Long term readers at this site know that Jyske Bank has been my main investment banker for around 25 years. I study their portfolios regularly to learn ideas on where to invest and their recent updates show how today’s global economic environment forces us into taking greater risk.
Long term readers also know that I do not recommend holding more than needed for day to day spending in Ecuador banks. If you are a new reader see my Ecuador bank warning here.
Thomas Fischer Sr. VP at Jyske Global Asset Management, the division that serves American investors, sent this note last week.
Hi Gary, Attached our latest performance update. We are pleased with the performance and all portfolios (except the FX but hopefully we will still make a profit by the end of the year) are beating the benchmark. We have no exposure to the euro and in our leveraged portfolios we use a 100% euro funding. As you can see this has also led to a return of 18.4% in a speculative performance (medium risk with 2X).
Here is JGAM’s record.
Click on this photo to enlarge.
There is an important multi currency lessons to be learned here.
JGAM wrote in their latest (August 1, 2012) portfolio update that they were reducing risk in their strategy
Risk exposure reduced
July 31, JGAM held an ad hoc Investment Committee meeting. We decided to reduce risk exposure in all our managed portfolios for the following reasons:
· During the second quarter financial reporting season a surprisingly large number of companies have reduced their earnings forecasts.
· Financial markets are very optimistic that both the Fed and the ECB will and can boost economic growth and solve the euro crisis – we are however less confident.
· So far this year we have a satisfactory performance on all our asset allocation portfolios which we want to protect to some extent in case the Fed and the ECB disappoint market expectations.
Therefore, we have sold the following stocks in medium and high risk portfolios: Cisco, Siemens, Novo Nordisk and China Mobile. In the low risk portfolios we have sold Vodafone, Nissan and a portion of Apple. All chosen stocks are considered to be of the more risky type.
Further, we have bought more gold and hence, increased the position we already have. In case the Fed and/or the ECB engage in another round of monetary easing we expect some of the excess liquidity to flow into gold.
Finally, we have put a protective stop-loss on our euro loan in the leveraged portfolios, in case the ECB manage to live up to the market’s high expectations, relieving the euro crisis and hence, cause a euro appreciation.
Bottom line is that we are still invested, but now with a less aggressive investment strategy, thereby protecting your investments with us to a larger extent. And again, we emphasize that we are NOT exposed directly to the euro or any euro stocks and bonds.
This lowered risk approach appears to be in line with events and JGAM wrote on Aug 10, 2012:
Global stocks started the week in a mood of optimism, drawing strength from Friday’s solid US jobs report and signs from Spain that the government could request a bailout, opening the possibility for support from the ECB in the form of a bond purchasing program, announced by ECB’s president Draghi last week.
Tuesday, the Reserve Bank of Australia kept interest rates on hold at 3.5% which caused the Australian dollar (AUD) to reach its strongest level in more than four months.
However, mid-week the market sentiment changed and stocks struggled to sustain recent gains. The reasons were bad news from Germany, the UK and Greece. Germany reported industrial output and exports that fell more than markets had expected. Further, the Bank of England cut its economic growth forecast sharply. Also, Standard & Poor’s lowered the outlook on Greece’s credit rating to “negative” from “stable”.
Then, Thursday the sentiment changed again and global stocks moved higher on hopes for additional monetary stimulus to struggling economies, especially in China. Both factory output and inflation in China slowed. These bad economic news were turned into positive financial market news as they spurred new hopes for central bank intervention.
Friday – as we write – the sentiment has changed once again. Growth-focused assets, especially stocks, are being sold after disappointing Chinese trade data. It seems as if the market has decided to end the week on a downbeat note using the Chinese trade data as an excuse for some profit-taking.
At JGAM, we conclude that the positive impulse from last week’s US job data and ECB’s promise on a bond purchasing program didn’t last for long. Financial markets are again nervous and volatile, faced with sluggish economies and an unresolved situation in the eurozone.
However the best performing portfolio at JGAM, up 18.4% is their most speculative… the medium risk portfolio leveraged two times.
This repeats an interesting multi currency investing phenomenon that we have seen numerous times in the past several years.
This phenomenon is that a lower risk portfolio using leverage brings the highest returns.
This is one reason why I have used Jyske for so many years… they provide multi currency lending. When a currency like the dollar, euro or yen is weak… you can borrow at a really low interest rate to invest for a higher return.
