Three Multi Currency Investing Lessons


Three multi currency lessons on global investing can help us thrive during this current economic shift.

Our decades long research in 30 year market trends predicted some time ago that the worst emotional time for stock market investors in the past 15 years years would be about now. This is the darkest hour… just before the light at the end of the tunnel appears.

Financial markets are in turmoil and opportunity has never been greater.

Many summer mornings start my day like this in my…

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summer office, checking the Asian and European markets as I enjoy the awakening of…

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dawn.

Cup of coffee in hand, I look at three multi currency lessons on how to thrive in turmoil.  We’ll see the three multi currncy lessons in a moment.

First. here is what I do from my front porch.

To begin I take a look at bond markets.  During times of panic, investors shy away from some really good bonds. The spreads widen enormously. In other words, the cost of a bond is much more than what you can sell it for.  Wednesday’s message Multi Currency Bargains because of this factor looked at some pretty good bonds that might pay as much  27% in the next year.

Now the bonds may even earn more!

My first action of the morning is to check with my JGAM personal investment adviser to see how is the bond spreads have continued to widen.

They have!  my adviser wrote:  Dear Gary, the spreads are still widening. Jyske Bank’s bond department have not published the corporate bond recommendation list for the last couple of days. When they are through updating prices the market has moved and the prices are already wrong. You can trade the higher end of the high yield market (BB and so), but the low end of the high yield have no bid prices but we might be able to find bonds for sale.   Kind regards.

This means that huge values are being created in bonds.

The first lesson on how to benefit from shifts and change is that multi currency diversification helps you thrive during turbulence.

Yesterday morning the dawn message (shown in this August 11, 2011 Financial Times.com chart) was that as Wall Street Collapsed, the Asian…

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markets thrived.

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This porch view allows me to watch the forest come alive and yet also take a quick glance around the world. Yesterday’s New York Times headline was an article entitled “Financial Turmoil Evokes Comparison to 2008 Crisis” by Nelson D.  Schwartz. The banner read:  Stocks are plummeting. The economy is slowing. Politicians seek solutions but can’t agree. Is 2011’s turmoil a repeat of the financial crisis of 2008?

The Wall Street Journal headline entitled “European Stocks Rise” said European stocks markets opened higher as market participants used recent losses in global equities as an excuse to snap up bargains. The Financial Times front page article “Asia Today” proclaimed: Yuan on the Rise.

These global financial insights confirm the importance of having a global view.  International diversification allows you to balance your savings and investments so they are not caught and stuck in the gloom of any one country.

Seek Value

Looking for good value is always the way to protect purchasing power and modern technology makes the search easy.

For example I track the investment portfolios of the State Street Global Advantage mutual funds which use the market value of Keppler Asset Management. Keppler, a friend for decades, is one of the best market value analysts I know. Frankly he is such a mathematical genius that I (who was stumped even by high school algebra) have a hard time understanding his statistics.  What I can easily see though is how investment managers from State Street (one of the largest fund managers in the world)  manage to translate Keppler’s data into good value investments in shares.

I simply look at their country diversification and the main shares they choose in their portfolio.

For example in the State Street Global Advantage High Value Major Market Fund the…

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main spread is in Germany, France, the UK, France, Austria and Italy well before (and much more) than the USA.

You can also see the fund’s top ten investments… like Erste Group Bank AG and ENI S.p. A., an easy way to find good value shares that might enhance your portfolio too.

State Street also has a Global Advantage High Value Emerging Market Fund so from my front porch deep in the Blue Ridge woods I can gain ideas on how to…

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diversify globally in emerging markets.

This is important to know because these funds have strongly outperformed the Morgan Stanley Capital Index Total Return ND Index… an index that represents share movements around the world.

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The green line shows the State Street Global Advantage High Value Major Market fund performance and the grey, the Morgan Stanley Capital Index Total Return ND Index.

You can see the annual performance of the major market fund (versus the MSCI Index) here:

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Plus we can see how emerging markets have offered so much more opportunity than major markets in the past five years!

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Non Americans can get information about these funds at the addresses below.

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Though State Street is a US company these funds are not available to Americans.  Americans can get information about how to buy shares like those in the fund and how to have a multi currency portfolio from Jyske Global Asset Management.  Thomas Fischer the JGAM Sr. VP can be reached at fischer@jgam.com

The Three Lessons

Multi Currency Lesson #1: Diversify in multi currency bonds as well as shares.

Multi Currency Lesson #2:  Investing in good value during bad times creates the greatest returns of all.  Those who picked up good value major market shares in 2008 (when the market fell by half) saw growth of 29.15% in 2009 and 12.29% in 2010.

Multi Currency Lesson #3:  Embrace change and invest in risk the market perceives.  Those who invested in what was viewed as risker emerging markets in 2008… earned  59.50% and 23.65% in 2009 and 2010.

Final Lesson

There is one more lesson.  While so many are trumpeting doom and gloom…while gold is skyrocketing due to market fear, we can do what a century ago… even kings could not imagine.  Sitting on a porch with a pastoral and global view… ignoring all dimensions of time and space…. I listen to the barn owl mourning “the end of night” as I visit China.  The hens cluck awake and the rooster crows as my research moves into Europe and the UK.  The sun rises brilliant and in peace I watch New York’s action unfold and… realize what incredible privileges that we have in this modern world!  Let’s don’t forget what this is!

Those who invest calmly during panic can thrive.

Gary

Join Merri, me and Thomas Fischer from Jyske Global Asset Management for the Blue Ridge leaf change and a global multi currency update at our  October 7-9, 2011 International Investing and Business Seminar

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