Tag Archive | "real estate markets"

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…

Investment-diversification

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

ecuador-tours

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

Or head south to Ecuador!

ecuador-tours

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

ecuador-hotel

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

ecuador-hotel

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

ecuador-hotel

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 Spanish


Our Ecuador Spanish course offers a secret that can help keep up  in a fast changing world.

See thirteen important demographic facts below that apply to everyone who has an interest in business and investing.  These facts also reinforce the importance of Spanish as a second language.

Most of the western world is multi lingual… except North America.

Ideally everyone that moved to North America would learn English…. just as North Americans moving to  South America should learn Spanish.

This does not happen in the real world.  Canadians do better if they have some French and Americans… Spanish.

ecuador-seminars

Enjoy the beauty of Ecuador as you learn.

Whether we like it or not… knowing some Spanish makes us more competitive in our day to day multi lingual world. Technology and the earth’s growing population makes the global economy of increasing importance to mankind’s evolution.   This will increase, not decrease the clash of  languages.

Spanish is the second most spoken language and its importance is growing in the USA.

Here are 13 of 23 facts presented by the Spanish Translation Service that shows why we dare not be a one language person in a multi lingual world.

1.   According to the 2000 Census, for the first time, non-Hispanic whites are the minority population in the 100 largest U.S. cities.

2.    The US Census Bureau predicts that ethnic minorities, encompassing African Americans, Hispanics, and Asian Americans, will represent more than half of the US population by 2040.

3.    Latinos (35 million strong) have increased their presence in the U.S. population by 58% over the last 10 years, and recently surpassed African Americans as the largest ethnic minority (2000 U.S. Census,).  While non-white Hispanic population grew by 3%.

4.    Hispanics are the fastest growing minority group in the U.S. and are projected to contribute two-thirds to the growth in the size of the high-school-age population over the next decade (U.S. Dept. of Education).

5.    In 2000, one of every five new entrants into the workforce was Hispanic (Census).

ecuador-seminars

Enjoy great food during meals and coffee breaks like this fresh mango and raspberry juice.

6.    In California, the Hispanic/Latino minority population has now become the majority (huge language implications).

7.    Gregory Spencer of the Census Bureau was quoted in newspapers citing changes in the workplace and marketplace and said “if you want to sell things and go where the growth is, about half of your market will be people in their 50’s, and the other half will be the Hispanic and Asian populations.”  According to the Census in 1996 Latinos and Asians will represent more than half of the U.S. population growth every year for the next 50 years.  Source:  Census Bureau, 1996.

8.    The Latino population alone is now 35 million strong in the U.S. with over $45 billion in buying power (2000 Howell).

9.    By 2050, the Census Bureau projects, Hispanics will be about a quarter of the U.S. population and blacks less than a sixth.

ecuador-seminars

Our Spanish course is conducted at the Cotacachi Museum which is…

ecuador-seminars

next door to Meson de las Flores.

10.    Hispanic American purchasing power is growing at two times the rate of general public.

11.    Latinos grew at four times the rate as the national population between 2000 and 2002, according to information released this week by the U.S. Census Bureau (2003 DiversityInc.com).

12.    “The official population estimates now indicate that the Hispanic community is the nation’s largest minority community,” said Census Bureau Director Louis Kincannon in a statement (2003 DiversityInc.com).

ecuador-seminars

We travel to markets each day and on our real estate tours by luxury coach.

13.    While the U.S. population as a whole is getting older because of the aging Baby-Boomer population, the Latino population is getting younger. More than one-in-three (34.4 percent) of the Latino population in the United States is under the age of 18. This ranges from 37.1 percent of Mexican Americans below the age of 18 to 19.6 percent for Cuban Americans below that age.

Spanish is the second most important language in the world. Yet our educational system did not teach us how to communicate with or understand this culture. Learning Spanish is valuable, important and can be fun!

You can attend our last 2009 Super Thinking + Spanish course (that helps you learn Spanish in less than a week)  this September 17 to 22, 2009. (Arrive Quito Sept. 16. Depart Sept.  22 or 23, 2009).

Even better we have created a special program so you can also attend our September real estate tours, that take place right after the Spanish course, (September 23 – 24 Ibarra real estate tour and  September 25-28 Ecuador coastal real estate tour) at a substantial discount.

ecuador-seminars

See real estate for sale ranging from small houses like this, to…

ecuador-seminars

gated communities to this hotel to…

ecuador-seminars

ecuador-retirement-farm

organic farms, to…

ecuador-seminars

property on this beach and…

ecuador-seminars

property in Manta.