For example in the example above, instance JGAM’s medium risk portfolio is up 7.87%. However because the portfolio is leveraged with a low cost loan in euro in the 3% range, the leveraged portion earns about 4.5% plus has the potential of a forex profit.
Leverage can also work against a portfolio in the downside… but in this era when bond yields are really low. commodity prices are very high and volatile… good value shares offer the best long term potential. That potential can be enhanced with these really low interest rate loans and this creates a very powerful long term strategy.
Warren Buffet exemplified this fact at his 2012 annual meeting when he described investments in bonds as: “bonds are more like “return-free risk” than risk-free return”.
He also had a word about gold: “Gold is a great thing to sew into your garments if you’re a Jewish family in Vienna in 1939,” said Munger, Warren Buffett’s long-serving No.2 at the $204 billion insurance and investment company, “but I think civilized people don’t Buy Gold. They invest in productive businesses.”
“A productive asset of any kind, a decent productive asset, is going to kill a non-productive asset over time.
“I will guarantee you that farmland, over a hundred years, is going to beat gold, and so are equities,” said Buffett – now 81, and recently diagnosed with early-stage cancer – adding the caveat that “in any given one-year period, five-year period, any asset can outperform another asset.”
Good value equities have always offered the best long term value and when leveraged with low costs loans they can provide enhanced returns.
Join me with Thomas Fischer to look at how you can borrow weak currencies to invest into 2013 at our upcoming Super Thinking + International Investing and Business this October 4-5-6.
Quantum Thinking for Everlasting Wealth Seminar
Quantum Thinking for Everlasting Wealth Seminar. How to retire from the rat race… at any age. Where the writing, business and reading world meet.
Gary Scott teaching delegates about quantum wealth.
Learn Quantum Thinking & How to Have Everlasting Wealth with Gary and Merri Scott.
These special seminars look far beyond creating or improving your own business for income. They begin with a global economic update that helps integrate thinking of the past with the here and now of global economics.
Learn how to integrate your brain waves so you become smarter and how to gain never ending income by continually spotting contrasts distortions and trends.
The seminar is divided into three sessions.
Each session builds on the next to help you learn how to gain freedom, remove stress and earn more by combining powerful tools of thoughts and business action
Sessions One: Our global World present past and future… seen from outside the box.
Sessions Two: How to have quantum wealth and health with more intelligence with whole brain thinking through “Frequency Modulation.Saturday – How to Write.
Session Three: International Micro Business – “How to Have a Global Income “.
This seminar provides a learning funnel that integrates your personal desires, skills and circumstances to current and historical global economic realities.
Here is what you learn:
* Global economic history - how this combines with each business’s past… future… interest, skills and knowledge.
The historical review sees current markets for writers based around economic cycles as outlined first by Russian economist, Nikolai Kondratiev, who proposed a theory that Western capitalist economies have long term (50 to 60 years) cycles of boom followed by depression. These business cycles are to this day called “Kondratiev Waves”.
Kondratiev’s thoughts were refined by Austrian economist, Joseph Shumpeter, which we have extensively researched and follow the global economy (and US stock market) and how it has moved through a series of bull…. and then a bear (a period of no growth) cycles that each run around 15 year bull as shown in this graph below.
These stock market bull and bear cycles are based on cycles of human interaction, war, technology and productivity.
These cycles are a driving force in the creation of opportunity.
These cycles are intricately connected with the new waves of productivity that grow from the great human platform of combat. The cycle goes like this.
An economic downturn enhances a war or threat of war. Struggles for survival in the war (like the Civil War, WWI, WWII and the Cold War (WWIII), super charge inventiveness that creates new forms of productivity…the steam engine, the internal combustion engine, production line processes, jet engines, TV, farming techniques, plastics, telephone, computer and lastly during the Cold War, the internet.
Each new invention helped win a war. Shifting the technology to domestic use… after the war… created a boom.
Each boom leads to excess.
Each excess led to a correction. The correction creates an economic downturn.
The economic downturn enhances a war or threat of war.
The global economy is currently in a major correction cycle… at the correct time and we should expect that a war (or some major struggle of the epoch or threat of war such as the Cold War) should begin to build! This latest downturn started almost exactly (1998), 16 years after the last boom began (1982)…which began after the last great human struggle called the Cold War that lasted about a decade when the Soviet Union collapsed.
If the cycle repeats, the struggle should build now due to the poor economy. If the cycles repeat then the bottom is around 2012-2013. Everything will seem bleakest… darkest… blackest.
This will be the best time of all in decades to invest!
