Roger Nusbaum submits: I have written about this concept before but it is worth repeating and since the graph makes the point so well I thought this would be a good time to revisit this issue.
The black is Telecom Corporation of New Zealand (NZT) shares trading locally in New Zealand and the yellowish color is the ADRs that trade in the US:
Over the last couple of months selling in the NZ dollar has accelerated. This causes the ADR to lag the ordinary share. If the US dollar had been weaker against the kiwi, the ADR would have outperformed the ordinary shares.
This always whips up some dissenting chatter, but I think if you are going to own foreign stocks, you need be in touch with what is going on in the currency market and understand some of the bigger catalysts for currencies.