no Chase, no BofA, no Wells Fargo. However, there are a TON of local/regional banks, it is actually amazing how unconsolidated the banks in Asia appear to be even with dominant local giants such as Standard Chartered and HSBC. This is something I read about in “[amazon text=Asian Godfathers&asin=0802143911]” by Joe Studwell. Asia in general is kind of overbanked because every crony capitalist wants his own bank to play financial games with his holding companies.

As I don’t have any substantial BitCoin holdings I didn’t explore how using BitCoin might work out here but my suspicion right now is that it doesn’t make it any easier or cheaper.

For a “globalized” world such as the one we live in, with so many people traveling for work and pleasure, isn’t it amazing we don’t have one, market derived currency of choice?

What The Taipeiese Do With Bagels

Breakfast is not a well developed concept in Taipei. If breakfast is eaten at all, it is typically something savory and for many involves takeout of potstickers, bao and soymilk congee.

We arrived early to Good Cho’s on a Saturday morning, 730am. Due to jet lag we had been up since 5am. They didn’t open until 9am. So we walked around the neighborhood, grabbed fresh guava from a street market and sat and blogged in the plaza outside a tall building by Taipei 101 before returning still 10 minutes early. Eventually we got inside and found ourselves in an artsy, creative space unlike most we’ve encountered so far.

The menu was simple and, as we’ve found to be the case at many restaurants with a more Western approach to decor and service, the prices were significantly higher and came with a mandatory 10% service charge.

While there is some sticker shock going from a 165NTD (about $5.50) breakfast for two like this morning’s take away from the soymilk shop and stepping up to a 770NTD meal for two (about $20), it’s still cheap when you put it into comparison with breakfast at home, where an entre and coffee plus tax and tip can easily cost $15+ per person. Which is why we don’t eat out that much, besides the fact that we think we make better food than what we can find at most eateries.

So this is what the creative restauranteurs in Taipei do with their bagels. And it was a great bagel, with a tasty black coffee.

In Taipei

Our first full day in Taiwan yesterday. After settling in at our AirBNB in the Da’an Park area, we headed to the Yongchun stop to meet with Quincy, our tour guide for the following 3 hrs on the Taipei Eats tour.

The subway (MRT) here in Taipei is interesting to me having ridden on many metro systems around the world. It is much cleaner than many (Paris, London and of course NYC) but not quite as clean as Tokyo’s whose floors seem like reasonable places to test the 5-second rule for dropped food. No one eats or drinks on the subway and I didn’t see anyone transporting bikes or other dirty things from outside which is common in NYC. No vagrants, graffiti or other undesirable activity. And yet I haven’t seen a cleaning crew so far, and like the wider world above there are no trash cans available in the stations. So how does it stay so clean?

The routes are easy to use and are based off of terminus points rather than compass directions. If you can figure out where you are, where you need to go and what’s at the end of the stops line in that direction you can find your way. Trains arrive and depart every few minutes.

It’s a much safer system than others I’ve used, too. Every station we went to had one of these kinds of security wall systems. There is no simple access to the tracks and when the train arrives the doors line up with the wall doors and you can safely get on or off. Notice also the queuing lines on the ground, set to the side of the doors. People getting off the train have ample room to maneuver before those on the platform shuffle on board. And none of the handles and bars inside the train feel greasy, sticky or dirty. I still wash my hands when I reach my destination but it certainly feels cleaner.

It’s also a very musical system. Entering and exiting the turnstiles results in musical chimes. When trains are arriving in the station, a gentle red light flashes as cheerful, almost classical sounding music begins playing to hearken it’s arrival. It makes riding very much a civilized event contrary to a system, again like the NYC MTA, where trains coming and going can often split your ear drums with loud clatter and screeching, not to mention split your body if you’re so unlucky as to get knocked onto the tracks.

Another delightful innovation is the numbering of all exits of the station. Instead of trying to figure out if you want the West or east southbound corner of Fifth Avenue, you just figure out what number exit is closest to your destination and go there. We found it was really easy to find our tour groups because they always gave a numbered exit at the stop at which to meet them.

Our food tour began at an outdoor market where we sampled the flavors, sights and smells of local produce, meats and fish. Most of the food available in Taiwan is sourced from the island, which is interesting given how relatively small the island is in relation to its total population, how large the urban areas are and how much of the total surface area of the island is covered by steep, wooded mountains. It’s also mostly conventionally grown. That means it’s safer than food sourced from the Mainland (though there is some of that as well) but there isn’t much of a popular “organics” labeling and eating movement from what I learned.

Most foodstuffs were served in small plastic or wax paper bags, but there are no municipal trash cans to throw the waste in. Recently a mayor (or maybe it was the president of Taiwan?) decided that people should carry their own trash bags with them and to dispose of their waste, so Quincy helpfully walked with a plastic trash bag for the duration of the tour to ensure we had a place to stow the wrappings we accumulated.