The epoch of the Cold War fought Maggie Thatcher and Ronnie Reagan fought the evil empire (1981 to 1989). The war was won when the Berlin Wall came down in 1989 and the Soviet Empire dissolved in 1991. That war created an arms race that created new technology including internet.
The economic war that follows the boom comes from the domestication of technology developed during the struggle.
The technological burst off WWIII accelerated when access to the ARPANET was expanded in 1981 by the National Science Foundation (NSF) which developed the Computer Science Network (CSNET) providing access to supercomputer sites in the United States from research and education organizations.
In 1982 the Internet Protocol Suite (TCP/IP) was standardized and the concept of a world-wide network of fully interconnected TCP/IP networks called the Internet was introduced. Commercial internet service providers (ISPs) began to emerge in the late 1980s and 1990s.
The dot-com bubble (also referred to as the Internet bubble and the Information Technology Bubble) was the post war boom, a speculative bubble covering roughly 1995–2000.
The next step is to decide where this cycle is and how this creates business opportunity through distortions, contrasts and trends.
Contrasts and distortions in currencies, markets and social and demographic shifts to spots trends.
For example we look at how each new wave of technology creates new problems. Shifts from WWII included increased fertilization in farming and more women at work. This caused dietary differences in the American family that led to an explosion of health food stores.
* Problems & Trends Create Income Possibilities
Surprisingly the inventors of Graham Crackers and Kellogg Corn Flakes were among some of the first to spur an interest in health food so in the 1920s and 1930s health food stores did start to open in the USA selling products such as blackstrap molasses and brewer’s yeast. However health food stores as we know them did not start to boom until the 1960s in connection to the newly emerging ecology movement and counterculture to modern living, intense fertilization, pesticides, women at work, etc.
Image the wealth you would have gained writing about that trend coming!
We explore potential counter cultures created by the internet… a WWIII technology… that could erupt and ways to write and do business based on this.
We pay special attention to economic distortions. Distortions create writing opportunities because your micro business is the best investment you can make backed by your own time, effort and energy.
Quantum Thinking For Everlasting Wealth Seminar – October 5-6-7, 2012 West Jefferson, North Carolina.
Another session in the seminar shows “How to have an international micro business.” These sessions are highly practical and usable. They focus on how to use modern technology to start global micro businesses with minimal investments of time and capital.
By starting small and building with stepping stones and a harmonious focus, Merri and I have learned how to almost own several profit generating phrases at Google. We, along with our webmaster David Cross share the secrets of how you can use words to create your own global income as well.
The seminar shares how we use the first four of “Seven Ps” (Person, Problem and Promise, Product) to zero in on key word phrases. Then you learn how to use the Fifth P Promise to develop new customers. The Sixth P is the Prospecting Path and Seventh P is the Presentation to create income.
We use this system successfully on the internet and share what we do with you as we look at ways you too can have a high income generating business… even if you never leave your home.
This knowledge has really helped previous course delegates. Here is what one previous delegate just shared:
“Gary , I have been working on my website, healthy-holistic-living.com site and I figure it is time for another update. It is really hard to believe it, but my site just keeps growing and growing and I am now averaging 2000 visitors per day!
“What I find to be most amazing is that in just a few short months my site is #1 out of over a million sites and sometimes even millions of sites! As you always say the internet is the ‘Great Equalizer’ anybody given the right tools can compete on the internet.“Below are some of my search results. I only listed GOOGLE and YAHOO but you can find similar results on both MSN and ASK.com.
#1 out of 1,190,000 …………………………“definition healthy spirit “
#1 and #2 out of 1,210,000.………………….“benefits to living a holistic life “
#1 out of 1,260,000 …………………………“gaining a healthy mind “
#1 and #2 out of 1,260,000 …………………“benefits to living a holistic life “
#2 out of 935,000 …………………………..“holistic lifestyle tips “
You will learn how to use the same system to expand (or start) your business globally!
This is a perfect era to increase your wealth and improve your lifestyle as you reduce stress with your own a micro writing self publishing business.
Merri and I enjoy having an international internet business and it is doing well. Almost every month our internet business sales are higher than they were in the same month a year before.
We are very thankful to be one of the most read sites in Ecuador and do very well in the US and Canada too.
May we share our experiences to help you learn how to enjoy this satisfaction and success through your micro business?
Here is a recent ranking of just one of our five websites.