Enjoy up to 11 days of great Ecuador weather, solve one of the biggest communications problems that face a great deal of the English speaking civilization, plus learn the Ecuador real estate markets.

This is way to enjoy the cool mountains, bask in the warm Andean sun and learn Spanish and Ecuador real estate.

This allows you to really zero in and refine Spanish with the Spanish course first. Then you put what they have learned into practice the remaining days they are in Ecuador.  To attend all three courses would normally cost $1,797 for one person or $2,497 for a couple. 

This price compared to many seminars is already low and represents a considerable savings. Under our special multi course adventure you can save up to $648.

This makes it entirely possible to spend time in Ecuador, gain valuable knowledge about health and wealth, plus perfect your Spanish.

We hope you will join us in Ecuador.

Gary

Super Thinking + Spanish: Sept. 17 to 22, 2009. (Arrive Quito Sept. 16. Depart Sept.  22 or 23 2009). Enroll here

September 23 – 24 Ibarra real estate tour $499 or $749 for two  Ibarra real estate tour

September 25-28 Ecuador coastal real estate tour  $499 or $749 couple. Enroll here.

Here are your multi tour savings.

Attend any two Ecuador courses or tours…$999 for one.  (save $299).

$1,399 for two (save $349).

Attend any three Ecuador courses or tours…$1,199 for one.  (save $598.)

$1,749 for two (save $648).

Read all 23 facts presented by the Spanish Translation Service that shows why we dare not be a one language person in a multi lingual world.

Multi Currency Risk Premium


Getting a multi currency risk premium is important because the government bail outs that will be announced in the weeks ahead, whatever they will be, will accelerate inflation. Multi currency risk premiums will help beat the price increases which have already been bad enough.

Emerging real estate and emerging bonds (seen below) are two ways to gain some extra multi currency premiums that can help fight this rise in costs.

The three main multi currency investments that fight inflation are:

#1: Commerce. (normally equities but sometimes bonds as shown below).

Prices have risen on these condos, but still offer an incredible value, plus until October 1, Kjetil is offering the original price (a $10,000 savings) to Ecuador Living subscribers.

For details on the units below contact Thor Anderson at thor@sanclementeecuador.com

#2: The raw materials required by commerce (commodities).

#3 Real estate (required in commerce for production and consumption).

Some real estate markets offer a better risk premium than others. This is what I like about Ecuador. So few people have been there so the majority of the investment market get it wrong. They misunderstand the politics, the people, the rumors of crime, the entire ambiance of the place. This has kept Ecuador real estate prices low. Prices are beginning to rise but are still low in terms of Latin America where a deluge of US, Canadian and European investors are now arriving.

This is why I have been harping on the $79,000 condos (where Merri and I bought) north of Manta.

Ecuador-beach-condo

I doubt that investors will ever see prices this low again in our life time for the quality of construction and so much green space. There are only 63 units on 12 are that include 5,000 fruit trees and an organic vegetable garden. (This one shown above is of course not quite finished.)

Ecuador-beach-condo-clubhouse

Plus such views like this sunset shot I took.

Ecuador-beach-condo-sunset view

Prices have risen on these condos, but still offer an incredible value, plus until October 1, Kjetil is offering the original price (a $10,000 savings) to Ecuador Living subscribers.

For details on the units below contact Thor Anderson at thor@sanclementeecuador.com

However during times (like now) when there is a lot of volatility, some investors need a place to park cash while they wait for the picture to clear.

Where is safe when even money market funds have risk?

The answer is “every type of investment has risk…especially now”. The key is to at least be properly paid for taking it.

Here is a simple fact that can help you spot distortions so you get the maximum bang for your at risk buck.

Industrialized economies seem unable to increase their output at any rate better than about 3% percent a year on a sustained basis. This seems to be a universal standard of human evolution.

This is a huge fact as it means we should not expect major economies to grow faster than about 3%.

This is a baseline that can help us sort out whether an investment has extra or too little risk premium because the baseline for safe savings than should be about the same as industrial growth…3%…if the money supply is keeping pace with the economy.

Bank accounts and government bonds, for example, are perceived as the safest investments (especially if government guaranteed). A look at their long term history shows that they pay about 3%. So if a bank account or government bond pays less…in the long term it’s bad. If it pays more…that’s better. Yet the idea is that bank accounts will not really make money. They will just keep up with growth…at 3%.