At the outset of the tour, Quincy advised us that we’d be eating a lot and it was okay to not finish our portions as we went. We were thankful for that suggestion because it was somewhat overwhelming to keep consuming so much food, especially with the ambient heat and sun as we walked.

These signs can be seen throughout Taipei and we learned on our walking tour that they signify the location of a “beetle nut” stand. These little nuts wrapped in a leaf and coated with calcium hydroxide are chewed for their stimulant effect by cab drivers and other blue collar workers who need a little extra pep in their step through out the day. They come in small boxes about 1.5x the size of a cigarette pack and apparently are hand filled at the local beetle nut shops. I tried one and decided I didn’t need to try another. True fiends can be spotted by their orange stained teeth.

We ate so many things on the tour in the space of 3 hrs, I tried to write them down but I couldn’t keep up with it all: Taipei “burger” (shredded pork, cilantro,  peanut powder inside a steamed bun), baked street market vendor onion pancake, stinky tofu (raw and fried with a fermented plum juice chaser), baked and steamed soup dumplings from Kao Chi (a Din Tai Fung competitor), pineapple cake, egg custard pie, Japanese cold noodles in peanut sauce with Chinese style egg drop Miso soup with meatball, shredded pork and soft peanut rice bowl with house fermented veggies and finally, lychee and plum and pineapple flavored shaved ice. I enjoyed just about all of it, except maybe the stinky tofu (never going to be my thing despite the health benefits), but on a hot day after stuffing our faces for three hours straight with a lot of bread and noodles, something about that light, cool, naturally sweet flavor of the fruity shaved ice tasted like accomplishment.

A few more notes about food in Taipei so far. First, as seen above, dogs can often be found in restaurants and usually belong to the proprietors. They leave the patrons alone (unless they want to play with them) and no one seems to be bothered by the potential interplay of dog hygiene and human food. Second, food is, for the most part, extremely cheap in Taiwan. Three to five dollars (USD) for a meal is not unusual, and sometimes it’s far less. For someone who has become used to the idea that $10-12 is “reasonable” for lunch for one of a decent quality, I find myself doing a double take when getting the bill. Finally, expensive restaurant buildouts and branding efforts (inside and outside the establishment) seem to be unusual in Taipei. Many restaurants can be missed simply because they’re so plain looking from the outside, and inside they’re often nothing more than a 2-300sqft plain room in the floor of a large building with a few food prep tables and equipment set up and seating for 20 people or so. Menus are simple and the savings appear to be largely passed on to the patrons.

Should You Hedge Currency Risk When Investing Internationally?

I read a white paper by Tweedy, Browne entitled “How Hedging Can Substantially Reduce Foreign Stock Currency Risk” the other day. I actually find the title of the paper misleading because the way it’s written it sounds like they’re recommending you hedge your foreign currency exposure when investing overseas.

Instead, the finding of the paper seemed to be that for long-term investors, currency fluctuations are generally a wash over time and hedged and unhedged portfolios perform similarly.

Here’s a quick, bullet-point list of info from the paper:

• currency fluctuations are generally more extreme than stock market fluctuations (greater volatility)
• depending on whether or not home currency interest rates are higher or lower than foreign country interest rates, one can contractually lock-in either a cost or a gain from currency hedging operations
• the investor who enters into a hedging contract to sell forward the foreign currency of a country whose interest rates are lower than his home country’s interest rates will receive a locked-in contractual gain
• over long measurement periods, the returns of hedged portfolios have been similar to the returns of portfolios that have not been hedged
• “Over the 1975 through June 1988 study period, the compounded annual returns on hedged and unhedged foreign equities were 16.4% and 16.5%, respectively” according to one study
• According to TB’s own experience: “over the 15.75-year period from Jan 1, 1994 through September 30, 2009, the MSCI World Index (Hedged to US$) had an annualized return of 5.7%; this return was nearly the same as the return over the same period for the unhedged MSCI World Index, which had an annualized return of 5.8%”
• studies have generally indicated that the compounded annual returns on hedged foreign stock portfolios have been similar to the returns on unhedged foreign stock portfolios
• currency hedging is similar to selling short
• the cost to an investor of hedging foreign currencies through forward and futures contracts is approximately equal to the difference between interest rates in the home country and the particular foreign country over the contract period

Investor Adam Sues, who blogs over at ValueUncovered.com, wrote in to share Currency Hedging Programs: The Long-Term Perspective (PDF). I appreciate the link and have reproduced my outline notes of key take-aways below:

