Yes, "foreign direct investment" usually means more than simply purchasing stocks on the NYSE. It includes acquisition of real estate, timber, mining and water rights and purchase of assets from other businesses, (hotels, factories, office buildings, warehouses, strip malls, etc. etc.) Foreign direct investment is usually good, if they actually operate these businesses. Sometimes it's not-so-good, if the acquisition is merely intended to reduce competition and consolidate the market.
But that's drifting off-point a little...
The other way that the dollars we squander with our Trade Deficit is when foreign nations purchase the debt issued by our Treasury to finance the federal budget deficit. This is NOT good because it commits paying an increasing proporation of our tax dollars directly to foreign governments (as interest payments on the debt) before we can spend anything to pay for the operation of our own government. Foreigners own half US debt, tipping point unclear
Thanks for the info as I wasn't clear on the meaning of "foreign direct investment". However, I did find the following definition of it at http://economics.about.com/cs/economicsglossary/g/fdi.htm:
Definition: FDI stands for Foreign Direct Investment, a component of a country's national financial accounts. Foreign direct investment is investment of foreign assets into domestic structures, equipment, and organizations. It does not include foreign investment into the stock markets. Foreign direct investment is thought to be more useful to a country than investments in the equity of its companies because equity investments are potentially "hot money" which can leave at the first sign of trouble, whereas FDI is durable and generally useful whether things go well or badly.
Hence, it doesn't include investments in stocks and is, as you said, usually thought to be more useful. It is interesting (and a bit disturbing) to see foreign direct investment going down so sharply. I would be interesting to know where the U.S. dollars dispersed via our trade deficit are going instead of to direct investments.