Posted on 13 August 2009.
Investing internationally with thought about reflexivity can improve your wealth.
See three thoughts below that can help bring you everlasting wealth.
#1: George Soros’ thoughts on international investment reflexivity and how the power of thought affects investing and business internationally.
#2: More on Ecuador’s government’s plan to take over a number of TV and radio frequencies.
#3: An update on international emerging market values…
International Investments & Reflexivity
Investing internationally can bring everlasting wealth if your logic can adapt and focus in new and meaningful ways. One way to focus your investing logic is by understanding reflexivity.
The term reflexivity was coined by George Soros. His thinking on investment markets can help investors because the philosophy has proven success.
Part one of his book “The New Paradigm for Financial Markets” shows how we as investors and as a society need to think outside the box. This section of the book makes seven points:
Point #1: Understanding world is inherently imperfect because we are part of the world.
Point #2: There are two functions in our thought… understanding the world … cognitive thought and having impact and taking advantage of the world… manipulative thought.
Point #3: These two functions counteract one another. Manipulation requires intentions and predictions which are not fact. So our beliefs and expectations can hinder our ability to see fact.
Soros writes in this book: “Take the stock market as an example People buy and sell stocks in anticipation of future stock prices, but those prices are contingent on the investors’ expectations. These expectations cannot qualify as knowledge.
Point #4: Supply and demand are not independent of people’s expectations. This means that the element of uncertainty cannot be be eliminated. Yet market theory that rules most investing and most government intervention in markets ignores this fact.
Point #5: Social events have a different structure from natural phenomena. Natural phenomena has a causal chain that connects one event directly to the next. Human affairs include participant’s views. These views affect the causal effect and the participant’s views which creates self reinforcing loops.
Point #6: Natural events happen. Participants can affect what happens next with their decisions but cannot base their decisions on true knowledge because their decisions alter the truth.
Point #7: At times reflexivity makes the abnormal normal.
Soros’ philosophy is supported by Heisenberg’s Uncertainty Principle that states that certain pairs of physical properties, like position and momentum, cannot both be known exactly. The more precisely one property is known, the less precisely the other can be known. It is impossible to measure both position and velocity of a microscopic particle with any degree of accuracy or certainty. This is not only a statement about the limitations of a researcher’s ability to measure particular quantities of a system, it is a statement about the nature of the system itself… the fact that the act of measuring anything alters the very thing being measured.
This would make it seem that we cannot really gain an understanding of what will happen with any international investment or business. This is true.
However there are ways we can come closer to understanding… because we are a part of nature, which by definition makes us part of and in touch with everything.
Access to this infinite knowledge is via our more subtle brain waves.
Access to these waves can come in many forms.
Soros claims to have many ways to access this greater knowledge but in his book his son wrote: My father will sit down and give you theories to explain why he does this or that. But I remember seeing it as a kid and thinking, at least half of this is bullshit. I mean you know the reason he changes his position in the market is because his back starts killing him. It has nothing to do with reason. He literally goes into a spasm, and it’s his early warning sign.
Some would call it intuition, instinct, gut feeling and perhaps these are just ways of describing getting in touch with a deeper, non linear, infinite field of intelligence that all receive but few tune in.
We cannot define infinity and logical thought by definition must be linear.
Final decisions should be rational and should come from our logic… but logic by its nature must be focused on a very narrow path. This means we need a way to let our intuition tell us when we need to shift the focus of our logic on a new path outside the box.
One way the yatchaks (means to know) of the Andes and wise people everywhere is to look for signs of nature.
One term used for these signs is totems. For example, my totem is the Heron.
So let’s ask what in the heck do Herons have to do with international investments?
The answer is nothing and yet everything…
Here is an explanation about totems from Speaker for the Animals:
Heron – Aggressive – Self-Reliance – Self Determination Heron links two worlds: the waters of life—the Unconscious, and the air—the realm of the conscious mind. He feeds on fishes, which symbolize the treasures of the Unconscious mind: spiritual nourishment for the Seeker. Yet he is also a creature of the Earth, so he is a grounding influence for people who spend too much time in their minds and who are called to ‘fish’ in the waters of the unconscious.
