Tag Archive | "Diversification"

Why Smaller and Focused is Better


Think about the power of small and focused.

Airlines often give long or important flights small numbers. Pan Am’s greatest routes were the two around the world flights Pan Am 1 and Pan Am 2.  The piddly flight we take on Delta from our home near Orlando to Tennessee is DA5844.

Look at names. Compare “Adolph Hitler, Führer des deutschen Reiches und Volkes” or “Kim Jong-Il, Great leader Comrade Kim Jong-il Eternal General Secretary of the Party and Guiding Star of the 21st Century” with names of real power, Jesus, Muhammad, Buddha.

Curse words are the same.  Smash your finger with a hammer and you’ll probably not shout “Oh Manure” or “Fornicate!”   Small four letter words are probably a more likely form.

Then there are even smaller three words of terror, such as IRS, FDA and CIA.

Smaller is more powerful for our investment portfolio as well.  There is no specific rule on the number of shares one should have in a portfolio.  Common sense says the number should be as small as one can keep track of EASILY.

Stress and our emotional response to activity in our portfolio is one of the leading causes of loss.  We all do better with anything when we are, or at least when we feel in control.

Warren Buffett  confirmed that too much diversification is not good investing.

“Diversification is protection against ignorance.  It makes little sense if you know what you are doing.”

In Buffet’s view, it is better to study one or two industries in great depth and focus on those industries. This creates better profit than spreading a portfolio across a broad array of sectors.  Too much diversity reduces risk but also lowers profit.

My portfolio usually remains at less than 20 shares.   My indepth study and focus is on the value of stock markets at large.  Then I invest in Country ETFs.   My basic portfolio only has 17 ETFs, held on an equally weighted basis.  Each are based on an intense value research.

The extra benefit here is that each of those ETFs represents investments in as much as 100 shares.  This type of investing holds a small number of shares but represents a much larger range of investments in many countries.

Here is our basic portfolio:

The developed countries get 70% of the weighting, divided equally.

Symbol     Country

EWA        Australia

EWO       Austria

FXI          China

EWG       Germany

EWQ       France

EWH       Hong Kong

EWI        Italy

EWJ       Japan

EWU      UK

EWS      Singapore

The emerging countries get 30% of the portfolio weighting, divided equally.

Symbol   Country

EWZ         Brazil

ECH         Chile

ICOL        Colombia

EWM       Malaysia

EWY        South Korea

EWT        Taiwan

THD        Thailand

This portfolio is small and focused on value.  Our goal is to continually learn ways to find value all over the world but take advantage of this knowledge in an easy, efficient, low cost way.

Gary

 

 

 

 

 

 

Storing Wealth Made EZ


Storing Wealth Made EZ

mcsi indices

These charts from Bloomberg.com of the Morgan Stanley World Index and

mcsi indices

and the MSCI ALL World Index shows how risky the economic world has become.

The MSCI World is a stock market index of over 6,000 ‘world’ stocks. It is maintained by MSCI Inc., formerly Morgan Stanley Capital International, and is often used as a common benchmark for ‘world’ or ‘global’ stock funds.

The index includes a collection of stocks of all the developed markets in the world, as defined by MSCI. The index includes securities from 24 countries but excludes stocks from emerging and frontier economies making it less worldwide than the name suggests.

A broader index, the MSCI All Country World Index (ACWI), incorporates both developed and emerging countries.

The volatility of these markets over the past five years shows how we have edged into an increasingly risky world.

Here are three ways to store wealth in this high risk world.

Over the past four decades global economic tensions in the USA and Europe have twisted like gigantic tectonic plates colliding at seismic faults.  Government and private debt, aging populations and huge, unfunded future obligations have slowly but relentlessly built and distorted fiscal reality while a younger emerging world grew bold and rich through low cost labor.

Finally this monetary stress unleashed an earthquake of financial reform that threatens every financial aspect of the modern world.  Banks, stocks, bonds, government debt and most currencies have all been thrown into stagflationary shock…where inflation rips purchasing power apart at the same time that wages and employment opportunities fall.

This shift has put almost every investment at risk and raises the question, “How can one store wealth in such an atmosphere?”

High Risk World

Most investments are now at risk because most savings and capital come in the form of a promise. Stocks are a promise of shared earnings and growth in business. Bonds are a promise of money used and returned with interest. Bank and savings accounts are a promise of money kept and cared for to be returned at the owners’ desire.

Currencies are promises of products and services delivered later from products and services given now.

We are in times when few promises… especially those made in terms of paper currency can be kept.

Traditionally Swiss francs and precious metals, especially gold and silver are the favored stores of wealth.  These investments should usually play a part in portfolios as insurance. 5% to 10% of a portfolio in metals and hard currencies is a general rule of thumb.

These hard assets were good ideas for speculation a year or two or even a few months ago.  Not when they are at all times highs though. History suggests that their high price puts their promise as a store of value at risk. In previous monetary corrections when the price of Swiss francs, gold and silver exploded upwards… the peak was followed by a harsh… extended downfall.

Storing Wealth Made EZ

Today investors and businesses need a new mindset for storing wealth…a thought pattern that leads in new ways to  make a relentless search for diversification, necessity and value.

Here are some tips that lead to professional investing who can help you make it easy to zero in on three ways to store of wealth in the high risk years ahead.

Diversification  –  Non Correlated Investments

The first way to store value is to look beyond stocks, bonds and certificates of deposit .

Stocks, bonds and certificates of deposit are the traditional ways that most investors and savers store wealth.