Knowing this, rather than wasting time trying to avoid risk…which cannot be done, we can assess risk and what we are paid to take it instead by asking:

#1: How much risk is there in any particular investment?

#2: What perceptions do the market have of the risk?

#3: What risk premium is due?

To get real growth requires taking risk. If an investment appears to be less safe than the safest (that pays 3%) the less safe investment will pay more than 3%. The extra payment is called a risk premium.

Bonds pay more than bank accounts because they are perceived to be less safe. Stocks pay more than bonds because they are perceived even riskier. Emerging market stocks pay more than major market stocks. Emerging market bonds pay more than major markets bonds.

Over the long run, bonds issued in countries and currencies perceived to be stable pay 5% to 7%…if they are issued in their own currencies.

Stocks in major countries should pay 7% to 10% annual return in the stock market as a function of global growth, long term earnings growth plus risk premium (above bank accounts and bonds).

To attain higher growth than 7% to 10% investors must either increase risk, trust luck or spot distortions.

This is good because the market is almost always wrong. Most investors always trying to avoid risk. Most investors dump their wealth into investments that are perceived to be safe. This creates excessive demand and lowers value and actually makes the perception wrong.

Knowing this helps wise investors spot trends created by distortions.

For example, right now short term bonds denominated in Euro issued by major market governments pay about 4.25%. One can increase yield by about 50% by buying emerging government bonds. Here are yields on some short term bonds denominated in euro.

South Africa 2013 6.22%
Philippines 2010 6.19%
Romania 2010 5.16%
Brazil 2012 6.03%
Colombia 2011 6.15%

It is not likely that any of these governments will default on their bonds in this short term…so at a time when equities are very volatile this could be a good place to get out of the US dollar, park cash in euro and still make a bit extra.

We are reviewing five emerging bond portfolios in our online multi currency course this week. You can learn them as a multi currency course subscriber

Until next message, may you get a premium for everything you do.

Gary

I’ll also review these emerging bonds and review my entire portfolio and all this thinking next weekend. October 3-5 in North Carolina at our International Investing and Business Course. Why don’t you join me.

The course was fully booked but we had many late applications and have have moved to a larger meeting room so still have space.

Join me with Thomas Fischer of Denmark’s Jyske Global Asset Management, who was a currency trader for years to review our multi currency portfolio thinking for the year ahead.

To help our subscribers meet and learn, we are giving all delegates at the North Carolina course a FREE year’s subscription to our online multi currency course. This is a $249 value.

This will not be all work-no play. We selected this particular weekend as the most likely to be beautiful with the autumnal leaf change. The colors are glorious.

autumn-gold

Here delegates at a previous course chat during a coffee break.

blue-ridge-leaf-change

Gary

Join us in North Carolina next week end October 3-5 and save $249. Enroll here.

Or join us in November to inspect Ecuador property for sale

Vistazul-Ecuador-beach-condos-model

Our September 17-20 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour was sold out as was our September 28-29 Imbabura Real Estate Tour was sold out.

Our Oct 14-18 Ecuador Import Export Course only has a couple of spaces open.
http://www.garyascott.com/catalog/ecuador-import-and-export-tour

We still have space in November

Join us in Cotacachi at El Meson de las Flores.

cotacachi-daybreak

Nov 7-9 International Investing and Business Made EZ Ecuador
http://www.garyascott.com/catalog/international-business-made-ez-ecuador

See these condos at $46,000 in Cotacachi.

Nov 10-11 Imbabura Real Estate tour
http://www.garyascott.com/catalog/ecuador-real-estat

Dine with delegates at the Vistazul clubhouse.

Ecuador-fishng-view-4

November 12-15, 2008 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour
http://www.garyascott.com/catalog/ecuador-coastal-real-estate-tour

Multi Currency Survival Lessons


There are multi currency survival lessons in this last week’s news.

Look at last week’s headlines from several leading financial publications.

A New York Times September 17, 2008 article entitled: “Risk aversion sparks mass flight to bonds” by Rachel Morarjee:

“Bonds are more popular with investors than at any time during the last decade amid a huge flight to safety in turbulent markets, Merrill Lynch’s monthly survey of global fund managers has found.”

Financial Times, Friday, September 19, 2008 entitled: “Stocks soar on rescue hopes”:

“The creation of a giant US government-sponsored vehicle to take on toxic assets looked possible as Treasury secretary Hank Paulson, Fed chief Ben Bernanke and top lawmakers convened a dramatic meeting to discuss the financial crisis. The move sparked sharp stock rallies in Europe and Asia. Regulators in the US and UK moved to curb short-selling of stocks.”