The legs of Heron are long to “stand” the deep waters of the Unconscious: the Waters of Lethe bring sleepiness and unconsciousness if one is not awake, aware and wary. Heron is a solitary fisher; if you call upon Heron to be your own totem, you must be able to stand alone as you seek, for there is no one to call on should you step into too-deep waters.
Heron’s strength for those of us who spend too much time ‘in our minds’ is that he brings one down to Earth. With Heron as your guide, he will bring you to ground to explore life here in the physical instead of just daydreaming or losing oneself in one’s imagination or dreams.
We’re unconventional, hearing our own inner drummer. We don’t worry about ‘keeping up with the Jones’s, doing what others do, believing what others believe, valuing what others value. If there is a weakness, it is that Heron works too hard at its fishing because he is a superb ‘stalker.’ He spends long hours standing and watching for a movement in the water, and needs sometimes to ‘loosen up’ and spend more time playing, courting lady herons or just snoozing in the Sun.
Most people, as Ted Andrews says in his book Animal Speak, would never choose to live this way: “It is not a structured way, and does not have a stability or security to it. It is though, just a matter of perspective. There is security in heron medicine, for it gives the ability to do a variety of tasks. If one way doesn’t work, then another will.”
Solitary in nature, Heron people follow their own path. They learn self-reliance. This is a valuable character trait in these times of conformity and homogenization of values. Heron people can stand alone, listen to their own inner wisdom, and go their own way when everyone else is conforming to society’s commands. In this way, they build their own ways to be as well as choose their own way of doing. They are individuals first.
Herons are active in my life and I have painted one (inspired by Audobon’s Heron) that hangs in the entrance to our house.
So when the Great Blue Heron that lives on Little Horse Creek flew from our high mountain bog right over this morning, I dug out my copy of Animal Speak.
I rethought my business and investments in contrast to the symbolism of the heron. This never happens without my coming up with some worthy thought. Today it related to a partnership I was looking into. I reread Solitary in nature, Heron people follow their own path. They learn self-reliance.
This started me rethinking if Merri and I really want a partner. This started me looking at the business in a very different way.
Ecuador shamans and yatchaks use this process extensively and call it shape shifting. They place themselves in the spirit of their totem and this forces them to think about whatever subject they are concerned with in a different way… thinking like a heron or eagle or condor definitely puts you out of the box!
I did not come to any conclusions about my business decisions because I saw a heron. The fact I saw a heron caused me to sit down and use my logic to rethink my plans in a different way.
Learn more about how to improve your thought process here.
Ecuador Radio and TV
On the subject of Ecuador, a previous message shared news about the Ecuadorian government’s plan to seize a number of radio and TV stations and promised to stay tuned to what happens. I have asked many of my trusted sources in Ecuador for their opinions which we’ll share in various messages. Here are two from businessmen in Ecuador.
The first contributor was quite negative when he wrote: The first thing to take into account is that he is actually proposing control over the press not only within the countries but at a international
level. What he is saying is that countries like Venezuela, Bolivia, Ecuador and others, should create an international committee that will oversee what the media is saying about the governments.
Ecuador is following the Venezuelan model, so if you see that Chávez is pushing for a new legislation that control the media and whatever content they have that may “threaten” the nation security, Ecuador will follow that soon. Below is what Venezuela is doing, they actually want to sensor the information that the media exposes meaning that if who oversees the media thinks that this or that information is “bad” for the country, the media or the anchor will actually face justice and may even go to jail for at least four years. They closed 32 radio stations and 2 tv stations.
Rafael Correa, the President, said that his team was about to revoke some radio frequencies depending on the outcome of a report that his government is finishing. This will mean that whatever happens will be done in the next weeks. Critics claim that this was not done on a technical level but on a political one, opening the door for the government to possibly revoke the frequencies of radio stations or TV stations that oppose the government. On this matter nothing is sure yet, but Conartel, which oversees the media, actually punished a TV station, Teleamazonas, that opposes the government. The fines were applied to that TV station one time, by law the second time they must close for about 90 days and the third time they must close forever. They censored the Simpsons also from that TV station and there was a public outcry because Conartel and the government threaten to punish them. We figure that since he started a new period, things will start to happen in the coming weeks, so far nothing is concrete yet.