These three asset classes usually offer non synchronized opportunity. Their movements are connected.  When cash investments make sense… shares and bonds may not be such good buys.  When shares are rising… bonds are falling and vice versa.

When economic and fiscal problems create systemic risk… as they are now,  the entire system is shaken and all three asset classes… stocks, bonds and cash may be at risk.

One non correlated type of investment is a managed currency or forex speculation investment.  Such investments are aimed at profiting on currency parity fluctuations which have little to do with stock or bonds so these fluctuations are not correlated to any of these asset classes.

An example is the Managed Forex Account offered by Jyske Global Asset Management in Copenhagen. These accounts offer a fundamentally managed forex service where every investor has a separate account.  This is a very low leverage service with a maximum of four times leverage depending on each individual’s risk profile.

Experienced JGAM currency traders borrow currencies they believe will fall in value and invest the loans in currencies they believe will rise versus the borrowed currency.  Then they use 24 -7 overview and stop losses to cut losses short and to let profitable positions ride.

Borrowed Currencies

Current JGAM is leveraging the account with one third US Dollar, one third Japanese yen and one third euro loans.

The dollar is weak in JGAM’s opinion because the Federal Reserve (Fed) is under no pressure to normalize policy any time soon and will keep the interest at the very low level until mid-2013.  This announcement makes the US dollar (USD) attractive as a funding currency, which should have a negative effect on the USD.

They have borrowed euro because on the other side of the Atlantic the eurozone has many unsolved debt challenges, which create a distrust of the euro. This distrust make investors sell euro (EUR).  The challenge is that both currencies cannot weaken at the same time (verus each other).

As of mid August 2011 Morgan Stanley’s (MS’s) EUR/USD target for Q3 is 1.40 and Bank Credit Analysts (BCA) predict 1.55. It is currently trading at 1.4240.

The Japanese yen (JPY) is a borrowed currency because it has strengthened so much due to the turmoil in the global economy. MS and BCA are both arguing that JPY inflows will remain substantial as long the uncertainty is intact.

However, Bank of Japan (BoJ) has intervened several times (sold JPY) in order to stem the JPY rally. BoJ has announced that it has increased the amount of its asset purchase program, which creates plenty of ammunition for further interventions. BCA is bullish on the JPY while MS is neutral to bearish.

Because of the current situation with financial uncertainty and divided expectations, JGAM decided to continue with the current loan mix, consisting of three equally weighted funding currencies.

Diversification is JGAM’s strategy and their existing currency positions (August 20, 2011) are:

The Singapore dollar (SGD) which has retracted upward lately (weaker SGD) and broke the 1.2100 resistance level against USD. However, JGAM remains confident of the SGD fundamentals and maintains their long SGD and short USD position. They are keeping their stop loss order at USD/SGD 1.2740.

The Canadian dollar (CAD) has suffered the past month and moved from 0.9433 to 0.9850 against the USD.  The sudden change in sentiment happened on the back of softening economic data and in generally weaker commodity currencies. However, the Canadian economy is outperforming its southern neighbor and Bank of Canada (BoC) should gradually normalize fiscal policy while odds of additionally Fed easing are rising. The diverging monetary policies should over time push USD/CAD lower (stronger CAD). Therefore, JGAM has kept this position.

Learn more about JGAM’s forex account for Americans from Thomas Fischer at fischer@jgam.com

Learn about Jyske for non Americans from René Mathys at mathys@jbpb.dk

 (GRV) Mars Hill Global Relative Value ETF

Another non correlated investment is the Mars Hill Global Relative Value ETF (GRV).   The goal of this ETF is to generate consistent positive returns in excess of the average annual return of the MSCI World Index using  a “Relative Value” approach to identify long positions within the major global regions that they expect will outperform the Index and an equal amount of short positions within the major global regions that they expect will underperform the Index.

This core long/short portfolio construction is designed to mitigate the directional influence of the global equity markets and instead seeks to profit from the spread between its long and short positions, which are prevalent throughout flat, rising and falling market environments.

This ETF reduces market exposure as its investments are fully hedged like a hedge fund, but as a New York Stock Exchange traded share has an open book so investors can see the high degree of risk management. The short positions offer a hedge against a decline in global equity markets, while concurrently offering an opportunity to even generate positive returns in such an environment.

The Fund employs an equal amount of long and short positions regardless of market direction so can profit whether the market is on a rise or fall.

The Fund’s Relative Value approach looks for attractive positions that bring added return and liquidity for the risk.

Because of the long/short strategy, the performance positions create a return stream that is expected to have a low correlation with both stocks and bonds.

This GRV ETF invests in many countries, sectors and industry groups to provide global diversification.

Necessity – Invest in Agriculture and Water

farm water

One reason Merri and I purchased our Blue Ridge farm is an abundance of…

farm water

spring fed water and dozens and dozens of artisian wells.

The second way to store wealth is in necessities.   No matter the state of the economy… basic necessities remain… food clothing and shelter.

Clothing perhaps can wait… but eating and drinking cannot.

Water is becoming a scarce resource yet investment in water treatment and infrastructure has been low due to artificially low prices.  This trend is changing as supply and demand realities  overwhelm political expediency.

Water is becoming a leading global commodity as the world population increases and increases the demand for clean water.  Global water demand has increased almost twice as fast as population growth in recent years.

Global population growth and water withdrawals that are already 275% higher now than 50 years ago add trillion dollar potential to this industry.

Modern farming creates the greatest demand on water for agricultural irrigation, so investments in water also are investments in food.

Investments in shares of water processing companies can provide multi currency diversification.

