The Power of Positive Part #1


Problems create opportunity and opportunity creates problems.

See three problems in three years and how to profit from a $10 billion war chest being built by major banks… what to do now that the fiscal cliff has been avoided and insights on how to invest during the looming battle over gun rights.

We had an unexpected high number of enrollments for next week’s Super Thinking + Investing and Business Seminar.   What a great opportunity!  The problem?  Our scheduled meeting room was too small.   Like a cascading fractal… life’s problem’s created by opportunity create more opportunity.  This is the exponential power of positive!

In this case, the problem of a larger meeting hall brings opportunity in Eustis. Florida.

eustis florida

Merri and Mah at the Lake Eustis Park in Old Eustis.

This site has posted many messages about real estate value in Florida and especially in Lake County.

Like Ecuador… Florida real estate has one really big advantage… sunshine.    Plus Florida real estate prices fell more than in many areas of the US… so they will rebound higher.

This creates a special opportunity we’ll look at in a moment.    First back to Eustis…. because there is a special little known potential there in the name of the Lake Community Foundation.

In 2004, Florida Hospital Waterman relocated to a new site and donated its Eustis property to the Foundation.   The revenue from the sale/redevelopment of the property is designated for charities and a comprehensive plan has been created.

eustis map

The area is developing nicely but there is one large parcel (C) not yet sold and designated for a hotel.

This and the fact that Eustis is one of the few cities that has not allowed development along the waterfront makes it extra attractive for its small town (15,000 population) and natural feel.

Merri and I have been buying real estate in this area for over three years now.  We took a stroll along Lake Eustis visiting restaurants.

While our friends and readers in the north and Pacific Northwest were struggling in the cold and snow, we enjoyed mid 70s and clear skies.

eustis florida

Lake Eustis.

We dined outside at the Lake Eustis Deli.

eustis florida

There are numerous picnic tables and this is a perfect place for a casual lunch.

Eustis also offers some exceptional real estate values already without the little known benefit.

For example this house is offered for $199,000.

eustis florida

This is near the lake.

eustis florida

Here is a photo I took (with a telephoto lens) the six blocks from this house to the lake.

eustis florida

Yet it has been on the market for a year and I suspect it will sell for less.

We have asked our friend and real estate broker, Shirley Peacock, to have a list of Eustis properties for sale and to be available for seminar delegates.

We will look at how to spot value in problems at this weekend’s Super Thinking + Investing and Business seminar.

Here are a few examples we’ll review of recent problems and our positive take on each.

#1  Problem:  Real Estate Collapse and hard to get mortgages. Winning Idea: Invest in real estate for rentals

A January 22, 2013 article in USA Today entitled “Rental Investors pant for next hot home market”  tells how home shoppers are now seeing multiple offers, bidding wars and shrinking supplies of homes for sale as investors swoop in.

Major institutional investors are amassing a $10 billion war chest to pursue the single-family rental market, JPMorgan Chase estimated in a recent research report.

This site posted an article about investing in rentals in December 2011.  Here is an excerpt.

Rentals are rising from the ruins.

economist graphs

From November 5, 2011 Economist article linked below “Rising from the ruins”

This site has promoted the idea of investing in necessities at this time… food… agriculture… shelter.

This site has always promoted the idea of having assets in more than one country.

Let’s look at why rental opportunities in North America must grow.

Excerpts from a November 5, 2011 Economist article “Rising from the ruins” explains why” The housing market still looks grim, but the rental side hints at recovery

THERE are two things everyone knows about American economic recoveries. The first is that the housing sector traditionally leads the economy out of recession. The second is that there is no chance of the housing sector leading the present economy anywhere, except deeper into the mire. In the two years after the recession of the early 1980s housing investment rose 56%; it is down 6.3% in the present recovery. America is saddled with a debilitating overhang of excess housing, the thinking goes, and as a result is doomed to years of slow growth and underemployment.

The economic landscape is unquestionably littered with the wreckage of the crash. Home prices languish near post-bubble lows, over 30% below peak. The plunge in prices has left nearly a quarter of all mortgage borrowers owing more than the value of their homes; nearly 10m are seriously delinquent on their loans or in foreclosure. The hardest-hit markets are ghost neighbourhoods, filled with dilapidated properties. Housing markets are far from healthy. Yet current pessimism seems overdone. A turnaround in sales, prices and construction may be closer than many imagine.

Rental markets, by contrast, look far stronger. America’s rental vacancy rate stood at 9.8% in the third quarter of 2011, down from a high above 11% in 2009. Vacancy rates in some cities are strikingly low—2.4% in New York City, for instance, and 3.6% in San Francisco—which translates into rising rents. Nationally, rents rose 2.1% in the year to August, in stark contrast to house prices (see chart 2).

economist graphs

Strength in the market for rentals is beginning to seep into the more troubled owner-occupied sector. Rising rents help housing markets heal on both the supply and demand side, by encouraging renters to consider buying and through the movement of supply into the rental market, easing the glut of houses for sale. The Obama administration hopes to take advantage of better rental conditions to unload some of the more than 200,000 foreclosed-on homes held by the two government-sponsored mortgage giants, Fannie Mae and Freddie Mac, and the Federal Housing Administration (which account for roughly half of all such inventory), on to investors who may rent the properties out.

