International Investments that Scope Out the Yen & Comfort


International investments should bring comfort to investors.

Many readers have been writing about international investments and asking if this is a good time to borrow Japanese yen to invest in other currencies.

Long term readers know my international investments have been out of the yen for quite some time and have borrowed Swiss francs and Czech koruna to invest in related European currencies. Plus they also know that I liquidated all (but two) of my equity positions on Feb 19, 2007.

Yet if a reader asks, “Should I get my international investments in our out of or into the yen or shares etc.” I cannot know if this is right for them.

There are many reasons why the same international investments at the same time can be good for one and bad for another. Timing counts, some investors are in a hurry. Others have longer horizons. Beliefs in and convictions about what the investment does matters as well. I, for example am for wind power. Others may be for petroleum. How one views and worries about risk is also vital. And what one believes in, logic, fate, purpose. Even patriotism counts. Some Americans only invest and buy “Made in USA”. Investing in Honda or a German or Chinese firm would feel like letting the home side down. Adding all these factors together begins to bring us to our own personal investing and business comfort level.

Yet few people pay attention to how various international investments make them feel.

There should be a personal, energetic element that plays a part in our information processing. The book, “Blink”, by Malcolm Gladwell points this out. We can call it a gut instinct, intuition, fate or luck. This is paying attention to how we feel about that holding shares or real estate or bonds or various currencies, borrowing or not, etc. “Does this investment raise or diminish my energy at this time?” should be asked. That’s kind of weird and hard to define but a reader just sent a reply to a recent Don Quixote message that might help clarify this. She wrote:

“I believe there are two types of renewable energy – that within us and that which is external. While windmills may provide external renewable energy it may not be worth the trade-off in diminishing the internal energy that your view provides you and your delegates! Beauty energizes everyone!”

This is an aspect of our reality that usually gets ignored in international investments, finance and economics. Everyone looks at the numbers first, then maybe some fundamentals second, even some frequency aspects (in trading these are called Stochastic Occilators). Yet few investors ask themselves how they feel at any one particular time when making investment decisions.

A lot of my investment decisions are based on value. I am comfortable with my understanding and sense of value. My logic for example told me that the yen is in a time of turmoil and has been kept low for over a decade. This led me to conclude that it’s a good value and not suitable for borrowing. My opinion of equity markets is reverse. Many equity markets have risen so strongly they are a bad value and not suitable to own. Plus I generally do not like equities. I do sometimes but I am rarely fully comfortable. There is too much going on that I know I cannot understand.

Yet Merri and I love investing in property. We feel we understand this. Even though we know there is plenty going on there we do not understand either, we like it.

Every person should look with at what type of investment makes them comfortable.

This is one place where perhaps astrology comes in for Merri and me. I know (from working in a late night restaurant as a kid) for example that a full moon make people crazy. Others must feel the same way. After all the word lunar and lunatic are connected for a reason. The moon’s position affects us. So why not the position of the sun and planets as well?

My astrologic progressions help me understand when I might be feeling strong, weak, angry, poor, frantic, frightened, bold, passive, etc. Knowing my moods (and hence actions) is important. So for whatever reason my astrological knowledge helped me determine that I would be happier taking profits and selling my equities on February 15. There were plenty of other value reason as well, but we could call the chart the “tipping point”, the final assistance that helped make a touch call. After all my investments were rising $80,000 to $90,000 a month. This was not easy to give up.

Can we carry the use of astrology further? I am not sure, but we (Merri, our astrologer Blaine Watson and I) are experimenting to see if there are ways to do so.

Our first experiment has begun and we are testing astrology and the Japanese yen. Blaine took a look and we recently wrote: “Since 2002 Japan is in a Mars cycle. Both of these cycles are unfavorable to the stock market. This coincides nicely with the fact that you mentioned how for the past 15 years Japan’s economy has been weak. This has created a very weak yen resulting in very low interest rates aimed at stimulating the economy.

“This mars cycle continues until 0ctober 7, 2009.

“Currently a mercury cycle is running on the 2nd level. This Mercury cycle is over April 5, 2007. This is a cycle associated with business and commerce and increased status and prestige in the world. However Mars and Mercury are great enemies of each other so the cycle also has tension and pressure in the area of business and commerce.

“Since December 20, 2006 a Jupiter cycle has been running on the 3rd level. Jupiter is a planet that signifies banks. He is placed in a house of change and transformation and vulnerability. This cycle ends on February 7. This is interesting timing based on the fact you asked me to introduce this perspective at this time.

“This means there is very little time remaining for the Japanese government to bring about a reasonable and well thought out solution to the problem of a strengthening yen. On February 7 a Saturn cycle begins on the 3rd level. This cycle runs from February 7 and April 5, 2007. Saturn is fortunate for this chart and is extremely well placed in a house of gains. Saturn produces his results slowly and with great effort. This will be a fortunate cycle for the country although short being only 2 months long. A fortunate cycle for the country would logically mean a strengthening currency and a time of building and construction.