For example, holding just these three shares diversifies savings globally into dollars, euro and Singapore dollars!

American Water Works Co. – USA –US Dollar. This company  provides drinking water, wastewater and other water-related services in multiple states and Ontario, Canada. The Company’s primary business involves the ownership of regulated water and wastewater utilities that provide water and wastewater services to residential, commercial and industrial customers. Symbol NYSE: AWK.

 

Veolia Environnement S.A. – France – Euro.  This firm operates utility and public transportation businesses. The Company supplies drinking water, provides waste management services, manages and maintains heating and air conditioning systems, and operates rail and road passenger transportation systems.  Veolia ADRS symbol at NYSE:VE

Hyflux  – Singapore – Singapore Dollar. Hyflux is a leading provider of integrated water management and environmental solutions with operations and projects in Singapore, Southeast Asia, China India, Algeria, the Middle East and North Africa. Symbol OTC: HYFXF

water share chart

This finance.yahoo.com chart of the Water Shares Index shows that water shares are down… a short term fear based drop on a long term fundamentally sector.

For greater diversification several exchange traded funds are designed to give a diversified investment in water.

PowerShares Water Resources Portfolio (NYSEArca: PHO)

PowerShares Global Water Portfolio ETF (NYSEArca: PIO)

Guggenheim S&P Global Water Index (NYSEArca: CGW)

First Trust ISE Water Index Fund (NYSEArca: FIW)

Necessity – Shelter – Real Estate

The collapse of American real estate prices combined with rising construction costs and the fact that the USA is growing faster than any other industrialized country in the world creates an outstanding store of wealth.

Studies have shown that Americans today occupy almost 20% more developed land (housing, schools, stores, roads) than 20 years ago.  By the late 1990s, 1.7 acres — the equivalent of about 220 parking spaces or 16 basketball courts — were developed for every person added to the population.

As America’s population expands from 300 to 400 million people the next 100 million people will at present standards create 73 million new jobs, about 70 million new homes and 100 billion square feet of non-residential space.

The overhang from the overbuilding in the mid 2000s cannot supply this demand for long.

Extraordinarily low US property prices are already attracting increasing numbers of people from around the world.  For example, Visit Florida reported that visitor numbers for the second quarter of 2009 were up 6.9% over the same period as last year to about 21 million visitors.  Estimates show that US visitors increased 5.3%, overseas visitors increased 17.3% and Canadian visitors 18.4%.  About 82 million visitors spent 60 billion dollars in 2010.

One way to invest in US real estate is with a US real estate ETF.  An August 5, 2011  ETF Digest article entitled “Top 10 Real Estate ETFs” points out that: “There is currently an expanding list of nearly 20 ETFs oriented to primarily REITs (Real Estate Investment Trusts) with more on the way”.

Included in the list are:

Vanguard REIT ETF(VNQ_) follows the MSCI US REIT Index which covers about 2/3 of all REITs in the U.S. market.

iShares DJ U.S. Real Estate ETF(IYR_) follows the Dow Jones U.S. Real Estate Index which measures the real estate industry primarily through REITs.

SPDR DJ Wilshire REIT ETF(RWR_) follows the Dow Jones U.S. Select REIT Index consists primarily of REITs in commercial real estate.

Good Value Equities

The third way to store value is with good value equities. This is traditionally the best long term investment.

A long term multi currency research project by asset allocation expert, Ibbotson Associates, looked at various returns over 95 years of differing assets classes under varied conditions.

The asset classes we bonds, T-bills. Equities, Housing and Silver. Over the entire 95 years the return was:

Equities: 11.9% per annum

Housing: 6.7% per annum

Bonds: 4.8% per annum

T-Bills: 4.6% per annum

Silver: 4.2% per annum

However the results were very different when the economy was split and viewed in five different conditions, Stable. Moderate Inflation, Rapid Inflation and Deflation.  Equities outperformed all asset classes except during rapid inflation when silver performed better and deflation when bonds were the best bet.

If stagflationary trends continue (inflation and recession) the economic slowdown will add a drag to the industrial and demand side of metals making them suspect as a dependable store of value.

The easiest way to diversify in equities globally is via an ETF  that tracks one of MSCI (Morgan Stanley Capital Index) Indicies.

The MSCI World is a stock market index of over 6,000 ‘world’ stocks. It is maintained by MSCI Inc., formerly Morgan Stanley Capital International, and is often used as a common benchmark for ‘world’ or ‘global’ stock funds.

The index includes a collection of stocks of all the developed markets in the world, as defined by MSCI. The index includes securities from 24 countries but excludes stocks from emerging and frontier economies making it less worldwide than the name suggests.

A broader index, the MSCI All Country World Index (ACWI), incorporates both developed and emerging countries.

Here are two US traded ETFs that give various global equity diversification.

The iShares MSCI ACWI Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Country World Index.

The Rydex MSCI EAFE Equal Weight ETF seeks investment results generally corresponding to the price + yield performance of the MSCI EAFE Equal Weighted Index. The MSCI EAFE (Europe, Australasia, Far East) Equal Weighted Index equally weights the securities in the MSCI EAFE Index (MSCI EAFE Cap-Weighted Index), which is a free float-adjusted market cap index that is designed to measure the equity market performance of developed markets, excluding the USA & Canada.

Having enjoyed global financial stability for almost 60 years, the mindset of most investors has become used to stocks bonds and CDs.  These investments have been considered as safe as the Western governments in an expanding industrialized work.

Not since the 1930s, when all financial institutions were questioned, has so much of the global economic system been shaken. This puts all stocks, bonds and cash instruments at greater risk.   The three ideas above and many professional money managers can help make the process of storing wealth in this risky world safer and easy.

