International Investments From a Bird’s Eye Vue – Investing Globally


International investments require global vue and at our most recent International Business and Investing Course one delegate timidly raised her hand and asked, “Perhaps this is out of line, but if you talk so much about the fall of the US dollar and investing abroad, why do you live here”?

International investors have long since stopped but this question shows a common misperception that the United States is not part of the rest of the world. There seems to be a feeling that if other countries are good this means the USA is bad. To me this is similar to thinking, “If fish is good, why eat chicken or “If Sundays are great why get up on Mondays?”

We live in the world! International investments are of this entire world. We are only restricted by borders to living in just a country only if we allow ourselves to be. A Bird’s Eye Vue sees America as one of many countries. Fortunately we are free to choose which and where we wish to live, work and invest.

Merri and I choose to live in the US part of the time because we have a mom, 2 children and 2 grandchildren here. We also have 2 children in the UK and 1 in Africa. We like the people, the weather, the beauty, the space and the really great value here at Little Horse Creek. We love our home and farm in America. Here it is and we really love the time we spend here.

This does not mean we love Ecuador any less. Every country offers different miracles. For example we love the ability to have such wonderful architectural details such as this room built by the architects, Barro Viejo.

Join us next weekend for our Ecuador International Business and Investing course and visit the Barro Viejo homes. Hear their philosophy and learn more about truly natural home building. Or come to the next course March 16-17-18, 2007. See http://www.garyascott.com/catalog/IBEZec/

Nor does our love for America mean we do not enjoy our visits to England or Africa, where we also have children, or to Copenhagen where we have so many friends.

Nor does this mean that the qualities we like about America blind us to the negative aspects of this land. Patriotism is not an all or nothing deal!

In fact sometimes taking a Bird’s Eye Vue is more patriotic than having a blinkered nationalistic concept. Recently as Merri and I drove the equivalent of a quarter way around the globe we were taking a global Bird’s Eye Vue. We were not just comparing land prices of property in Boring, Oregon to Henryetta, Oklahoma to Lake Tahoe to Billings, Montana. We were comparing value in these areas to property prices and costs of living everywhere we know.

From this aspect America looks good despite the potential for a US dollar crash. In fact US real estate looks even better because the US dollar is likely to crash. Buying US land with low interest rate long term mortgages may be the bargain of the universe.

Yesterday’s message looked at why mid American real estate, especially in rural economies, may offer especially good value now. This is a global good value!

For example, yesterday’s message suggested our messages often look at the great value in Ecuador real estate. You can buy a wonderful new home for as little as $50,000. However let’s compare this Ecuadorian value with what the reader below just shared. The BOLD TEXT IN THE QUOTE IS MINE.

Gary, Just finished driving trucks for a farmer here who farms 30,000 acres of which 10,000 acres is in sugar beets. He used around 30 semi trucks to haul the beets. When I was young, the average size farm here was about 700 acres. Now the average is around 3,000-4,000 acres. And yes, lots of empty houses, and fields where houses used to be. My home town is 1,200 people, with several houses for sale for under $20,000. However, this last month, the one real estate agent in town who is a friend of mine sold 4 houses, two to people from California, one family from Kentucky, and one from Detroit. The miracle of the internet. Linda and I predicted this about 6 months ago, that boomers would soon be moving out of the cities into the small towns for low cost housing and taxes, no crime, and a rural way of life. Seems as if it is happening.

Shifts in utility create great opportunity. I believe that farm houses across America lost their value because small farms became unprofitable. Now technology is altering how these houses can be used and this will change the value.

These are not bad places to live either as the reader below points out.

“Dear Gary, Having lived in Oklahoma most of my life, I was eagerly awaiting your comments on Oklahoma.

I have traveled thorough Henryetta many times, on my way to/from my town of Tulsa to Dallas, San Antonio, and Houston. Henryetta is representative of many small midwest towns, where a Rodeo hero from the 50’s (Jim Shoulders) gets top billing over a recent hall-of-fame quarterback from the local-favorite NFL team (Troy Aikman).

I do have to take issue with your comment on harsh winters, though. Given the choice between an Oklahoma winter and an Oklahoma summer, I’ll take the former. Looking at city data, Henryetta and Asheville appear to have very similar winter characteristics, though perhaps you find North Carolina winters to be harsh to your liking. For certain, Oklahoma winters are nowhere near as long or severe as say, Minnesota, Iowa, or Nebraska. It’s been fascinating reading about your journey across the US. Thanks for sharing it with us. Joey.”

We can see what previous messages outlined, “Water is a huge key” from another reader. Oklahoma has lots of it.