Monday, Sept 22, Wall Street Journal entitled “Stocks plunge amid bailout fears”
by Francesco Guerrera, Henny Sender and Michael Mackenzie in New York and Krishna Guha in Washington:

“The US financial system was shaken by fears that a $700bn government rescue plan might not be enough to end the financial crisis on Monday as stock prices and the dollar tumbled, oil soared and once mighty Wall Street names turned to Japan to safeguard their future.”

This up and down motion in markets is what destroys most multi currency investors. Such up and down news can be hard to ignore but this is exactly what smart multi currency investors do….ignore them.

Yesterday’s message (see it at Multi Currency Trust if you missed it) reviewed the asset allocation of my portfolio.

That review showed how I made very little change in the last year except to add cash and real estate..a plan started BEFORE the crash.

Wise multi currency investors act on fundamental economic principles. Wise multi currency investors do not react to short term market fluctuations. Wise multi currency investors have a set of rules that pertain to reality and integrate reality with their individual circumstances.
Unless one is a trader (a very special occupation that should be practiced by very few) these rules should rarely change during fluctuations.

Here are seven simple multi currency rules that I use. I think they are wise…so far they have worked pretty well for me.

#1: There is always opportunity in value. Look for value in good times and bad. The best value and opportunity is normally found in bad times.

#2: Markets are efficient and dependable long term because they are ruled by universal laws.

#3: Markets are never predictable short term because they are ruled by human emotion.

#4: Times of high performance are followed by times of low performance and vice versa. The current downturn has not only been totally predictable but should have been expected by all.

#5: Always live beneath your means.

#6: Never borrow more than you can afford to lose.

#7: Everything is always in perfect order. Wise multi currency investors focus on spotting that order rather than worry about what they think the order should be.

Here is what is happening and what will happen.

Money should represent production or a change in supply and demand. When money represents production, it is money of value. If a person does something productive, creating a product or service, this creates value.

If supply and demand alters…for example if there are more people and no more land, then the land grows in value.

Money should only be created to represent production or such change.

Yet when markets are overheated, prices rise beyond reasonable value. This creates money without production. When people seemingly become rich because the price (not value) of a share they hold or a house they own skyrockets, this is the creation of money…that is without value.

If left alone, markets correct themselves (see rule #2 above). They rise…then become overpriced…then correct. However when governments intervene and do not allow the correction that should take place, to do so, by creating money without value, then the purchasing power of the money without value falls.

Both US equity and real estate markets have been overpriced. People used the imagined (but not real) value as collateral to borrow money. The borrowed money has been spent buying goods from abroad. This seemingly created more money abroad.

All of this money was not supported by value.

Now the markets are correcting and as the equities and properties return to their real value, the collateral has disappeared. The houses and equities appear to be worth less than they were before. Actually they never were really worth more.

Nevertheless the amount borrowed against them is more than the equity or property is worth. This is called negative equity.

This makes it seem as if money is disappearing. Actually the money never existed.

What should happen is that people who previously appeared to be rich just because they help a property or equity should now lose that appearance. However since these people indebted themselves with their previous appearance, they (nor their lenders) want this appearance of wealth to disappear.

Governments create money so the appearance of wealth remains. Yet no real wealth is created. The money without value that is created loses its purchasing power. This is called inflation.

If just one country is creating money without value (such as the US), a simple investing strategy is to invest into other currencies. However when many countries are creating no value money, there are three places left to invest.. products and services (equities or your own business) …raw materials for products and services (commodities)… or real estate which is required for all business.

We are looking at strategies on how to blend these investments in our Multi Currency Course now. You can subscribe here.

Some property becomes more valuable that others for a variety of reasons.

For example changes in the supply demand fundamentals of oil have enhanced demand for ethanol.  This has altered the supply and demand fundamentals of land that produces food. My belief (in which I am investing) is that this type of land will grow in value.

This is why I have been adding farm land such as our North Carolina farm (a shot of upper meadow is just below) as one of our biggest asset classes. I believe this land will increase in value because it allows those who live on it to produce their own food.

farm colors

This is also why I like land such as these condos being built on Ecuador’s coast.

multi-currency-value-beach-condos

They are very inexpensive (as little as $79,000 for a 1,200 square foot two bedroom, two bathroom unit) and have wonderful sunset views like this.

