First, let me be clear… there is not much of an Ecuador stock market… never has been and probably won’t be for quite a while.
Merri and I do own a few Ecuador shares… in Cemento, an Ecuador cement company, but these were purchased years ago when Ecuador had a stock market beginning to boom. Then the economy and sucre collapsed and all the Ecuador banking shares (including the ones we held) rushed to zero.
The Ecuador cement shares were all that was left… along with a lesson learned.
Yet there are two other reasons why you’ll not see many Ecuador equities in my portfolio.
In fact, you won’t see many stocks in our portfolio at all. A review of my recent total asset allocation shows that I hold only 3% in equities.
An excerpt from our recent Multi Currency Update shows that I do not hold many shares at all and why I am not buying more now.
Last week my account adviser at Jyske Global Asset Management sent me this note.
Gary, The USD on the move! The main focus this week has been on the FX market. We have had a long period of a declining US Dollar against most other currencies. The market participants have been waiting for an excuse to take profits. The market got its excuse last week, where we for the first time saw better than expected US unemployment figures. The non-farm payrolls where better than expected and the unemployment rate dropped to 10%. When the numbers hit the market the EUR/USD was trading above 1.5000 and during this week the USD strengthened approximately 5%, currently trading at 1.4350.
The correction of the EUR/USD also indicates that the psychology in the market could have changed. During 2009 improving economic figures led to a risk-on scenario where investors began to diversify in to more speculative markets and at the same time exiting the USD safe-haven. The change in psychology has resulted in a focus on possibly increasing interest rates as the economies worldwide begin to improve. The US economy shows signs of improvement and investors are thus beginning to focus on being long USD assets.
The FED however announced no change in the FED funds after their meeting on Wednesday. Bernanke told the market on the following press conference that the interest rate would remain unchanged until the economy is back on track and we see a significant drop in the unemployment rate. We therefore believe that the current strength in USD is temporary and we do expect the EUR/USD to turn around and once again go toward our target of 1.5500.
The main focus in Europe during the week has been on the down grading of the sovereign debt of Greece to BBB+, by both FITCH and S&P. Both rating agencies, still have Greece on a negative watch. The 10 year government bond of Greece now pays a historical 250 bps more than a 10 year German government bond.
Norway once again increased their interest rate with 25 bps, from 1.5% to 1.75%. Norway has seen an increase in the private consumption and a hot real estate market. The Central bank of Norway thus chose to increase the interest rate, even though the industrial production in Norway still suffers.
That note from my adviser cemented my thinking that the greenback’s upswing creates a good time to further reduce US dollar positions. I am reducing my euro positions as well.
The global economy continues to upswing and eventually interest rates will be heading up…. bit equities are at risk due to the chances of another economic slowdown and massive government economic stimulation that has supported high risk speculation.
So last week I added more emerging currencies with higher interest rates by liquidating my Jyske Invest Danish Bond Fund and Jyske Invest Euro Bond Fund.
I used the proceeds to purchase higher interest rate bonds away from the euro and mostly into the dollar zone but not the US dollar itself.
NOK 4% Rabo Bank 29.05.2013 (AAA) 101,25 3,60% p.a.
CAD 4,95% KFW October 2014 (AAA) 109,60 2,80% p.a.
EUR 7,25% Bombardier 15.11.2016 (BB+) 102,25 6,70% p.a.
AUD 6,00% EIB 14.08.2013 (AAA) 101,60 5,50% p.a.
NZD 6,50% EIB 10.09.2014 (AAA) 104,50 5,39% p.a
MXN 8% Bonos 19.12.2013 (A+) 103,60 6,97% p.a.
BRL 11,25% EIB 14.02.2013 (AAA) 104,75 9,41% p.a.
I also sold my Hungarian government bonds and bought the Polish bond below with the proceeds.
PLN 6,50% EIB 12.08.2014 (AAA) 107,00 4,77% p.a.
I see any period of US dollar strength as an opportunity to exit the greenback and accumulate other currencies.
Learn how to get my regular portfolio updates.
The personal reasons why I do not invest much in shares is based on three cornerstones in Merri’s and my lifestyle and investing philosophy.