Gary

Learn how to get my full  Multi Currency report here.

You can learn more about ETFs from Morgan Hatfield at Ruggie Wealth. Her email is mhatfield@ruggiewealth.com

Tom Ruggie of Ruggie Wealth was featured on the Flashpoint Talk Show last week.

ruggie-wealth

See Tom Ruggie on Flash Point here.

Join Merri, me and Thomas Fischer from JGAM in North Carolina this October.

 

Trading Down Part VII


Trading Down Part VII

This series has looked at why a huge new economic era will benefit US and Ecuador real estate.  We have also looked at a different Ecuador property for sale each step of the way.

See a link to see this message’s Cotacachi Ecuador property below.

First, this last report on “Trading Down” asks “What do the following have in common with big business and trading down?”

Ecuador and US real estate…

photo

Why would Merri and I buy a beat up 180 year old inn in Ecuador?

Christmas trees and Mexicans?

photo

Ashe County is one of the top Christmas producers in the US. Here is a Christmas Tree farm next to our farm.

North Carolina farm roads…

photo

We have put in miles of road on our farm.

Deer…

photo

Here is a nice buck I snapped sneaking though our woods.

Water…   

photo

We have a lot of water on our land… all running down the mountain.

Ecuador and US real estate… Christmas trees and Mexicans… North Carolina farm and roads… deer and water.

What do these all have in common with trading down?   What is their connection?  They are all connected because they all follow the same universal rule that follows the path of least resistance.

Christmas trees farms are everywhere in Ashe County.  Here they are being grown within the city limits of West Jefferson.  Because Christmas trees are cut and wrapped in late October, early November many Mexicans arrive in the mountains this time of year. We are seeing them everywhere.

They are following the path of least resistance to earn income and the flow north where there is work.

Photo floating to the left

We have put in over eight miles of roads on our farm shown in blue.

photo

Usually the first question people ask when visiting our farm is; “This is so remote how did you find this place”?   The second question is “How did you figure out where to put the roads?”

My answer to the road question is simple.  “I did not need a surveyor or engineer.  We have a lot of deer on the farm. I simply followed the deer trails.”

photo

Here’s two does I photoed feeding in our front yard.

The deer follow the path of least resistance so their trails produce roads that run as level as you can get.

The entire farm is a reflection of this universal rule… not a farm in the Blue Ridge sense, but a…

photo

global headquarters with a…

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barn like seminar hall hung over Little Horse Creek…

photo

barns converted to apartments and…

photo

farm houses and…

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nestled on the creek and…

photo

tucked in…

photo

remote parts of the woods, with…

photo

cozy accommodations so guests from around the world can…

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meet to share global ideas about health and wealth… investing and business.

Those who grew up here are selling their farms so they can move into the city and those like Merri and me from the city are moving to the farms… as technology… cars… trains…. planes… the internet and low cost communications change their utility.

All these… like water following the path of least resistance and flow…

photo

downhill.

This brings us to the US.   The price of American real estate… compared to European and Japanese has dropped enormously in the last several years.  Even more than it seems when the devaluation of the US dollar is factored in.

This gives America an advantage… cheap offices… cheap gas stations… cheap homes… cheap factories.

Trading down is the process of mankind following the path of least material resistance. Trading down is the process of  big business following the path of least resistance.

Energy of industrialization has been run on  human fuel, farmers moving from rural to urban and suburban environments.  From the farm to the factory as they dramatically improve productivity at a very low cost.  Their enhanced wages increase their consumption.   In short the burst of increased affluence over the past several centuries has been fueled by cheap labor enhanced mainly by fossil fuels.

In this era past big business followed the path of least resistance wherever labor was cheapest in the world.

Globalization and improved technology plus a serious 2008 recession reduced the costs of US labor and enhanced the likelihood that the eleven American benefits we have reviewed in this seven part series will again help the USA be an important leader of mankind into the next socio-economic era.

What About Ecuador and Trading Down?

Ecuador gains from this trading down process in several ways.   First Ecuador real estate and labor were really inexpensive to begin.   Since Ecuador uses the US dollar as its currency, it benefits from the greenback’s fall as Ecuador real estate, labor and debt become less expensive.

In this process of trading down, technology creates a circular flow… just like the flow of farmers to the city and urban dwellers to the farm.  Immigrants move to America as Americans (who no longer have to labor) move out of the US to a less expensive and less cumbersome lifestyle.

The two big losers in the current soci0-economic pact are lenders to the USA and those on fixed incomes.

Ecuador real estate potential is enhanced by increased inflation and this is why Ecuador real estate investing makes sense. Messages at this site monitor investments in Ecuador.

The collapse of the US economy made real estate in America more affordable… but reduced income, jobs and wealth also.  This has forced the US government to stimulate the economy at the expense of the US dollar.  This will cause inflation.

This is forcing many middle class Americans to move to less expensive areas in the US and abroad.

60 million baby boomers have begun to retire.  Many of their pensions and social security will be severely squeezed by inflation, leaving these people with one of five options.

#1: Keep working
#2: Move to less expensive areas within the US
#3: Export their retirement
#4: Live in near poverty
#5: Die

This is one reason I  believe in Ecuador.  Imagine this. 60 million boomers will retire over the next 20 years. We boomers are the most spoiled group of consumers as a demographic class that has ever existed on earth. We were promised the world. We were given the world. Now the magic is about to disappear.