For details on these condos contact Thor Anderson at thor@sanclementeecuador.com

multi-currency-value-view

Yet I believe that their value will also increase because they are close to the fishermen who still keep their boats on the beach. These boats are right by the condos.

multi-currency-value-fishermen

So I can buy fillets from this dorado or other prime fish for $1 a pound!

multi-currency-value-fish

This is also why like property in the Andes like these 1,200 square foot two and three bedroom and two bathroom condos for as little as $46,000.

multi-currency-value-andean condos

They are surrounded by inexpensive, rich farm land, like this, tilled by low cost farmers…so good fresh food is available. I believe this will enhance the property’s value.

multi-currency-value-real estate

We will also review strategies on how to gain extra opportunity in the current turmoil at our October International Business and investing course next weekend October 3-5, 2008.

Change, as we are seeing taking place now, is not something bad, but  is part of the eternal flow of commerce, the tensions of supply and demand and the torsions created by frequencies that are life itself.   There are always times that destroy some investors and make others rich.  The old guard is aways giving as the new begins to emerge.  All that may differ now is acceleration.  As we saw in yesterday’s message maybe the market will once again bolt upwards.  Perhaps the market will slide more.  This may even become the perfect economic storm.   Whatever happens, it is likely to be choppy and fast…conditions that sink even the best sailors…and investors.

Those who plot a steady course compassed by value and anchored by a recognition of illusion and reality are those who will emerge as the next rich generation of wealth.

Until next message, may every lesson you gain be good.

Gary

I’ll review my entire portfolio and all this thinking next weekend. October 3-5 in North Carolina at our International Investing and Business Course. Why don’t you join me.

The course was fully booked but we had many late applications and have have moved to a larger meeting room so still have space.

Join me with Thomas Fischer of Denmark’s Jyske Global Asset Management, who was a currency trader for years to review our multi currency portfolio thinking for the year ahead.

To help our subscribers meet and learn, we are giving all delegates at the North Carolina course a FREE year’s subscription to our online multi currency course. This is a $249 value.

This will not be all work-no play. We selected this particular weekend as the most likely to be beautiful with the autumnal leaf change. The colors are glorious.

autumn-gold

Here delegates at a previous course chat during a coffee break.

blue-ridge-leaf-change

Gary

Join us in North Carolina next week end October 3-5 and save $249. Enroll here.

Or join us in November to inspect Ecuador property for sale

Vistazul-Ecuador-beach-condos-model

Our September 17-20 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour was sold out as was our September 28-29 Imbabura Real Estate Tour was sold out.

Our Oct 14-18 Ecuador Import Export Course only has a couple of spaces open.
http://www.garyascott.com/catalog/ecuador-import-and-export-tour

We still have space in November

Join us in Cotacachi at El Meson de las Flores.

cotacachi-daybreak

Nov 7-9 International Investing and Business Made EZ Ecuador
http://www.garyascott.com/catalog/international-business-made-ez-ecuador

See these condos at $46,000 in Cotacachi.

Nov 10-11 Imbabura Real Estate tour
http://www.garyascott.com/catalog/ecuador-real-estat

Dine with delegates at the Vistazul clubhouse.

Ecuador-fishng-view-4

November 12-15, 2008 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour
http://www.garyascott.com/catalog/ecuador-coastal-real-estate-tour

Multi Currency Course Review


We had a multi currency and economic review at our latest International Investing and Business Made EZ course here in North Carolina.

Delegates enjoyed a meal in our teaching kitchen.

We had a full house for the course. More and more people are coming because they realize that ways of life, as we know them, are changing forever. Multi currency investing is becoming a necessity.

The course was conducted here at our deep woods seminar hall.

Gary Scott

A recent article in USA Today by Sandra Block entitled “The incredible shrinking nest egg” pointed this out.

The article says: “For years, stock investors have been led to expect average annual returns of 8% to 10%. Similarly,many people have assumed that their home would appreciate by roughly 10% a year. Both assumptions, though rest on two decades of outsize returns. Many financial analysts are predicting a prolonged period of below-average returns on both stocks and home equity. Investors who rely on historical returns for the past 50 years will ‘probably overestimate what we’re likely to see in the future,’ says Chris Jones, chief investment officer for Financial Engines, a retirement-plan consultant. “

At the multi currency sessions in the course, we showed delegates why upcoming change makes this article right and wrong. More importantly we showed delegates how to react to the change so that the shifts can rig extra safety, security and profit.

Here are a few points that delegates learned that shows why this is a bad and good time.

First, as far as stock markets go, this correction is understandable and was expected. Messages at this site warned about it for months before it took place last year.