Rental-market strength is also rousing a long-dormant building industry. New housing starts rose 15% from August to September of this year, driven by a 53% surge in new structures containing five units or more. In the three months to September construction employment rose by 29,000 jobs. The sector is still some 2.2m jobs below its pre-recession peak, and new hiring there would help a dismal labour market.

Problem #2:  The Fiscal Cliff.   Winning Ideas: Borrow Yen. Invest in dollars.   The cliff was bound to be avoided and the dollar to rise. The yen was obviously too strong.

A December 12, 2012  message at this site said: Yen leverage has remained a wonderful overall long term strategy for 20 years.  Yen interest rates have normally been near or under 3% for 20 years!  Any  loan that was invested for more than 3% enjoyed pure extra profit!

Now the yen is too strong again (in my humble opinion).   Plus as you see below yen interest rates now are as low as 2%.

If I am correct, this is a good time to short the Japanese yen.

There are two easy ways to make this short yen speculation… one is through ETFs.

The way to short the yen is to borrow yen and use the loan to make investments that earn more than 3% in currencies that are likely to rise against the yen.

Since that article the dollar has risen from 82 yen per dollar to 90 yen per dollar bringing a double digit profit in a month.

yahoo.com chart

Dollar yen chart at www.finance.yahoo.com

Problem #3:  Government buying ammunition. Winning Idea: Shares in Alliant Techsystems (NYSE: ATK). 

yahoo.com chart

Chart of ATK shares at www.finance.yahoo.com

Shares of ATK have risen from $57 to $66 per share since we wrote:  I stumbled across ATK because of a potential problem. Numerous readers began sending me copies of websites headlines like this: Fears that federal authorities are preparing for mass civil unrest have increased after it was revealed that the Department of Homeland Security is planning to buy a further 750 million rounds of ammo in addition to the 450 million rounds of hollow point bullets already purchased earlier this year.

The buzz is that the current administration is afraid of civil unrest in the USA and is arming up.

Perhaps so but my thinking focused on value instead of anarchy.  Instead of asking… is this true or not… what is the government’s intention… I asked… Who will make all that money?

For a fact… there is very little I can do about the government or its expenditures.  There is a lot I can do in my own actions and investing.

So I looked and found this news at fiance.yahoo.com:   ATK Delivers 2 Billion 7.62mm Rounds to the U.S. Army from the Lake City Army Ammunition Plant (LCAAP).  ATK Delivers More than 350 Million 5.56mm Enhanced Performance Rounds Using Modernized Production Line Equipment
.   ATK Receives $131 Million in Small-Caliber Ammunition Orders

Over the past 10 years, the company produced an average return on equity of 31.51% by using financial leverage.

ATK debt is high but during the recession it never had problems with debt service.  All these facts suggest that  the shares of ATK are good value.

A little investigation found that stocks in the defense sector have been selling at historically cheap valuations and that ATK shares were selling a ratios far below the industry average. ATK Price/Earnings is 6.2 compared to an industry average of 13.2. ATK  Price/Book is 1.3 compared to industry average of  3.0 and its Price/Sales Ratio is 0.4 compared to 0.8.

The 10 year average P/E ratio for its shares has been 18% but is currently below 10%  about half  the ten year average.

These facts coupled with recent events in the Middle East suggest even more spending will be for defense.

Share the world’s  problems and how to gain the power of positive to turn them into opportunity this weekend in Eustis, Florida.

Multi Currency Value Investing Seminar

The Best Multi Currency International Investing Seminar in 32 Years

Cash in on the best opportunity in 32 years.  Currency diversification has always been important for safety, but right now a multi currency opportunity is brewing and has more profit potential then you have seen in over three decades.

Our “International Investing Seminars” started 32 years ago at about the best time for investors ever.  Over these decades our semi annual seminars have updated what’s going on in global investment markets and what to do.  In all those years, few times offered as much long term opportunity as in 1982.

Join us to learn the great opportunities that are just ahead.

Mount Dora Florida. Multi Currency, Protect Against a Weak Dollar Investing Seminar. (Normally $799 or $999 for a couple)

Sept 4-5-6, 2015, West Jefferson, North Carolina.  Multi Currency, Protect Against a Weak Dollar Investing Seminar. (Normally $799 or $999 for a couple)

jefferson Landing

Our summer and autumn courses are at the Jefferson Landing Country Club.

Finally, conditions have come full circle and the several conditions are coming together just as we saw at our first seminars in the 1980s.  The US dollar. the US stock market and the price of oil are acting almost exactly as they did in the early 1980s.  Knowing the conditions and why they have merged  and what to do about them can help you create a fortune.

One way to tap this potential (we’ll review this at the seminar) is to invest in a Good Value Country Strategy with ETFs (Country Index Exchange Traded Funds).  For example there are currently ten good value developed markets, Australia, Austria, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore and the United Kingdom.  You can easily create a diversified portfolio in each or all of these ten countries with Country Index ETFs.