He was not totally negative though and added: One thing although is that the government is not talking about taking over TV stations or radio stations, but revoking the frequencies. But take this into account, the government actually took over some private TV stations, they got them as part of a debt that Filanbanco, a bank, had with the government back in the crisis of 1999. This appears to be a separate thing. On the same takeover they got two TV stations plus a newspaper El Telégrafo.
The second contributor feels good about this new and wrote: Hi Gary, I have lived here full time for over 9 years and have seen the corruption and I believe that Correa’s intentions are more good than bad. I believe that many things that he does for a good reason while he is working on removing corruption are turned into bad press by the opposition. The same opposition that stole from the people of Ecuador throughout history, and want to regain control and steal from them again. I think that the Wall Street Journal article you wrote about says a lot. It says to me that he is going through the licenses one by one to find out if the licenses were granted illegally through corruption and payoffs. If they were granted legally, no problem…..and if they weren’t we are going to suspend the license and you will have a chance to prove that you obtained it legally. A year or so ago, two television stations were taken over, with the same uproar in the press. But the truth is that they were taken over because the owners of those two stations were the owners of one of the banks that went under when they took all of the depositors money and went to Miami to live happily ever after. Well, Correa went after their assets ( a first for a president to go after someone like this) and some of those assets were the two tv stations. So we need to look past what the press says as many of them are owned by this type of opposition. I see Correa in a similar boat that President Vicente Fox of Mexico was in a few years ago, when His party was elected after over 100 years of severe corruption by the ruling party and he wanted to remove that corruption. He was also fought along the way by the opposition that wanted the power back to again steal from the people. It is a very difficult job that Correa has ahead of him, and I hope that he can succeed and become possibly the best president that Ecuador has ever had. Regards.
We’ll be providing a full report on the radio and TV position to our Ecuador Living subscribers
Emerging Markets Update
We’ll share more comments about international investments in Ecuador in upcoming messages… but let’s use our logic here to look some more at international investments in all emerging markets.
One problem many investors have when using non linear approaches to international investments is that they forget the final logical step…. which is to come back and end in the logical mode.
Thinking outside the box does not mean we should just ignore what is in the box. We want to use our logic to reflect on “in-the-box-stuff” in different ways. If we do not know what’s in the box then we won’t know when we are out of the box. Boxes exist for a reason. At times the box.. assuming the box is the norm… but Soros says “is abnormal.” We need to conclude if the box is normal or abnormal which dictates that we do examine what’s in the box.
Thinking outside the box does not mean we should abandon logic.
So I may sit down and rethink everything… or something I am doing when I see a heron… but I add that to my traditional logical thought.
This is one reason why we regularly review Michael Keppler’s major and emerging market value analysis. Kepler is a statistical genius and guru…. very institutional… logical mathematical .
What I search for are strokes of intuition supported by such logic.
This morning for example their were three crows grazing our front yard.
Stock market investors sometimes refer to three crows as a pattern of successive declining stock prices over three days often identified by overlapping candlestick patterns. Three crows are often seen as a warning of a period of powerful selling pressure on the stock market.
This does not mean I rushed out and sold all my shares. It does mean I looked at logical data like Keppler’s value analysis to see if the logic supports the intuition.
Here is an excerpt from our last multi currency portfolios update that shows Keppler’s mathematical logic.
Emerging Markets equities recorded their highest ever quarterly return. In the second quarter 2009, the MSCI Emerging Markets Total Return Index gained 34.7 % in US dollars and 27.5 % in euros.
This brings the year-to-date total return of the global Emerging Markets benchmark to 36 % in US dollars and 34.8 % in euros.
All markets covered here were up last quarter. Hungary (+69.7 %), India (+59.8 %) and Turkey (+56.6 %) had the most impressive returns.