* Returns in equity markets had been phenomenal from 2003 to 2007. A correction was expected if for no other reason times of good performance are always followed by times of low performance.

* The most important demographic of the economic world has not changed.
There are still increasing numbers of people producing and consuming more in more efficient ways.

* The previous equity growth was not a bubble. High GDP Growth and falling interest rates plus earnings explained more than 100% of global equity returns over those four years.

There has not been a general expansion of P/E multiples. Equities were not expensive when the correction began last November. P/E ratios were about the same at 15 times earnings, about as 1987 when a huge rise in markets though 1999 drove P/E ratios to 25.

During breaks delegates ambled in these woods.

Multi Currency Jyske Bank

* We should expect 7% to 10% annual return in the stock market as a function of global nominal GDP growth and long term earnings growth plus risk premium.

* Periods of low growth are followed by periods of high growth. This is the time to accumulate shares.

* Inexpensive equities in quality companies that pay a reasonable return are better investments now than they were six months ago..

This means that the comment in the USA Today article, “we will see a prolonged period of below-average returns on both stocks and home equity.” is most likely wrong. This is especially likely because governments have reduced interest rates and flooded markets with liquidity.

Therefore the 11 steps of dealing with a purported economic crisis remain.

#1: Do not worry too much about short term noise.
#2: Do not worry too much about day to day volatility.
#3: Turn on the auto pilot and normally add to your position.
#4: Do not panic.
#5: Do not let feelings influence you too much.
#6: Do not count on extra ordinary returns. Be realistic.
#7: Expect change.
#8: Do not underexpose yourself for the long term.
#9: Embrace risk.
#10: Sell your losers and let your winners run.
#11: Add some restructuring stories to your portfolio.

Yet the same liquidity that will kick start the stock market and economies out of the doldrums will probably make another comment in the USA Today article true:

“Investors who rely on historical returns for the past 50 years will ‘probably overestimate what we’re likely to see in the future’.

This is because liquidity and stock markets and real estate markets will rise, but the US dollar will lose even more purchasing power.

To beat this loss of dollar power, one must invest in equities, real estate and/or commodities. Yet this may not be enough. We’ll also need to invest in these three inflation fighting investments in new avenues and in different ways.

Future messages will look at how and where.

During the course Thomas Fischer introduced Jyske Bank’s new JGAM investment management service for US investors.

Multi Currency Jyske Bank

The three fundamental investment ideals that form the core of investing remain.

Learn more about multi currency investing at our multi currency portfolio course.

Learn more about fighting inflation with Ecuador real estate and our Ecuador Living Service
Until then, good global investing to you.

Gary

Gain From the Volatility of the Next Four Years

However America’s politics turn out, one thing is sure.  There will be volatility in stock markets during the next four years.

The first reason markets will bounce has nothing to do with politics or policies.   The market’s downward shift is simply due regardless of the party or the person in office.

Second the new politics will create an uncertain era. Everyone is shaken whether they are pleased with the election or not and nothing frightens markets like uncertainty.

Third we’ll see rising interest rates over the next 48 months. This will push markets down.

Despite these pitfalls, there is a way to profit using the downtrends  to pick up good value shares.

During nearly five decades of global investing I have noticed found that good value strategies increase through bull markets and bear, through good presidents and bad.  The steps to take are simple.

The first tactic is to seek safety before profit.

We can look at Warren Buffett’s investing strategy as an example.  Buffett success is talked about a lot, but rarely does anyone explain how he make so much money.  That was the fact until some researchers really stripped his operation bare.  They looked at everything and learned the deepest of Buffett’s wealth management secrets.  Fortunately they published all in a research paper at Yale University’s website. that reveals important truths about extending wealth.

This research shows that the stocks Buffett chooses are safe (with low beta and low volatility), cheap (value stocks with low price – to – book ratios), and high quality (stocks of companies that are profitable, stable, growing, and with high payout ratios).

The second tactic is to maintain staying power.  At times Buffet’s portfolio has fallen, but he has been willing and able to wait long periods for the value to reveal itself and prices to recover.

keppler asset management chart

This chart based on a 45 year portfolio study shows that holding a diversified good value portfolio (based on a  good value strategy) for 13 month’s time, increases the probability of outperformance to 70%.  However those who can hold the portfolio for five years gain a 88% probability of beating the bellwether in the market and after ten years the probability increases to 97.5%.  Time is your friend when you use a good value strategy.  The longer you can hold onto a well balanced good value portfolio the better the odds of outstanding success.

