Economic Review IV – What Goes Down Must Come Up


This series is reviewing the thoughts garnered at the Jyske Bank Global Economic Seminar in Copenhagen where I recently spoke. We learned a lot from many speakers.

As the lead off speaker, I set a positive tone and stressed three reasons why global investing offers such great opportunity now.

First, as mentioned earlier in this series, we looked at the past 100 years of stock market growth. The direction has always had ups and downs but in the long term it has been up and the upwardness has grown. This is in part because governments tend to flood markets with liquidity.

Second we looked at the fact that mankind currently has more and more people, doing more, in better ways. In other words there is more supply and more demand!

Until these realities change, the global economy will grow. The history of the Industrial Revolution is fueled by farmers moving from a rural to urban environment and gaining improved productivity through new technology. This allows these poor unproductive, farmers to increase their wealth as factory workers.

Until the supply of farmers that convert to urbanization runs low, the global economy should grow (barring war, famine, plague). For our life time we have enough farmers that can shift! There are probably a billion still in India and China alone. Then there are those waiting in even poorer places like Vietnam and the former Burma etc.

The third thought shared in my Copenhagen speech was that man’s nature is to expand. The nature of the universe is to expand. Plus the laws of energy say that for every action there must be an equal and opposite reaction.

Truly anytime something goes down, something must come up.

Or when investments, shares, bonds or commodities, drop due to market panic (not for fundamental reasons), we can expect bargains and a sharp recovery.

The performance below of the green portfolio we track for educational purposes enforces this idea.

The two weeks between August 17 and 31 shows what the “what goes down must come up formula can do.”

Imagine what those who believe and act on this idea have done…enjoying a rise of almost 50% in two weeks.

The main theme told by the Jyske Invest portfolio managers was also “do not worry about short term moves.” The August collapse and the sudden recovery shows that the Jyske Invest managers are correct.

Jyske Bank has even placed Vestas, the wind turbine manufacturer and one of the shares in our portfolio, on its buy list. Contact Thomas Fischer at Jyske Bank for more details at fischer@JBPB.dk

Thomas Fischer from Jyske Bank and I will unveil the 2008 portfolios at the International Business & Investing Made EZ course in North Carolina, September 14-15-16, 2007. We hope to see you there. Details are at http://www.garyascott.com/nccourse/

Or join me and Jyske Bank at our hotel El Meson de las Flores for International Business & Investing Made EZ in Ecuador , November 9-10 and 11. http://www.garyascott.com/catalog/IBEZec/

Once we truly understand the balancing nature of markets, we can begin to formulate investing strategies that are in tune with reality, so drops as we say Aug 17 become opportunities, not times of remorse and panic.

The tendency for investors is to look at the July 20 high and say “these portfolios are really down – too dangerous to invest now.” Another tendency is to look at the total ten month performance and think, “these portfolios are really up – too high to invest now.”

In reality, how high or low a portfolio is matters little…or a lot because there are two ways to invest, in long term value or very short term volatility…or both as we will see in tomorrow’s Economic review VI.

Until then may all your losses be good and your gains even better.

Gary

P.S. Last month I mentioned that I have been approached by a large publisher to develop some form of cooperation with them for our Multi Currency Educational Service. The phenomenal appreciation of our model portfolios for nearly two years has attracted a lot of attention. We had a starting date of August 17 and that their marketing staff has been working on what the new higher annual subscription will be.

As mentioned your current subscription is grandfathered for whatever time you have enrolled.

Plus before the price rise I offered you the ability to extend your subscription at the current, low, annual price before August 17. I received this message from the publisher.

“Hi Gary I apologize for the delayed response. I’ve been sick for a couple of days. Well miss the August 17 deadline. This is not going to mail until September. We need more time to talk editorially about currencies. I’ll follow up with you next week when I’m back in the office. Kind regards.

”This gives you more time to subscribe at the existing $149 price. Simply go to http://www.garyascott.com/catalog/bldh


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