• Remember, the floating exchange rate system is relatively new as it began in 1973
• While median hedging impact numbers were close to zero in the Brandes Institute’s study, the range of outcomes was wide, with almost half outside the range of +/- 3% annualized; be prepared for extended periods of possible hedging losses
• Japanese and US-based investors have experienced more volatile hedging results than Canadian-based investors; UK investors have had more favorable outcomes from hedging programs than US investors
• As the timeframe lengthened, the impact of hedging overlays relative to long-term equity returns tended to diminish
• A US-based currency hedging program for a non-US equity portfolio would have suffered an average annualized 1.8% loss over the entire 34-year period since the start of floating exchange rates (passive hedging programs are costly for US investors in the long-term
• The dollar, when measured against other major currencies, has more often been at the extremes of valuation than in the middle
• Currencies exhibited significant volatility in the short term but generally have been mean-reverting in the long term
• Currency moves and the related hedging impact tended not to wash-out completely over time, and even for 5- or 10-year periods, the range of results remained wide
• Currency overlay managers have shown evidence of value-add, but this effect has been small relative to the size of overall currency impact
• Bottom-line: it’s appropriate for investors to choose either a hedged or unhedged benchmark, and then stick to it for the long-term

Review – Which Broker Should I Use? Online Discount Brokerage Review

I’ve been through a few brokers already in my short investing career. I found answering the question, “How do I trade X?” to be a mysterious one in numerous cases. It turns out the answer was often much simpler than I originally thought.

In the interests of saving other investors some time, I’m going to share what I’ve learned. This is not an endorsement of any of the brokers mentioned, I am not an affiliate/referrer (though I probably should be if I am writing posts like this) and ultimately I don’t care who you use– YMMV.

First, some info tables

I created a few tables to compare online discount brokerage features. The first is a commission and fee schedule for Scottrade, TD Ameritrade/Think or Swim, Fidelity and Interactive Brokers. Please note, this is not exhaustive nor comprehensive, it’s just the info I care most about for the kind of trades I do:

Brokerage Name	Scottrade	TD Ameritrade	Fidelity	Interactive Brokers
Stocks (online)	$7	$9.99	$7.95	$1/min, 0.5% of order max
Stocks (broker assist)	$27	$44.99	$32.95
Stocks (intl)	Limited, $7/$27		Extensive and reasonable	Extensive and reasonable
Options (online)	$7 + $1.25/contract	$9.99 + $0.75/contract	$7.95 + $0.75/contract	$0.25-0.70/contract
Options (broker assist)	$27 + $1.25/contract	$44.99 + $0.75/contract	$32.95 + $0.75/contract
Addtl Fees	N/A		N/A	Activity fee minimum $10/mo

Next up is a comparison of international markets you can trade in with Fidelity and Interactive Brokers, “O” means you can trade there online, “BA” means you can trade there with a broker assist and a blank means no online trade (and potentially no access with a broker, either):

Country	Fidelity	Interactive Brokers
N America
US	O	O
Canada	O	O
Mexico	O	O
Europe
Austria	BA	O
Belgium	O	O
France	O	O
Germany	O	O
Italy	O	O
Netherlands	O	O
Spain	BA	O
Sweden	O	O
Switzerland	O	O
Norway	O
Portugal	O
UK	O	O
Asia
Australia	O	O
HK	O	O
India		Indian residents only
Japan	O	O
Singapore	O	O
New Zealand	O
Notes:	Claims it can reach nearly any stock in the world via broker assist

For trading Net-Nets

Which is the best online discount brokerage for trading Net-Nets in the US? I’m going to go with Scottrade here. Unless the shares have some restriction or are trading for under $1, it is only $7 per trade making Scottrade by far the cheapest (unless you’re trading in size on IB).

For trading all common stocks (US and international)

For a wider scope, I go with Fidelity. It’s $7.95 in the US for online trades and although the fee varies by country elsewhere, I’ve generally found it to be reasonable. Fidelity claims you can get access to almost any equity market in the world through their brokers, as well. I like that there is no activity or account maintenance fee, as well, which is something that irks me about IB.

For trading corporate debt and cap-arb

I tried doing a capital structure arbitrage trade through IB and not only could they not locate the debt for me because it was a convert and they don’t do converts, I also found their interface to be so confusing I wasn’t even sure if I had bought the related options properly when I put the trade on. IB has a terrible interface and their trade documentation is similarly obscurantist.

As a result, I prefer Fidelity and TDA/ToS. I have found in a few situations that TDA/ToS actually was able to find me bonds that Fidelity couldn’t, which surprised me. But overall, they both work well.

Overall

Fidelity gets my overall vote and I do and will continue to do most of my trading through their service. I have been told by so many people that IB is the way to go but I just find the GUI to be too difficult to understand. It’s outside my circle of competence, it appears! For US Net-Nets, I’ll use Scottrade just to make my trading costs absolute bare-bones and for a hard to find bond I’ll call up TDA/ToS (although they have been stumped to find me certain securities, as well) but more times than not, I am placing trades through Fidelity.

Though, one thing I do like about IB is they offer an account where you can manage a pool of sub-accounts (up to 15) without having any licenses or anything like that, which could be a good option in the future if I ever want to try managing  OPM. Plus, if you ever set up an account with Covestor you must use IB.