“Gary, My Gary and I live in the middle of the eastern Colorado wheat fields. What has happened here is more than one thing. A lot of small farmers have sold out to the big commercial companies, but many of the small farmers have simply gone bankrupt. Another thing here in eastern Colorado is the sad fact that in the 1930’s deals were struck to take away the water rights and send them elsewhere. A really good friend of mine, a woman in her fifties that I met in college in the 80’s, is losing ALL her water rights to the front range. This means trouble for her cattle business and also means that she is totally dependent for dry land farming for her wheat and millet. Since we are in a drought here her prospects are not too bright at the moment.

“Gary has been doing a job in Wray, CO – about 60 miles northeast of Akron and while up there – where it is lush and beautiful with many crop circles being irrigated – by the end of next year all of their water is going to Kansas – taking away the irrigation in Wray. This was a decision made in the 1930’s. Imagine how devastating this is for the people there.

“Gary was born in Hugo, CO and his family has been in the farming/ranching business for many generations. His dad, who will be 86 on his next birthday. retired two years ago but keeps his hand in by farming a 1/2 section of land near the old homestead. His last two crops of dry land millet failed because of the draught.

“Many farmers out here have equipment older than I am – you do not see the new expensive equipment because no one here can afford it. The trend is to keep buying old, cheaper equipment and use it for parts on what is still running.”

Here is another farming comment.

“Hi, Gary & Merri: This is an interesting letter and it sounds like you had a fun trip. Now, to answer your question of the empty farm houses. I grew up on a 320 acre family dairy farm in the 50’s & 60’s and we milked about 70 cows which was considered a large farm at the time. Now the family farmers are much larger and can farm several thousand acres and milk 800 to 1500 cows three times a day. Back when I was growing up we milked two times a day. We had cows that would be good producers for 12-15 years. Now they burn out the cows in 5 years or less. These farms are now family corporations involving several family members and a lot of hired help, many times utilizing cheap Hispanic labor to do the milking.

“These family corporations have been buying up all the small family farms since about 1980 or so and letting them fall into a heap of rubble. They may have a home farm for the parents and 2-3 other farm places for their children and the others sit empty and eventually just fall down. All in all it is sad to see the small family farm coming to an end. Our food is now raised by these big corporate farms and shipped long distances to market using a lot of fuel. Very little of our food is raised and sold locally anymore. It is just my opinion but as our natural resources become more depleted we may have to return to the smaller local agi-systems some day in the not too distant future. Yours Truly, Deb & Denny.”

These comments can help us see a huge distortion. Demand for US property will rise dramatically over the next 34 years, yet population and prices are declining in some nice places.

This enhances our belief in Small Town USA. Merri and I stepped boldly out in this belief nearly a decade ago. We sold our turn of the century home in Old Napes and gained a great price ($1.3M)…the first house in that area to ever sell for seven figures. Then Naples prices exploded. The buyers of our home sold it on for 3.2M (after putting maybe as much a lot into renovation). Now even though prices have sagged a bit, that house may be worth three or even four or five times what we sold it for.

Looks like we sold too soon and really missed a huge profit?

I don’t think so. We always look at things in this way…we don’t worry about selling at the top…we don’t worry about buying at the bottom…we just like continual profits and gains and buy when we can and sell when we want to.

Also, we bought hundreds of acres up here at less than $1,000 an acre. Now land like ours is selling at $5,000, $6,000 an acre and more now. Plus the land here has a chance to double, even triple. That won’t be as easy in the appreciated markets of Florida.

Plus I have said it before, but will say it again (probably not for the last time)…a falling US dollar also enhances this upwards potential of Small Town USA. The lower the dollar, the better value US property is in the global market. One reader outlined this fact when he shared:

“Gary, while I don’t disagree with what you say about building costs and materials going up, there is the issue of all the hot money coming out of Russia that is inflating Central European capitals/major cities and skewing your comparisons. I have acquaintances who report a vast influx of Russians into the better areas of these cities. They perhaps don’t trust the rules in their own country and don’t mind inflating the local markets they’re buying into.”

He is right. The Russians are pushing up real estate values in Central Europe and also in the US. The Russians are everywhere, Naples, Portland and almost all cities…as are Japanese, Mid Easterners, Chinese and Asians and Latin and Europeans. Merri and I were enjoying a tea at an afternoon outdoor café in Naples recently, when all the cellphone talk around us was Russian! When the US dollar creates incredible value for US property, overseas buyers will scoop it up.

This and the big farm trend create another opportunity. We’ll see it tomorrow.

Until then, I send good values to you.

Gary

P.S. One point was clear wherever we traveled in America. Even in Small Town USA, Spanish is a useful language to know. Learn how to learn better and speak Spanish at our next condensed Super Thinking + Spanish Course December 9-13, 2006. See details at http://www.garyascott.com/catalog/sp/


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