Assume that 10% of these boomers will decide to move to less expensive countries. That’s 6 million people. Where is the most likely place to go? Eastern Europe offers great potential but is a long distance from the US.

Estimating the Number of Americans Who Move Abroad.

My estimates at 105 may also be low. An article in Barrons entitled, “A new life in Panama” by Bob  Adams tells of  a silent immigration of Americans retirees and more, seeking to  work and live in other nations.

I have been writing and speaking and urging people to consider an international life for not quite 40 years. Yet the scale of the  immigration that is taking place now surprises even me.  The author of this article did a survey with over 115,000 respondents.

Any relocating for less than two years or because of military, government or their jobs was eliminated.  The survey uncovered uncovered that 1.6 million  households have already made the decision to relocate. 1.8 million households are seriously considering relocating and 7.7 million households are somewhat seriously considering relocating. The survey suggests that in total, an astounding 10% of American households are considering relocating abroad and another 10% are considering owning a home to either vacation or live part time abroad or 20% of Americans are n the move!

More surprisingly the largest group which is making these plans are in households aged 25 to 34.

If this survey is anywhere near correct (I will assume that Barron’s vetted this at least a bit), then the wave of Americans headed abroad is larger than I believed.

So where will these Americans (Canadians, British, Australians, Kiwis and Continentals who are leaving their homelands as well) go?

Canada is out…too expensive and too cold. Most people will head south.

Mexico stands to be #1. Prices there have risen and there is a lot of anti-gringo sentiment.  After all there have been numerous Mexican-American wars. The building of a fence across the border will not help either.

The law and order crisis in Mexico has also grown. Yet it’s still probably the number one benefactor of this flow due to location.

Cuba, when it opens, will be ripe and good as well. A great place to buy when you can assume no negative political circumstances. The low end Caribbean is also good except for those darn hurricanes that will put lots of people off…plus many water and transportation problems and the fact that few of the islands have a real infrastructure.

Panama is good. There is a lot  of English spoken, many yanks already there, but weather is lousy if you want to be in town (hot and humid) and prices are no longer low.

We see many Americans now moving from Panama to Ecuador.

Ditto for Costa Rica.  The rest of Central America lacks infrastructure though there are some nice gringo settlements although they are expensive.

Colombia and Venezuela are the first nations with the potential for full fledged economies  and infrastructures after Panama and Mexico. They can be wonderful places but security and political risks stop most from going there for now.  If the security/drug/crime issues are resolved and image cleans up…go buy in Colombia.  If the political system shifts in Venezuela this could be a great opportunity.

Argentina & Uruguay? Both Buenos Aries and Montevideo should do well also.  They are further from North America but both have very European flavors.

Ecuador, 3 hours and 45 minutes from the US will benefit as the first nation with a full infrastructure and really low cost of living.

If Ecuador gets just 10% of six million Americans who leave the US, imagine what this means to this nation of 11 million.  This is more than a 5% increase in population. However look at what it means in dollars!

According to the CIA World Fact Book, Ecuador has a Gross Domestic Income of $4,300 per annum per person. That makes a total GDP of $47,300,000,000.

Imagine what happens if the 600,000 gringos have an average income of $18,000 a year per person. That adds $10,800,000,000. This is an annual income that almost equals 20% of the entire national GDP! This is one reason why Merri and I include Latin equities in our investment portfolio and are buying more and more real estate in Ecuador.

Every cloud has a silver lining and two clouds casting shade on the greenback’s value are liberal money supply and political interference to support presidential elections. The silver lining comes in the form of profits made in places where fed up Americans and Canadians decide to go when they leave home.

This is why we have purchased a hotel, an office building, 13 condos and houses, and a 900+ acre hacienda in Ecuador over the last 10 years.

ecuador-health

Our hacienda Rosaspamba.

What if the 11 benefits are not enough?

This report is about global diversification with the US and Ecuador as parts of an overall plan.

I believe the US debt is high and will cause the US dollar to fall, so this report is about being short American currency because the advancements in the US will be due in part to a declining greenback.

As one of the first Americans to write about being an international citizen, I am suspicious of my US enthusiasm.  But I am suspicious of Europe, China and India as well.

That is why since the release of my first book “Passport to International Profit” in the 1970s I have preached and practiced being a One Man Multinational.

The core message in “Passport to International Profit” was to become a one man multinational where you live in one country bank in another country and earn in another  a six point command posture which is to:

Let’s take this one step further. To have a fulfilling lifestyle make your residence in a place you love and want to be. Do not limit yourself to where you are or where you were born.

More than 40 years after we left the USA,  Merri and I still believe that being global is vital from an investing point of view and enlivening for one’s lifestyle.

This does not mean that the US should be excluded as a place to live or invest.

The 11 American benefits reviewed in this series suggests that the USA may remain a leader in the upcoming socio-economic evolution of “Trading Down”.

That is why Merri and I have increased the weighting of our portfolio in the USA.

That is also one reason why Merri and I love Ecuador as a place to own real estate and live.

Gary

Power of Global Investing Diversification


There is great power in global investing diversification.

Investment-diversification

Sunrise at our North Carolina farm.  We diversify because the sun always shines somewhere.

Pure capitalistic theory says that in the long run… a global economy is good for everyone….overall.

Technology gives us the ability to buy from those who serve us best, wherever they are  in the world.  Why should we buy poorer quality goods locally at a higher price when someone from elsewhere can serve us better and for less.

Plus if we produce something better than anyone else we should be able to sell our product or service anywhere in the world as well.

Floridians and Californians buy apples from Oregon and North Carolina.