“The transits of Saturn, Jupiter and Rahu are not favorable to the country indicating poor health for the country or weakness on the level of the economy over the long run. This is most pronounced between now and July 15 of this year.

“In a word, this horoscope confirms what you and others are suggesting. Over the next 2 months there could very well be a strengthening of the yen, which as you has told me, is not good for anyone who has borrowed heavily on a weak yen.”

I appreciate Blaine’s advice and it certainly helped me get out just at the top of the equity markets. Yesterday’s Financial Times March 3, 2007 article “Investors on edge after week of turmoil” by Christopher Brown-Humes and Paul J. Davies in London and Richard Beales in New York said:

“US stocks lost more ground on Friday after a turbulent week that saw European bourses endure their worst week for four years and Wall Street suffer its biggest one-day fall since markets reopened after the September 11 2001 terrorist attacks.

“The global equity sell-off that began on Tuesday more than eradicated all this year’s gains, leaving investors on edge over the outlook for next week.

The flight from risky investments triggered a surge in volatility across financial markets. It began on Tuesday when Chinese stock markets fell 9 per cent amid concerns over the health of the US economy and the subprime mortgage market.

“The worries about the US subprime mortgage market were underscored on Friday by the Federal Reserve and other US financial regulators who said they were worried that some borrowers did not understand the risks of such loans.

“It’s a classic risk sell-off after a very strong bull run,” said Robert Buckland, chief global equity strategist at Citigroup. “Whatever has gone up the most is going down the most.”

Blaine’s view of a stronger yen is also accurate so far. Orbus news reported yesterday: “The yen climbed 3.5 per cent against the dollar as investors cut back “carry trade” positions, which involve borrowing in low-yielding currencies to buy higher yielding assets elsewhere.” The key we’ll watch for right now is to see what happens to the yen in the vicinity of April 5, 2007.

Blaine says:

“On April 5 of this year a Ketu cycle begins on the 2nd level. This cycle runs from April 5 to September 1 of this year. Ketu signifies sudden collapses. He also covers or hides things. He is placed in a house associated with losses, enemies, changes and transformations and vulnerabilities. He is there with Jupiter and aspected by the moon. This means basically that, there will most likely be a very public, government or central bank orchestrated change which could very well result in a collapse of the economy on several levels.”

I trust astrology as part of my personal information processing system. Can it work for outside specifics like the yen? If we see a yen rise till April 5 and then a crash create by some “very public, government or central bank orchestrated change”, I’ll be impressed.

Some areas of investing have such huge supply demand imbalances that they go beyond immediate value. This is why I am so sold on the green portfolio that Jyske Bank helped us pit together to track in our Borrow Low Despot High Educational Tracking Service.

Here is this portfolio and its performance from November 1, 2006 to March 1, 2007 (four months).

Currency Share
Price
Invested Amount
Current Value
EUR Seche Environnement
122.60
48,000.00
54,904.14
DKK Novozymes B
473.51
48,000.00
51,707.10
DKK Vestas Wind Systems
178.83
51,000.00
82,880.66
JPY Kurita Water Industr. 6370
2395.00
51,000.00
56,879.47
EUR Q-Cells Ag
32.90
51,000.00
77,191.41
SGD Hyflux Ltd
2.46
51,000.00
56,700.60
  Original Investment
$100,000.00
  Borrowed in yen at 1.88%
$200,000.00
  Total Portfolio Value
$380,263.38
  Cost to pay off loan and interest
$194,037.91
  Value of Portfolio after Loan payoff
$186,225.47
  Appreciation of original Investment in four months
$ 86,225.47

This portfolio is up 86,22% in four months, not just due to value but because future supplies of water are so scarce and demand is exploding! Plus the world faces such huge environmental concerns.

Plus the portfolio has profited because as of March 1, 2007 the yen had weakened versus the US dollar. It will be interesting to see how this portfolio looks at our next update. A good move now might be to take the loan profits and switch the loan to Swiss francs and Czech koruna.

Our next update will show how well the portfolios survived the current equity drop. You can learn how to track these portfolios with us at http://www.garyascott.com/catalog/bldh/

Our courses Mar. 16 -18 International Business and Investing Made EZ Course in Ecuador will include two account executives from Jyske Bank who join with me to update global currency values and economics. See http://www.garyascott.com/catalog/IBEZec/

This course will be updated May 25 – 27, 2007 in North Carolina. Thomas Fischer joins me to update global economics.

You can continue this message including Ecuador export pictures at http://www.garyascott.com/international_investments/256.html

Until next message may all your international investments be good.

Gary


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