International Bond & Equity Portfolio Up 297% Last Month


The latest review of the five multi currency portfolios we created November 1, 2006 and have tracked since shows how fast portfolios can recover and how quickly the US dollar can fall.  This quick fall and fast recovery created a 297% rise in one of our model portfolios in just the last month. Here are the portfolios.

Here is an excerpt from Multi Currency Update #26 that I sent to subscribers of the Multi Currency Educational Service yesterday.  

“The Emerging Markets Portfolio which lost half its value from July 20 through August 17 has recovered all that loss and has risen and extra 19.37% to boot. That’s a 27% increase from the July 20 value and a whopping 182% rebound from its August 17 low.   This rebound has been funded mainly by strong returns in Chinese and Turkish equities.

The Dollar Neutral Portfolio has jumped almost as much, up 167.60% from the August 17 depression. However it is the Dollar Short that is truly phenomenal, up 297% in just a month.

The Green Portfolio looks impressive.  Given a bit of low interest rate boost in the equity markets this portfolio could end the year with a 200%+ gain. However its recovery was not as strong as the other portfolios (though neither was its drop).

Yet most of this movement is meaningless…just noise.  No reliable indicators could have predicted the exact moment of the drop or the timing of the rebound.  Here is what really counts.”

You can have the rest of this update plus the three previous updates FREE when you re subscribe to our Multicurrency educational service this week.

In additional I’ll send you the full report on how our 2007 portfolios are situated and you’ll see the short list for our 2008 portfolios.

Save Now

Because of the performance of our portfolios one of the largest financial publishers will shortly begin a cooperative plan to offer our Multi Currency Educational Service.  “ Gary , I believe we’re just ready to promote this…we’ve got some slots for your product on the mailing schedule for next week.”

When they begin the marketing, the subscription price will rise. This may be the last week to subscribe at the low, existing $149 price.  To take advantage and save during these last days simply go to http://www.1shoppingcart.com/app/netcart.asp?setCookie=TRUE&MerchantID=86635&ProductID=3136540

In this latest update I also pointed out to readers that this type of performance is way beyond the norm.

The update said: “We can expect 7% to 10% annual return in the stock market as a function of global nominal GDP growth.  To attain higher growth we must either increase risk or trust luck.   Leveraged multi currency portfolios (we call Multi Currency Sandwiches) increase risk.  If you leverage one time at 4% interest as an example (invest $100,000 and borrow $100,000 for example) a 10% return grows to 16%.  A two times loan (invest $100,000 and borrow $200,000) increases return to 22% per annum.

Yet if the market heads south, losses mount much faster as well.  A look at the volatility of the ten portfolios we have created and tracked these last two years shows how performance can be enhanced but how leverage increases risk as well.”  You see the comparison of the tow portfolios when you subscribe at the link above.

In this message let’s see how that Dollar Short Portfolio rose so much in one month.

Here was the Dollar Short Portfolio valuation on August 17, and September 19, 2007.

      

% of  Portfolio Curr. Investment Invested Amt. 8-17 Value 9-21 Value
10.%  AUD 5% BK Nederlandse Gemeenten 30,000 30,370.14 33,113.28 
4% BRL 12.5% Brazil Rep. of 05.01.16 12,000 13,244.43 15,468.64
10% GBP 6.3% Rabobank Nederland 20.03.09 30,000 30,546.27 30,825.27
5% HUF 6.5% Hungary Gov. 12.08.08  15,000 15,981.52 17,403.54 
4% ISK 9.5% Iceland 13.06.2008 98.96 12,000 11,488.57 12,762.80
5% MXN 9% Mexican Bonos 22.12.2011 15,000 14,215.05 14,562.89
6% NZD 6% KFW 15.07.2009 18,000 17,934.47 19,677.89
4% TRY 10.25% KFW 09.02.2008 12,000 13,196.85 14,930.56
5% EUR  6.25% Turanalem Finance BV 15,000 14,084.32 14,943.58
5% EUR  4.75% Iss Global A/S 15,000 15,190.55 16,538.22
5% EUR  8.62% NXPBV 15.10.2015 15,000 12,522.08 13,498.40
7% EUR  Jyske Invest Favourite Equities 83.00 21,000 22,505.27  26,406.71
5% EUR  Jyske Invest German Equities   80.25 15,000 18,226.79 20,340.84 
5% EUR  Jyske Invest High Yield Corporate Bnd 15,000 15,635.60 16,608.02
5% JPY Jyske Invest Japanese Equities 15,000 15,901.64 16,003.87
5% EUR Jyske Invest European Equities 120.80 15,000 15,977.14 17,794.09
10% EUR Jyske Invest Emerging Mkt Bds(Euro)  30,000 31,973.78 34,406.67

On August 17, the total investment of $300,000 ($100,000 invested and $200,000 borrowed in US dollars) with accrued interest had risen to $321,614.36. The $200,000 loan payoff at 6.875% interest amounted to $212,451.39 leaving a net amount of $109,162.98 or 9.16% profit in ten months. Though this was well down from its high of the year, this is still an outstanding return on a conservative, well diversified mixed portfolio of equities and bonds.

Yet look how due to the dollars fall and lowered US interest rates, almost every investment in the portfolio jumped, a lot, over the month.  

On September 21, 2007 the total investment of $300,000 ($100,000 invested and $200,000 borrowed in US dollars) with accrued interest had risen to $348,816.92. The $200,000 loan payoff at 6.875% interest still amounted to $ 212,451.39 (the next month’s interest had not yet been added) leaving a net amount of $136,365.53 or 36.36% profit in eleven months.  That’s a 297% increase over the month before!

There are three points we can learn from this.  First, when a currency crashes, profits can come (or go) very quickly.  Second markets are really jittery to move so much, in such a short time. Third, leverage enhances everything good and bad.

Until next message may everything you do be enhanced to the good!

Gary

We will introduce our new 2008 multi currency portfolios and much more at International Investing and Business Made EZ course in Ecuador .  Join Merri, me and Steve with Jyske Bank this November 9-11 in Cotacachi Ecuador . See http://www.garyascott.com/catalog/IBEZec/

Stay on for our Ecuador real estate tour and shamanic Mingo and save $398. See http://www.garyascott.com/catalog/ecuador-tours-november-2007


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