Oregonians and North Carolinians buy oranges from Florida or California because these areas each have special advantages… excellent conditions to produce and deliver those fruits clear across a continent, better and for less.

Global market advantages can be based on geography, infrastructure, skills sets, labor costs etc.

The theory of globalization is good but the process is not smooth. Globalization creates unemployment in many places and distorts many economies in the short term.  This usually pushes the process into the political arena and gets governments involved.  Governments often act based on political considerations rather than for good, long term economic reasons.

Plus business if given a chance… does not always encourage a free economy either.  Give big business a monopoly and they’ll tie up free trade even faster and much more efficiently than a government.

There is little, as businesses or investors, that we can do do to change these facts.

We are usually better off to adapt and take advantage of whatever situation exists instead.

This is what creates power in diversification.

Investment-diversification

Sunrise at our Ecuador hacienda.

The sun always shines somewhere. When our business and investments are diversified, we just have a better chance that our investments and business will be somewhere where there the business climate is sunny.

For example… a recent message Ecuador Beats Inflation looked at excerpts from a recent AOL.Money article by Jim Kuhnhenn entitled “White House Projects $9 Trillion Deficit”: In a chilling forecast, the White House is predicting a 10-year federal deficit of $9 trillion — more than the sum of all previous deficits since America’s founding. And it says by the next decade’s end the national debt will equal three-quarters of the entire U.S. economy.  But before President Barack Obama can do much about it, he’ll have to weather recession aftershocks including unemployment that his advisers said Tuesday is still heading for 10 percent.  Overall, White House and congressional budget analysts said in a brace of new estimates that the economy will shrink by 2.5 to 2.8 percent this year even as it begins to climb out of the recession. Those estimates reflect this year’s deeper-than-expected economic plunge.

Yet at the same time a Wall Street Journal article entitled “Ecuador Inflation To End ’09 Below 4%”  By Mercedes Alvaro shows that Ecuador’s economy is growing.
Here is an excerpt: QUITO (Dow Jones)–Ecuador’s inflation rate will end 2009 below 4% and the economy will grow close to 2% this year, President Rafael Correa said Wednesday.

“The annualized inflation will be below 4%,” Correa said late Wednesday in a radio and TV address. “There is not recession. Ecuador will have a growth of about 2%.”  “We have faced the biggest world crisis successfully,” Correa added. Early Wednesday the central bank said the Ecuadorian economy overall is poised to expand 1% in 2009.  Ecuador’s gross domestic product grew 6.52% in 2008 while inflation reached 8.83%.  According to central bank data, Ecuador’s liquid international reserves stood at $4.0 billion as of Aug. 21.  Last week, the central bank president, Carlos Vallejo, said that the government will repatriate in the coming days some $300 million of Ecuador’s liquid reserves invested abroad.  Ecuador’s liquid international reserves include public-sector deposits with the central bank, revenues from oil exports, loans from multilateral lenders and minimum reserve requirements from private banks.  In May, the central bank established a liquidity requirement forcing private banks to keep at least 45% of their assets and investments in Ecuador to draw back cash and boost domestic liquidity.

Investment-diversification

Sunrise on…

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Sunrise over Mount Imbabura.

Because I am diversified in Ecuador, Georgia, Florida and North Carolina, in 2007, I was selling Florida property at the top of the market.  I was buying Ecuador real estate with those returns. Now that Florida  is down and Ecuador real estate has risen,  I am selling Ecuador real estate and buying in Florida.

A huge portion of all profits in business and investing come from timing.  Most commodity, stock and real estate markets go through ups and downs.  If you plan your investments and liquidity so you sell only at favorable times, global investing diversification enhances your chances of always having assets someplace where there is a seller’s market.

Investment-diversification

Sunrise shot from our hotel Meson de las Flores.

So when you think Ecuador… or Mexico or Panama… or wherever…. also thing diversification.  The sun always shines somewhere and your changes of financial suntans increase when you diversify.

Gary

The greatest asset of all is the ability to labor at what you love wherever you live. This brings everlasting wealth.

This is why we are providing a special three for one offer with our  course Tangled Web… How to Have an Internet Business

This course can help you create your own internet business.

Our emailed course “Tangled Webs We Weave – How to Have Your Own Web Based Business” is a continuing educational program.  You receive the first 28 lessons when you enroll and a new lesson every week or two.

This course teaches how to create a web based business and is developed from the ongoing experiences that we have from our successful and profitable internet business.

This course is well worth the enrollment fee of $299… but currently you also receive two additional courses FREE.

The other two courses are #1: International Business Made EZ, and #2: Self Fulfilled – How to be a Self Publisher.

These two courses have sold for $398 and thousands have paid this price. We add them to your course, at no added cost, as I believe they will help you develop a better business in these crucial times..

Even Better Get All three Courses Free

To make this offer even more compelling,  I am giving everyone who enrolls in our North Carolina or Ecuador International Business & Investing seminar in October or November all three courses, “Tangled Web… How to Have an Internet Business Course,”  “Self Fulfilled- How to be a Self Publisher” and “International Business Made EZ” free.

internet-business-idea We always conduct our autumn North Carolina course on the first weekend of October… the best time to enjoy  the leaf change.

Join us with Jyske Bank and my webmaster David Cross in West Jefferson North Carolina. Learn more about global investing, & how to have an international business at the seminar.

Oct. 9-11 IBEZ North Carolina with our webmaster  David Cross & Thomas Fischer of JGAM

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You’ll see views like this on your way to West Jefferson for the October seminar.

Or head south to Ecuador!