Cornerstone #1: Know Thyself.
Cornerstone #2: Be True to Thyself.
Cornerstone #3: Turn Your Passion into Profit.
Merri and I love our business. We earn more than enough from it and… we gain enormous fulfillment from serving others.
Plus we love buying and fixing up real estate. If you have been sharing this site from long you have read our escapades buying real estate in North Carolina, Ecuador and now again in Florida.
We love fixing up real estate in Ecuador and…
on our North Carolina farm…
at the lakefront in Florida.
On the dark side, we hate accounting. We cannot read balance sheets… nor do we trust them much… so we tend to avoid equities… which historically overall are the best investments of all…. if… you ignore the three cornerstones.
We only have two shares… Bank of Florida and Jyske Bank…. because we know (and like) the people and the concepts involved. Plus we understand the financial business. Otherwise the most we do in shares… even though we have helped others make many millions in the stock market… is buy ETFS or mutual funds.
When we invest in shares there are three factors we continually look for…
Investing Factor #1: Contrasts.
Investing Factor #2: Trends.
Investing Factor #3: Value.
We are always looking for contrasts in value that will eventually create trends.
This is why we began buying real estate in Florida and are not investing in many equities now. A recent New York Times article “New Slip in Housing Prices Undercuts Fragile Optimism” by David Streitfeld explains why. Here is an excerpt:
Just as the economy is finally beginning to strengthen, the real estate market is showing new signs of deterioration. Prices slipped in many cities in October, new figures show, despite low mortgage rates and a generous tax credit meant to spur sales. Now rates are starting to rise, making it harder for many buyers to afford a house, and the tax credit seems to be losing its capacity to lure them into the market.
The renewed worries about housing come against a backdrop of improvement in the broader economy. Surveys suggest consumers are growing more confident. That better mood probably helped improve holiday retail sales. The number of people joining the ranks of the jobless is dwindling, while the hiring of temporary workers is up, a traditional harbinger of recovery.
Still, economic growth for the third quarter was more modest than originally reported; it was revised down to an annual rate of 2.2 percent from 2.8 percent. Many economists are fretting that housing could drag down the tenuous recovery.
The figures released Tuesday showed that the Standard & Poor’s/Case-Shiller home price index, a widely watched measure of housing markets in 20 metropolitan areas, rose 0.4 percent in October from the previous month on a seasonally adjusted basis.
It was the fifth consecutive month that prices were up, but the rate of increase has dropped sharply from the impressive gains of the summer. Prices in nine of the 20 cities were flat or down.
“I’m worried. Everyone’s worried,” said Karl E. Case, the Wellesley College economist who helped design the housing index that provided fresh cause for alarm on Tuesday. “If prices sink 15 percent from here, which is a possibility, and the 2008 and 2009 loans go bad, then we’re back where we were before — in a nightmare.”
One might think why invest in real estate… not stocks… when real estate seems down.
Due to the last economic downturn… many governments… led by the US… spent trillions flooding the market with easy money… for big banks.
These big banks in turn borrowed the money and poured that money into stock markets. This made the banks look profitable and pushed stock markets up… at the expense of currencies around the world.
Government spending rarely works efficiently as evidenced by the multi billions spent of security that missed a Nigerian, whose father’s warning to the US Embassy validated a risk… that the CIA had already picked up… even though he was on a risk list… and after buying a ticket for cash…. and arriving without luggage… he was allowed to walk onto a plane headed for the US with a bomb in his underwear.
This post 9-11 security may not have been such a great government investment.
Just imagine that the economic spending from the governments of the world have created the same situation… making the public feel better when the reality is… the risk is the same… or actually worse… because of the government’s heavy handed involvement.
If the economy once again stalls… the stock markets… many of which are thinly traded… will collapse like a house of cards. All that government money (actually your money and mine) will be gone.
Repayment of the loss will most likely be made via inflation. Stock portfolios will be wiped out.
This concerns me. Jyske Global Asset Managers are concerned as well. Their low risk managed account for US investors has only 17.5% in equities and they are only in seven investments… of which five are major Blue Chips.