The Buffett strategy integrates time and value for safety and profit.

A third tactic is using limited leveraging, tactic in the strategy boosts profit.  Buffett leverages his portfolio at a ratio of approximately 1.6 to 1.   The Yale published research paper shows the leveraging methods used by Warren Buffett to amass his $50 billion fortune.  The researchers found that the returns from Buffett’s investment company, Berkshire Hathaway, far outweighed those achieved by any rival that has operated for 30 years or more.  The research shows that neither luck nor magic are involved.  Instead, the paper shows that Buffet’s success hinges on using leverage at the rate of 1.6.

To sum up the strategy, Buffet uses limited leverage to invest in large purchases of “cheap, safe, quality stocks”.   He limits leverage so he can hold on for very long periods of time, surviving rough periods where others might have been forced into a fire sale or a career shift.

Stated in another way buffet uses logic (buy good value) to have the conviction, wherewithal, and skill to invest with leverage over many decades.

What do we do when we are not Warren Buffett?

May I introduce the Purposeful Investing Course (Pi) for those who want to invest like Warren Buffet, but know they are not.  This course is based on my 50 (almost) years of investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.

Enjoy Extending Wealth

Pi’s mission is to make it easy for anyone to create a three point strategy, like Buffett’s even though they do not have a lot of time for or knowledge about investing.

Pi reveals investing secrets and the sciences that make investing easy, safer, less time consuming and increases the chances of profit.

One secret is to invest with a purpose beyond the cash.  One tactic as mentioned is staying power.  This means not being caught short and having to sell during a period of loss.  This also means having enough faith in a strategy that we stick to the plan.  When we invest with purpose, doing what we love, we enjoy the process more and are more likely to hold on during down times, when most poor investors panic and sell.

Slow, Worry Free, Good Value Investing

Stress, worry and fear are three of an investor’s worst enemies.  They create the Behavior Gap, a trait exhibited by most investors, that causes them to underperform any market sector they choose.  The behavior gap is created by natural human responses to fear.   Pi helps create profitable strategies that avoid losses from this gap.

Spanning the Behavior Gap

Behavior gaps are among the biggest reasons why so many investors fail.  Human evolution makes fear the second most powerful motivator.  (Greed is the third.)  Fear creates investment losses due to behavior gaps.  Fear motivates us more strongly than desire.  By nature investors are risk adverse.

Winning investors though embrace risk because they have a plan based on good value.

Purpose is the most powerful motivator,  stronger than fear and greed, so a strategy with purpose is the most powerful of all.

Combine your needs and capabilities with good value secrets and the math to back up your value selections through the Pifolio – The Pi Model Portfolio

Lessons from Pi are based on the creation and management of a Primary Pi Model Portfolio, called the Pifolio.  There are no secrets about this portfolio except that it ignores the stories (often created by someone with vested interests) and is based entirely on good math.

The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets using my (almost) 50 years of global experience and my study of the analysis of four mathematical investing geniuses (and friends).

The Pifolio analysis begins with a continual research of international major stock markets that compares their value based on:

#1:  Current book to price

#2: Cash flow to price

#3: Earnings to price

#4: Average dividend yield

#5: Return on equity

#6: Cash flow return.

#7: Market history

We follow this research of a brilliant mathematician and have tracked this analysis for over 20 years.    This is a complete and continual study of international major and emerging stock markets.

This analysis forms the basis of a Good Value Stock Market Strategy.   The analysis is rational, mathematical and does not worry about short term ups and downs.   This strategy is easy for anyone to follow and use.  Pi reveals the best value markets and provides contacts to managers and analysts and Country Index ETFs so almost anyone can create and follow their own strategy.

A country ETF provides diversification and cost efficiency by spreading one simple, even small investment into a basket of equities in a good value stock market.  The costs are low and this type of ETF is one of the hardest for institutions to cheat.  Expense ratios for most ETFs are lower than those of the average mutual fund.

Little knowledge, time, management or guesswork are required.  The investment is simply a diversified portfolio of good value indices.  Investments in an index are like investments in all the shares of a good value market.

Pi matches this mathematical certainty with my fifty years of experience. This opens insights to numerous long term cycles that most investors miss because they have not been investing long enough to see them.

For example in the 1980s, a remarkable set of two economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  Then the cycle ended.  Warren Buffett explained the importance of this ending in a 1999 Fortune magazine interview.  He said:  Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!

I did well then, but always thought, “I should have invested more!”  Now those circumstances have come together and I am investing in them again.