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October 16-18 Ecuador Southern coastal tour ONLY FOUR SPACES LEFT

Oct. 21-24 Ecuador Import Export Tour

Oct. 25-26 Imbabura Real Estate Tour

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In Cotacachi the weather is always spring like.  Here is the village plaza near our hotel Meson de las Flores.

Join us with Peter Laub of Jyske Global Asset Management in Ecuador. Learn more about global investing, how to have an international business at the seminar.

Nov. 6-8 IBEZ Ecuador Seminar

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Let our friendly staff at Meson de las Flores serve you.

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

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This shorts weather photo was taken from our beach penthouse in February.

Join us in the mountains and at the sea.  Attend more than one seminar and tour and save even more plus get the three emailed courses free.

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

Read the entire article Ecuador Inflation To End ’09 Below 4%

Ecuador Jobs


Ecuador farming is one way to create your own Ecuador job.

In a moment we’ll see how to diversify globally to beat  inflation and protect your savings. First, let’s look at ways to earn income abroad.

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Ecuador’s land is rich.

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Here is some land recently purchased by a reader just outside Cotacachi… beans and blackberries are grown here.

Many readers write and ask about getting work in Ecuador.  Jobs are scarce, do not pay well. This is why our foundation is devoted to creating employment… but for Ecuadorians not expats moving down.

We do help our readers learn how to earn income abroad with their own business because this helps have work in Ecuador and often enhances employment in Ecuador for Ecuadorians as well.

I was delighted to read this note about earning income from Ecuador farming. The reader shared this:

Hi Gary,  I just wanted to drop you a note making you aware of another idea  we came across to produce some income in Ecuador.

My wife and I have retired in the Cotacachi area ( we live in Ibarra now) and have been looking at some income producing ideas as we are only 52 years old and not ready to sit in out rocking chairs just yet. Believe it or not, we have settled on becoming chicken farmers!

My wife and I have agreed on a partnership with a couple that own a farm. We are putting up the money to fix up a building on their land and turn it into a chicken coop.

We then purchase the chicks at 55 cents each, waterers, feeders, heaters, and feed . Our partners make sure the chickens have water, food, heat, and a good clean environment. We then sell the chickens after raising them for 48 days back to the company we bought them from. They are currently offering 90 cents a pound.

Overall, we are making about $1.00 a chicken every 7 weeks or so. Our chicken coop holds 2400 right now and we plan to build a couple more structures that will hold 14,000.

We never imagined that when we moved here, it was possible we could become chicken farmers. Our friends and family back in the States are in disbelief.  Interesting to say the least!

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Merri and I love our chickens.  We…

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let them roam free. There is something wonderful about collecting the eggs and they are so much better than those available in the store… thick shells…. deep orange yolks.

We helped another reader buy….

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this chicken farm just outside Cotacachi…

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at a very low price.

The greatest asset we can have is the ability to earn anywhere in the world doing what we enjoy. This is why we offer our course Tangled Web… How to Have an Internet Business.

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.

Sept. 17-21 Ecuador Super Thinking + Spanish Course

Sept. 23-24 Imbabura Real Estate Tour

Sept. 25-28 Ecuador Coastal Real Estate Tour

Learn more about global investing, how to have an international business and diversification in Ecuador at the seminar.

Oct. 9-11 IBEZ North Carolina with our webmaster  David Cross & Thomas Fischer of JGAM

International Investment Allocations

Jyske Global Asset Management just finished altering their managed portfolios after their late August Investment Committee.

They made the following changes to their managed portfolios:

Their asset allocation exposure remained  the same. They are:

* Neutral on Fixed Income (i.e. bonds and currency positions other than dollar)

* Underweight on Equities

*Overweight on Alternatives and Cash

The gearing on leveraged portfolios has been increased a little to adjust for the deleveraging effect of positive development on the value of portfolios.

Here is what that means. If an investor desires a one times leverage and their portfolio started with $100,000, they added $100,000 so a total $200,000 was invested.  If the portfolio has risen over 15% in the last six months, its value is now about $230,000.  The leverage is now less than one time… so about $20,000 more is borrowed and invested.  This will put the portfolio at $250,000 with a $120,000 loan.

JGAM has also reduced the dollar exposure in their portfolio. They belive as I do that the US dollar is likely to fall versus other currencies.

They have added more Brazilian, Mexican and New Zealand bonds to some portfolios.

They were so underweighted with equities in some portfolios that they added some shares… though they remain underweight.

The new shares added were: Group4 Securicor, Gazprom,  iShares S&P Global Clean Energy and iShares FTSE BRIC 50.

You can see a review of the portfolios and the shardes above as a Multi Currency Course subscriber.

Be sure to see about a new 100 mile per gallon electric car at Jyske’s Financial Friday WebTV here

Send questions about Jyske JGAM and their portfolios to Thomas Fischer (US investors) at fischer@jgam.com or  Rene Mathys (non US investors) at mathys@jbpb.dk

Gary

October & November Ecuador Tours

Here is a recent comment about staying about a seminar at our hotel:  We both thoroughly enjoyed the workshop and really appreciated Mauricio and Alberto’s help, as well as the help from all of the hotel staff.  Cotaccachi truly is a magical place and we feel blessed to have had the opportunity to stay Meson.  We really hope we’re both lucky enough to return in February.

October 16-18 Ecuador Southern coastal tour (early sign up before Sept. 1, $499 per person).

Oct. 21-24 Ecuador Import Export Tour

Oct. 25-26 Imbabura Real Estate 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


South Ecuador Beach Property


New ideas offer great opportunity so our south Ecuador beach property tour has attracted attention.