Peru (+11.2 %), Israel (+15.8 %) and Morocco (+19.6 %) came in at the bottom of the performance range with what would be very desirable double-digit returns under normal circumstances.
In the second quarter 2009, the Emerging Markets Top Value Model Portfolio, which invests according to the Top Value Strategy and assumes index returns for each national market included in the strategy, gained 45.5 % in US dollars and 37.7 % in euros, outperforming the benchmark by 10.8 percentage points in US dollars and by 10.2 percentage points in euros.
There were two changes in our performance ratings last quarter: Korea was downgraded to “Sell” from “Neutral” and Brazil was upgraded to “Buy” from “Sell”.
The Top Value Model Portfolio now contains the eight “buy” rated markets: Brazil, Egypt, Hungary, Poland, Russia, Taiwan, Thailand and Turkey at equal weights.
It is unusual for a market to rise all the way from sell to buy as Brazil did this quarter. This is in keeping with our thoughts on Brazil Distortion Thoughts published in April and June.
You can see the password protected pages and full emerging markets update and a warning about these values as a Multi Currency Portfolio subscriber.
Whether you plan to have international investments, an international business or non at all, it will become increasingly important to think outside the box as change accelerates and new social and economic paradigms are required. Whether you use backaches, gut feel, hunches, totems or meditation and prayer… new ways to focus your logic an help you have everlasting wealth.
Combining good international investing with the greatest asset of all, the ability to earn wherever you live, brings everlasting wealth.
This is why we offer our course Tangled Web… How to Have an Internet Business.
A clear mind and healthy body are also a vital assets… plus a second language is a powerful diversification tool.
This is why I am willing to pay you $300 to attend either our Ecuador Super Thinking plus Spanish seminar in September or our North Carolina International Business & Investing seminar in October. Sign up for either seminar and I will email you our Tangled Web… How to Have an Internet Business Course (offered at $299) free plus I’ll knock an extra dollar off your seminar fee…. to round up the $300 savings.
See details of the two seminar below.
Thomas Fischer teaching at our IBEZ seminar.
Join Merri, Thomas Fischer of JGAM, our webmaster David Cross and me in North Carolina this October and enroll in our emailed course on how to have a web business free. Save $300.
Learn more about global investing, how to have an international business and diversification in Ecuador at the seminar.
Oct. 9-11 IBEZ North Carolina
Here is an email for a recent seminar delegate: Hello Gary and Merri, I have wanted to write to tell you how much we enjoyed your IBEZ seminar, and to thank you both for inviting us all into your lovely home for lunch last Sunday. Merri, again, thank you for taking the time to prepare foods especially for me; they were delicious, and I appreciate your effort! Thank you for a thoroughly enjoyable, very well done, stimulating seminar. I came away not only with all the notes provided, but also with many ideas which I plan to begin working on now that we are back home. Wishing you all the best,
Or join us in Ecuador and learn more about living and retiring in Ecuador.
We take delegates on our Ecuador seminars to Otavalo markets. Many buy enough goods to resell in North America to pay for their entire trip. Ecuador tiles are one great product attract many international businesses.
Here are comments from one seminar delegate about the followup from our course: Thanks so much. I have been following the advice in your Multi Currency Course/International Investing monthly and have added selected suggested funds from your lists which are available in my Fidelity IRA. Even though my transactions are in SMALL amounts for stock and ETFs I am almost back up to the total invested amount prior to the stock market dive of last year. Your emails have given incentive to keep diversified investments when I know other people are selling out.
Sept. 17-21 Ecuador Super Thinking + Spanish Course
Sept. 23-24 Imbabura Real Estate Tour
Sept. 25-28 Ecuador Coastal Real Estate Tour
Oct. 21-24 Ecuador Import Export Tour
Nov. 6-8 IBEZ Ecuador Seminar
Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour
Attend any two Ecuador seminar or tours in a calendar month…$949 for one. $1,349 for two.
Attend any three Ecuador courses or tours in a calendar month…$1,199 for one. $1,799 for two.
See the entire explanation of herons at speakerfortheanimals