Cotacachi & Bonds


Recent messages looked at the potential profit that Cotacachi fixer uppers can bring. We are converting an office building into condos.

Before.

Cotacachi condos

Now…but not done.

Cotacachi-condos

One great thing about fixing up Ecuador real estate are the low prices. Yesterday for example the doors began to arrive. Great… attractive hardwood…less than $100.

Cotacachi condos

Recent messages also looked at the potential profit that is building in bonds. I have received a number of messages asking for my recommendations.

First let me repeat that now is probably not yet the time to buy the bonds.
As mentioned in a recent email the spreads are so high at this time that you receive a large loss immediately. This is a sign that dealers are very nervous and do not know what to do. For example a bond might be sold for 90 and bought for 80. You immediately lose the spread if you sell.

However on short term bonds that you do not plan to sell this may not matter much.

I have been getting questions from readers asking me to recommend…which bonds.

I cannot make a recommendation for any individual because there are many factors…such as…

How much risk can you tolerate and afford?

When would you need the funds?

Do you want income or capital gains?

We are in uncharted bond territory…hardly ever seen before and you need to look closely at each bond… with your bank or financial adviser to see how how any specific bond may rise or fall.

For example there are numerous DaimerChrysler bonds that have different yields.

Curr Bond Yield
EUR 4.25% 23/01/2009 DAIMLERCHRYS NA 2.82%
EUR 4.25 % 04/10/2011 DAIMLERCHRYS NA 5.88%

USD 6.50% 15/11/2013 DAIMLER FINANCE 12.23%
USD 8.00% 15/06/2010 DAIMLERCHRYS NA 10.82%

Questions to decide are which… why..based on rating and maturity…and do you want to be in the auto industry at all or not. Obama just asked Bush to help the US auto industry.

If so are other auto firms better?

There are many options such as:

EUR 6.25% 24/02/2010 FIAT FIN & TRADE 5.83%
EUR 6.75% 25/05/2011 FIAT FIN & TRADE 6.75%
EUR 5.625% 15/11/2011 FIAT FIN & TRADE 14.22%
EUR 6.625% 15/02/2013 FIAT FIN & TRADE 14.09%
EUR 5.75% 12/01/2009 FORD MOTOR CRED 53.63%
EUR 7.25% 03/07/2013 GENERAL MOTORS 33.66%
EUR 5.75% 27/09/2010 GMAC 39.38%
EUR 5.375% 06/06/2011 GMAC 36.27%
USD 5.8% 12/01/2009 FORD MOTOR CRED 36.93%
USD 7.375% 01/02/2011 FORD MOTOR CRED 35.56%

Finally if you are a US investor, the list is shorter. Some bonds can be owned by US investors…others not. The bonds that are available for US investors are available on a state by state basis. and are only available to residents of some states.

The bonds above come from Jyske Bank’s bond list which is their list of bonds available, not recommendations.

If these bonds are of interest to you, you should contact your account manager. If you do not have an account at Jyske, contact your banker or broker or contact Jyske for more information on how to open an account to buy these bonds…when the time is ready.

A correction in the bond market could create enormous profits and properly chosen have a high risk premium in relation to the risk taken. However there is risk…in everything at this time.

Unless you are a professional bond trader do not try this on your own. Get a professional who has bond experience to help you study the risk reward and timing.

Conditions have created the potential for a really high yield…with reduced risk…when the market turns. You need to study this carefully to be sure that the turning point and specific bonds you choose suits your risk timing parameters.

US investors can get more information from Thomas Fischer of Jyske Global Asset Management at fischer@jgam.com

Non US investors can get details from Rene Mathys of Jyske Bank at mathys@jbpb.dk

Until next message good investing.

Gary

Join us at a course in Cotacachi or on Ecuador’s coast this winter.

Jan. 16-21 Ecuador Spanish Course
Jan. 22-23 Imbabura Real Estate Tour
Jan. 24-27 Coastal Real Estate Tour

We’ll visit the Otavalo markets.

Ecuador-Project

Feb. 13-15 International Business & Investing Made EZ
Feb. 16-17 Imbabura Real Estate Tour

Cotacachi-meeting

Courses are centered around this open air courtyard in our colonial inn El Meson de las Flores.

March 8-9 Imbabura Real Estate Tour
March 10-15 Ecuador Export Expedition
March 16-19 Coastal Real Estate Tour

You are also invited to tag along to the beach where we visit all types of Ecuador beach property for sale. Here is one f our previous tours enjoying a visit to Vistazul condos.

Ecuador-Project

Better still join us all year in Ecuador! See our entire schedule of 26 courses, tours, mingos and expeditions we’ll conduct in 2009.



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