Electricite De France France’s electric company.
Siemens AG a global powerhouse in electronics and electrical engineering, operating in the industry, energy and healthcare sectors.
Bayer AG, a global enterprise with companies in almost every country.
G4S Plc the world’s leading international security solutions group, operating in over 100 nations.
Novartis AG Reg. the largest producer of insulin.
Only a very small portion of the portfolio is in other equities, iShares II BRIC and Jyske Invest IT Equities.
If we see a double dip recession, then real estate will remain depressed perhaps for a bit. However there is real utility in real estate and the very inflation that could ruin so many investors will benefit those who hold real estate (and can hold on) plus those who hold commodities and have their own business.
There is no doubt still some good individual shares but overall shares offered good value early last year… not now so investors should beware.
We hope you will join us for seminars and tours in 2010.
If you plan to join us at six or more seminars and tours in Ecuador, Florida or North Carolina in 2010 you can save as an International Club member
See details about each of our seminar and tours below… then see our December special that allows you to attend as many of these courses you like at a huge savings.
For Ecuador Export
For Quito & Mindo
You gain discounts by attending multiple seminars and tours.
Here are our multi tour adventure discounts.
But our 2009 International Club membership which allows you and a guest to attend as many of the 56 courses and tours we’ll sponsor and conduct in 2010 (fees would be $40,947 for all these courses individually) is only $2,999.
The International club fee rises to $3,500 in January 2010. Enroll in the International Club now at the original fee of $2,999. Save $501.
International Club 2010
Attend our 56 investment, business, Spanish, real estate and export, courses and tours in 2010 with one small enrollment fee.
International Club 2010 Membership Enroll here
Here are the 56 courses and tours you can attend free. Plus there is even one more savings you will see below.
Join us in February or March.
Feb. 15-16 Travel to and visit Quito
Feb 17 Travel to Manta
Feb. 18-19 Coastal Real Estate Tour
Feb. 20 Travel to Cotacachi
Feb. 21-22 Imbabura Real Estate Tour
Feb. 23-24 Quito-Mindo Real Estate Tour
Feb. 26-27 Cuenca Real Estate Tour
Mar. 11-14 Super Thinking + Spanish Course, Mt. Dora, Fl.
Mar. 15-16 Travel to Quito and Andes
Mar. 17-18 Imbabura Real Estate Tour
Mar. 19-20 Cotacachi Shamanic tour
Mar. 22-23 Coastal Real Estate Tour
Mar. 25-26 Cuenca Real Estate Tour
Mar. 28-29 South Coast Real Estate Tour
Apr. 12-15 Ecuador Export Tour ($499 or couple $749)
Apr. 17-18 Imbabura Real Estate Tour ($499 or couple $749)
Apr. 20-21 Coastal Real Estate Tour ($499 or couple $749)
Apr. 23-24 Quito-Mindo Real Estate Tour ($499 or couple $749)
Apr. 26-27 Cuenca Real Estate Tour ($499 or couple $749)
May 13-14 Ecuador Shamanic Minga ($499 or couple $749)
May 16-17 Imbabura Real Estate Tour ($499 or couple $749)
May 19-20 Coastal Real Estate Tour ($499 or couple $749)
May 22-23 Quito-Mindo Real Estate Tour ($499 or couple $749)
May 25-26 Cuenca Real Estate Tour ($499 or couple $749)
May 28-29 South Coast real Estate Tour ($499 or couple $749)
June 24 Quantum Wealth North Carolina
June 25-27 International Investing and Business North Carolina ( $749 or couple $999)
June 28-29 Travel to Ecuador and Andes
June 30-Jy 1 Imbabura Real Estate Tour ($499 or couple $749)
July 3-4 Coastal Real Estate Tour ($499 or couple $749)
July 6-7 Quito-Mindo Real Estate Tour ($499 or couple $749)
July 9-10 Cuenca Real Estate Tour ($499 or couple $749)
Sept. 3-6 Ecuador Export Tour ($499 or couple $749)
Sept. 8-9 Imbabura Real Estate Tour ($499 or couple $749)
Sept. 11-12 Coastal Real Estate Tour ($499 or couple $749)
Sept. 14-15 Cuenca Real Estate Tour ($499 or couple $749)
Sept. 17-18 Ecuador Shamanic Minga ($499 or couple $749)
Sept 20-21 South Coast Real Estate tour ($499 or couple $749)
Oct. 7 Quantum Wealth North Carolina