The circumstances that created fortunes 30 years ago were an overvalued US market (compared to global markets) and an overvalued US dollar.

The two conditions are in place again!  There are currently ten good value (non US) developed markets,  plus 10 good value emerging markets.

Pi shows how to easily create a diversified, worry free portfolio in some of these good value markets using Country Index ETFs.

The current strength of the US dollar is a second remarkable similarity to 30 years ago.   The dollar rose along with Wall Street.  Profits came quickly over three years.  Then the dollar dropped like a stone, by 51%  in just two years.  A repeat of this pattern is growing and could create up to 50% extra profit if we start using strong dollars to accumulate good value stock market ETFs in other currencies.

This is the most exciting opportunity I have seen since we started sending our reports on international investing ideas more than three decades ago.  There is so much more to write and the trends are so clear that I have created a short, but powerful report “Three Currency Patterns For 50% Profits or More.”   This report shows how to earn an extra 50% from currency shifts with even small investments.  I kept the report short and simple, but included links to 153 pages of  Good Value Stock Market research and Asset Allocation Analysis.

The report shows 20 good value investments and a really powerful tactic that shows the most effective and least expensive way to accumulate these bargains in large or even very small amounts (less than $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

This report sells for $29.95 but you’ll receive the report “Three Currency Patterns For 50% Profits or More” FREE when you subscribe to Pi.

Leverage

Pi also explains when leverage provides extra potential without undo risk.  For example in 1986 I issued a report called “The Silver Dip” that showed how to borrow 12,000 British pounds (at almost 1.6 to 1 dollars per pound the loan created US$18,600) and use the loan to buy 3835 ounces of silver at around US$4.85 an ounce.

Silver had crashed, I mean really crashed from $48 per ounce.  As prices decreased from early 1983 into 1986, total supply had fallen to 449.7 million ounces in 1986.  Mine production was restricted by the low prices at this time, with silver reaching a low for this period of $4.85 in May 1986.  Secondary recovery also was constricted by these low prices.

Then silver’s price skyrocketed to over $11 an ounce within a year.  The $18,600 loan was now worth $42,185.

The loan was in pounds and in May 1986 the dollar pound rate was 1.55 dollars per pound.  So the 12,000 pound loan purchased $18,600 of silver.  The pound then crashed to 1.40 dollars per silver.  The loan could be paid off for $13,285 immediately creating an extra $5,314 profit.  The profit grew to $47,499 in just a year.

Conditions for the silver dip have returned.  The availability of low cost loans and silver are at an all time low.  The price of silver has crashed from nearly $50 an ounce to below $14 as did shares of the iShares Silver ETF (SLV).

silver chart

(Click on chart from Google.com  (1) to enlarge.)   Imagine investing in a spike like this… with leverage!

At the same time the silver gold ratio hit 80, a strong sign to invest in precious metals.

I have updated a special report “Silver Dip 2016” about a leveraged silver speculation that can increase the returns in a safe portfolio by as much as eight times.  The purpose of the report is to share long term lessons gained through 30 years of speculating and investing in precious metals.  While working on the report, when the gold silver ratio slipped to 80 and the price of silver dropped below $14 an ounce, I knew I needed to share this immediately.

I released a new report “Silver Dip 2015” so readers were able to take advantage of these conditions and leverage 1.6 times as a speculation.  That report generated profits as high as 212% and a revised 2017 issue has been produced.

“The Silver Dip 2106”  sells for $39.95 but  you receive  “Silver Dip 2017” FREE when you subscribe to Pi.

Save

Subscribe to the first year of The Personal investing Course (Pi).  The annual fee is $299, but to introduce you to this online, course that is based on real time investing, I am knocking $102 off the subscription.  Plus you receive the $29.95 report “Three Currency Patterns For 50% Profits or More” and the $39.95 report “The Silver Dip 2017 free.

Triple Guarantee

Enroll in Pi.   Get the first monthly issue of Pi, and the report “Three Currency Patterns For 50% Profits or More” and “The Silver Dip 2016” right away.

#1:  I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through slow, worry free purposeful investing.

If you are not totally happy, simply let me know.

#2:  I guarantee you can cancel your subscription within 60 days and I’ll refund your subscription fee in full, no questions asked.

#3:  I guarantee you can keep “Three Currency Patterns For 50% Profits or More” and “The Silver Dip 2106” report as my thanks for trying.

You have nothing to lose except the fear.   You have the ultimate form of financial security to gain.

Subscribe to the Pi for $197.   You Save $158.95.

Gary