This ranking from Alexa.com shows how our site is in the top 16,000 web sites in America, top 8,000 in Canada and top 500 in Ecuador. There is more. While many suffered in 2007, 2008 and 2009, the recession caused our internet business to grow.
Our seminar helps you learn how to use the same tactics we use… in your micro business.
Our sales doubled during the recession. Our list of readers increased over 100%. Since the economy picked up our business growth has slowed but business is still growing. This is how good, value oriented business grow by the way.
Value oriented micro businesses should increase steadily in good times. They do not get caught overextending in euphoria. Then during bad times they are in a position to do really well!
Knowing the micro business philosophies we follow can help you use the internet in business if you desire.
The Western economy has changed… probably forever. The old ways are gone and those who held jobs… or still have work in the private sector have lost the most.
The economy will recover… but the way people earn and work… and how the money is distributed and to whom especially… has been profoundly altered. This is especially true in value added countries like Canada… the USA and most of Europe.
We are in an era of global structural change… in economics… in society and in the way we work because technology brings us low cost administration, low cost access to data, low cost communication, and low cost travel, plus the opening of markets beyond logic that rely more on passion and experience than on efficiency and cost.
We look at these economic and structural changes, and what to do about them in the business portion of our seminar.
We’ll see how markets are shifting from materialistic needs to emotional needs.
We’ll see great opportunity for writers in the following markets:
Love-friendship-control-freedom-tradition-change-big answers-recognition and care. These are emotional needs that create expanding demand and business opportunity. The next generation is having more involvement in every step of the buying process. Uniting the body and mind is an emerging market. Natural physical health, fitness will expand but botox and insulin sales will also grow.
Mental health, retreats and spas prosper. The health of the planet is becoming a more important business.There is a shift of emphasis from GDP to GWB (General Wellness Barometer Happiness Factor). Business will operate with more passion.
Learn about other business possibilities…
In the global micro business sessions we’ll see ideas on how to:
* Create export businesses
* Self Publishing/Writing
* Internet Sales
* Ecuador Business Ideas
* Organic Business Ideas
* Health Business Ideas
* Ideas for Cuban Business
Quantum Thinking For Everlasting Wealth Seminar – October 5-6-7, 2012 West Jefferson, North Carolina.
The educational program Merri and I have developed uses a different form of frequency modulation that opens enormous opportunity for expansion, understanding, peacefulness as well as greater wealth.
FM teaching uses frequency (in music and with each sense… sight…. smell, tactile and even smell) to integrate brain waves so the process of absorbing, processing and recalling information is vastly accelerated. This brings forth the three C’s: Calm, Clarity and Coherence.
FM creates relaxed concentration… a key to happiness, health and success.
You learn whole brain thinking that can help improve your freedom, satisfaction and income through business.
This part of the seminar helps us integrate their brain waves so they are more intelligent, intuitive and relaxed.
This workshop shows how to get into and stay in a state of relaxed concentration… a mental state shown to enhance almost every human capability… especially writing.
Merri and I are explorers so we have used this techniques for decades. We are always looking for what’s next… trying to stay on or ahead of the leading edge and need ways to think outside he box..
This journey has helped us alter the main mission in our lives again and again… every seven to 14 years.
The Quantum Wealth Frequency Modulation sessions share ideas on how to live better…. using frequency modulation to be smarter… stronger…. more energetic… and healthier.
Most of us have never so many problems that create opportunity as those that face us now. A growing global population… depletion of natural resources and technology are bring social and financial shifts at a pace never seen before.
These shifts will rob many of their financial well being, but fortunately the same technology that is creating the change can also help you gain prosperity like you have never imagined. We look forward to sharing these riches with you.
We are in our 44th year of business and we share what we have learned and where this is leading our activities in our upcoming seminar. Join us.
Each seminar updates how we doing business globally, and even how we are investing… and why… right now. Join Merri, me
Spotting new trends and applying them to our micro business has brought us a strong and continual flow of income. More importantly the process has been fulfilling…. beneficial to society and healthy. Now you can benefit from the latest… and perhaps strongest… of all the trends we have stumbled upon.
Applying the concepts of quantum thinking to spotting trends over the past 44 years has helped thousands of our readers make and save millions. The success of our readers has been a driving force in our lives yet we have always wanted to do more so continued looking deeper at ways we can share how to have income, stability, good health and contentment.
Join us to learn our most recent experiences and most advanced concepts and ideas.
Quantum Thinking For Everlasting Wealth Seminar – October 5-6-7, 2012 West Jefferson, North Carolina.