Oct. 8-10 International Investing & Business North Carolina ($749 or couple $999)
Oct. 11-12 Travel to Quito and Andes
Oct. 13-14 Imbabura Real Estate Tour ($499 or couple $749)
Oct. 16-17 Coastal Real Estate Tour ($499 or couple $749)
Oct. 19-20 Quito-Mindo Real Estate Tour ($499 or couple $749)
Oct. 22-23 Cuenca Real Estate Tour ($499 or couple $749)
Nov. 4-7 Super Thinking + Spanish Course Florida ($749 or couple $999)
Nov. 8-9 Travel to Quito and Andes
Nov. 10-11 Imbabura Real Estate Tour ($499 or couple $749)
Nov. 13-14 Coastal Real Estate Tour ($499 or couple $749)
Nov. 16-17 Quito-Mindo Real Estate ($499 or couple $749)
Nov. 19-20 Cuenca Real Estate Tour ($499 or couple $749)
Nov 22-23 South Coast Real Estate Tour (($499 or couple $749)
Dec. 3-5 Ecuador Shamanic Mingo ($499 or couple $749)
Dec. 7-8 Imbabura Real Estate Tour ($499 or couple $749)
Dec. 10-11 Coastal Real Estate Tour ($499 or couple $749)
Dec. 13-14 Quito-Mindo Real Estate Tour ($499 or couple $749)
Dec. 16-17 Cuenca Real Estate Tour ($499 or couple $749)
If you join the International Club, the entrance fee for 2010 is $2,999 (until January 2010). Your attendance fees at all courses will be waived. You and your guest can attend courses worth $40,947.
You can calculate the savings as our schedule of all 2010 courses is shown below.
Arrival dates are always one or two days earlier. Please double check with us before booking flights.
I invite you to be a member of the International Club which allows you and your guest of your choice to attend all of these courses which are valued at $40,947!
International Club 2010 Membership Enroll here
You may well wonder why I would make such an offer and ask why the cost is so low? Let me answer this question frankly and from the heart.
First, it helps us do a better job for you. We feel greatly enriched when we can really help our clients improve their lives. We have learned through years of experience the best way to do this is to meet with you regularly. We can best help you learn how to improve your health and wealth through continual expansion of knowledge.
Second, we gain enormous fulfillment from the many friendships we form through the years. Our friends have enriched our lives tremendously. Let me explain this in more detail.
As a member, you will be part of our international family that meets intensively over the next year to examine ways we can make our lives better. Our goal is beyond just having money. Our goal is to have quantum wealth… good health… wealth and fulfillment through service.
Though I give all course delegates my very best, I cannot help but to do a better job for those who come again and again. As we meet often; your particular wants, needs and desires become clear, and it is easier for me to point you in the right direction.
Another phenomenon is that repeat delegates help each other! They get to know one another, help each other learn, share their insights, make contacts and gain more wealth.
Out associates in Ecuador, are experienced business people who live or work and conduct our real estate and export courses. They can also act as your local backup for the business.
Lifestyle for Two. There is more! I have learned at my courses that many repeat delegates were couples.
We want couples! As a member of the program, you are entitled to bring another person to every single course or tour. The cost for that extra person will be ZERO! You can bring whomever you wish. Bring your spouse, a friend, son or daughter, partner, accountant, adviser. You can bring the same person each time or a different person, whomever you choose to accompany you. (Accommodations and air fares relating to the courses are not included for members, delegates or their guests.)
Won’t you join us in this exciting club and share Merri’s and my lifestyle for the next year? We look forward to seeing you at as many courses as possible and sharing this wonderful world of abundance and well being with you!
International Club 2010 Membership Enroll here
Read the entire article New Slip in Housing Prices Undercuts Fragile Optimism