In a moment we’ll look at another green battery thought. First here is a south Ecuador beach real estate advertisement placed by our friend and attorney, Dr. Andres Cordova.

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I’m glad to see you are doing a coastal series.  I have a program that can provide your readers with opportunity, value, service, new horizons and community.

I am very focused on Salinas real estate, especially in the Punta Carnero area.  The trend is focusing on Punta Carnero, where good planning and zoning and great initiatives will create a major opportunity. It can be the example of what Salinas could have been. It’s very early on in the process, hence the major opportunity.

I see tremendous potential and if investors and buyers are to get at the beginning of the wave that’s coming, timing is of the essence. Those who come in early on will reap the most rewards. Elements are coming together, synergy is ensuing; this is snowballing big time. Once I explain why I believe this to be occurring you to will see it as vividly as I do.

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South Ecuador beach photo from Dr. Andres Cordova.

My idea is to not only offer value, but also services, information and structures to help investors and expats take the plunge with the most happiness, with the least stress. It’s about quality of life and sound investing.

My plan entails 6 participations of $35.000 each. Let me explain the process:

–          Each participant invests $35,000.
–          A 0.5 beachfront property in Punta Carnero is purchased and placed under a trust.
–          A 12 story, 36 condo building is designed for the lot.
–          A preconstruction sales campaigned is launched.
–          Once 30 condos are sold the investors will get a 2 bedroom, ocean view condo each, valued at $135.000.
–          The trust guarantees pre-construction buyers and investors too.
–          If project does not take off in a limited time, trust will sell the property and reimburse investors.

An investment of $35,000 offers the chance of a $135.000 condo in 18 – 24 months. The cost of the land at the time should very well suffice to cover the investment and then some.

We want to really, really stand apart on virtues of value, good design and really understanding the wants and needs of our prospective customers. We have a major teamed lined up to pull this through. I can explain the opportunity to great depth; it makes for a very compelling case.  Andres.

Andres email address is afcordova@accessinter.net

We have not reviewed this opportunity and investors should use all due diligence.

See more about the South Ecuador Beach Real Estate Tour

New Green Investing Battery Thought.

Yesterday’s message looked at a green investing opportunity for major advances in battery technology.

Several readers sent comments like this:

Hi Gary,  Thanks for your article.  I believe that you are on to the right track in looking for ways to store renewable, energy, especially PV & wind, with batteries.  I came to this same thought sometime ago and, after some research, it lead me to Zenn Motor Co. (ZNNMF).  They now own about 10% of EESTOR, which is close to presenting a truly revolutionary energy storage device.  It is essentially a high efficiency capacitor.  I won’t go into the technical aspects because you can read more than you want on some of the blogs.  If the product works even remotely close to what they are projecting, it will cause tremendous and positive change in our world.  If it doesn’t, I will have lost a few $, but the risk still looks worth it to me.

I googled  Zenn Motor Co. (ZNNMF) and read a lot of positive data about this but also saw some negative information.  This is a very high risk venture deal and I am not a penny stock venture risk taker but those of you who are may find this of interest.

Another high risk environmental share that is far more interesting to me is a far more stable company, Vestas, the Danish wind turbine manufacturer.  Vestas was one of the big winners in our green portfolio that we created with Jyske Bank.  Jyske is currently recommending  Vestas. You can see why at Jyske TV’s latest Financial Friday.

This show also shows why the US dollar may rise in the short term, but is likely to fall long term and also looks at why no Asian currency is ready to take over as reserve currency of the world.

The greatest opportunity (and risk) always comes from new ideas.  Whether  in new technology or in new places… those who jump into the winners first make the most.   Portfolio theory shows that a well managed small diversification into higher risk deals enhances the overall return of a portfolio without creating a great deal of more volatility in the portfolio.  So until next message, may all your risks be great ones.

Gary

Combining good international risk investments with the greatest asset of all, the ability to earn wherever you live, brings everlasting wealth.  For details contact Steven Stark at sstark@perfgogreen.com

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.

Here are comments from one seminar delegate about the way we help: I really enjoy your Ecuador e-mail every day, especially because of the eclectic nature of the subjects. The recent postings on Loja were great, as my wife and I visited Loja for two nights and a day when were were in Ecuador last March. It is a beautiful town, and we met some very nice people there.

Sept. 17-21 Ecuador Super Thinking + Spanish Course

Sept. 23-24 Imbabura Real Estate Tour

Sept. 25-28 Ecuador Coastal Real Estate Tour

Learn more about global investing, how to have an international business and diversification in Ecuador at the seminar.

Oct. 9-11 IBEZ North Carolina with our webmaster  David Cross & Thomas Fischer of JGAM

October 16-18 Ecuador Southern coastal tour (early sign up before Sept. 1, $499 per person).

Oct. 21-24 Ecuador Import Export Tour

Oct. 25-26 Imbabura Real Estate 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.

International Investment Variables


There are many international investment variables we can never see when we invest or start a business.

Here are links to three ideas that can help international investments and an international internet business bring you everlasting wealth.

The first link is about  how to deal many international investment fundamentals beyond our control. such as the full moon.

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Full moon photo I took in Cotacachi Ecuador.

The second link looks at the new Thomas Fischer’s report “Money & More” & Jyske Global Asset Management’s current international investment portfolio positions.

The third link looks at an Ecuador ice cream business idea.

Knowing how to earn wherever you live… all the time… is the greatest asset of all.

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 seminars below.

international-investment-course

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.

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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.  These woolen and mixed scarves are one of the most popular items.

Sept. 17-21 Ecuador 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.