We review more than two dozen Country Index ETFs at the seminars.   One example is the iShares Germany MSCI Index ETF.

MSCI Germany

Click on image to enlarge.

Germany’s stock market is a good value market.  Germany has the world’s fourth largest economy.  The country is the third largest exporter in the world and in 2013 recorded the highest trade surplus in the world making it the biggest capital exporter globally.  Yet German shares have been overlooked. German share prices are cheap.

The problem most investors have is knowing which German shares to buy.  The country Index ETF solves this by investing in almost all the shares traded on Germany’s largest stock exchange in Frankfurt.  The iShares Germany MSCI Index ETF is a share traded on the New York Stock Exchange that invests in 85% of the shares in Germany.  This ETF is a passive fund that does not try to outperform the growth of the German Stock Market. The managers simply track the investment results of the MSCI Germany Index.

The MSCI Germany Index is designed to measure the performance of the large and mid cap segments of the German index is composed of the stocks of 54 different German companies and covers about 85% of all the German equities.  Germany’s ten largest companies compose about 60% of the index.  These ten companies are:  BAYER (Health Care) composes 9.91% of the index – SIEMENS (Industrials) 7.89% – DAIMLER (Consumer Discretionary) 7.04% – BASF (Materials)  6.81% – ALLIANZ (Financials) 6.65% – SAP STAMM (Info Tech) 5.69% – DEUTSCHE TELEKOM (Telecom Srvcs) 4.46% – DEUTSCHE BANK NAMEN  (Financials) 3.66%  – VOLKSWAGEN VORZUG (Consumer Discretionary) 3.18% – BMW STAM (Consumer Discretionary)  3.15%.

The iShares MSCI ETF invests in all the important sectors in the German market, so your one investment in the ETF gives you a spread of good value German shares.

MSCI Germany

The fund has over 4 billion of assets and those assets are invested mainly in the 54 German shares, so your investment gives you enormous diversification within the German stock market. What makes ETFs such easy and simple investments is that even a small investment of $1000 (at this time) will buy about 25 shares.  For just $1,000 the investment is spread into this vast powerful, good value equity market.

At our seminars we review Country Index ETFs for every good value stock market in the world. One benefit of these ETFs is that investors can invest very small amounts so it is possible to invest in all good value countries, even if your portfolio is not large.

You save on tax.  Managed funds exert a heftier tax bill on your portfolio than passive products.  You save on reduced portfolio turnover.  Every time a manager makes a trade, there’s a cost. ETFs invest in the shares that compose the index and do not trade.  During 2013 actively managed funds in the US turned over 85% of their holdings.  Remember that this activity resulted in poorer average results than the indices for 75% of these funds.

Join me at our 2015 seminars to explain how to use ETFs and much more.  The “International Investing Seminar” looks at how to protect purchasing power and pensions with multi currency investing.  The course teaches how to add safety and create to profit from multi currency and global equity cycles.

Value Investing Outside the Box.  Here is a partial syllabus of the seminar:

* See new breakout possibilities… in global investing.

* Benefits of early investments in an oil that’s up 22.8 times in the past ten years.

* Beyond Gold.  Three hard assets that protect against all currency erosion.

* The Small Country Effect. Why small markets rise more than large ones.

* Top Value small markets and how to easily invest small or large amounts.

* The best four currencies for the year ahead.

Few decisions are as important to your wealth as WHICH CURRENCIES to invest in. This has been our area of expertise since the 1970s.  Learn how to use ETFs to gain multi currency diversification.

Details in this session also include:

* How to easily buy global currencies, shares and bonds.

*  The benefits of investing in real estate in Small Town USA.  We will share why the value is special and why we have been recommending good value real estate in this area since 2009.

* What’s up with gold and silver.  One session looks at my current position on gold and silver and asset protection.  We review the state of the precious metal markets and potential problems ahead for US dollars – how interest rates at zero eliminate opportunity costs of diversification in precious metals and foreign currencies.

* New tax strategies.  How to create businesses that earn income and reduce tax.

gary scott

Gary Scott at a multi currency session

The course begins with a 1000 Year Economic Review that leads us up to where markets are in 2015.

Learn how to:

* Find good investing value.

* Use Multi Currency Portfolios.

* To use multi currency for diversification-speculation & hedge.

* Earn in water and agricultural investing.

* Gain with special situations now for aggressive growth

Join Merri and me for this multi currency economic update seminar.

gary-scott

Gary Scott speaking to 400 delegates in Quito, Ecuador

Sept 4-5-6, 2015, West Jefferson, North Carolina.  Multi Currency, Protect Against a Weak Dollar Investing Seminar. (Normally $799 or $999 for a couple)

Join my wife, Merri, and me at our International Investing Seminar. Enroll here $799. Couple $999

Gary

Read the 2011 real estate rental article in our archives here

Read the entire September 14 ATK Message in our archives here.

Read the entire Dec 12, 2012 yen message in our archives

 


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