Tag Archive | "US government"

Electric Investments


Yesterday’s message looked at high voltage investments ideas.

In a moment we’ll see an Ecuador income idea.

First, here are some more electric thoughts about investing in energy.

wind-turbine

Investments in alternate energy can be profitable.  For example in 2006 we introduced the idea of investing in the Vestas Wind Turbine company.  The chart below from finance.yahoo.uk shows that this share has done really well… up four times even after the great 2008 correction.

Vestas-shares

Jyske can buy the VESTAS WIND ADR (VWDRY) of this share for US investors by the way.  Here is a chart from finance.yahoo.com of the ADR since it was introduced.

wind-turbine-chart

Jyske Bank currently has a buy recommendation with the current price of 378.50 Danish kroner  and a target price of 550 Danish kroner. Jyske considers this a HIGH RISK share and says:  Thanks to its market share of about 23% in 2007, Vestas Wind Systems is the world’s largest producer of wind turbines. The company began its production of wind turbines in 1979, and was listed on the stock exchange in 1998. Today Vestas produces and sells wind turbines in sizes from 850 kW to 3.0 MW. The company’s vision is to turn wind into an energy source equal to oil and gas.

They believe the shares are available at an attractive valuation. The company’s streamlining will continue to the benefit the earnings margins and despite the financial crisis, Vestas is facing high growth past 2009, and the management is experienced and strong.

You can get more details from Thomas Fischer at Jyske Global Asset Management at fischer@jgam.com (US investors) or Rene Mathys at Jyske Bank (non US investors) at mathys@jbpb.dk

Yet we must understand that not all alternate energy investments will go well.  See what I mean here.

Of course one malfunction does not mean much… this was just a dramatization… pointing out that we have to invest in a future…that we cannot truly see.

What can we do?

First, we can understand that we may not know the technology but we can know the trends.  Part of the future is in the here and now and we can pick up these trends.

Here are seven trends we can use to reflect upon when looking at new ideas for the future.

Trend #1: The rate of change will increase. This is self evident. Change is speeding up… so new products will not remain “in” as long.  This means bigger is not better. Ian Pierson, a futurist whom I know and respect, said that the value of a company is its idea… less its size and experience.  Fast and small have an advantage now.

Trend #2: The rate of private consumption will grow. From 1884 to 1995 private consumption just about doubled, but increased 25% in the past ten years. This means that the amount of money spent per person will continue to grow. This also means that the amount of discretionary income per person is growing.  There will be more people producing more.

Trend #3: There will be more automation. In the process of automation, mankind supplements muscles first, brains second and feelings third.

Trend #4: Age, gender and wealth are becoming increasingly irrelevant.

Trend #5: There will be a shift of attitude from our brain to heart.

Trend #6: Families will turn more and more of their responsibilities to the market place.

Trend #7: The growth in markets will be for stories, not products.

When looking at new technology… run it past this list.  This will not tell you if the technology is best… but may help you understand if the product fits the trends.

Take electric cars as an example.

We have been thinking about electricity here at the farm for some time as we have great hydro potential.

Mark Owen has been helping us research this and sent us this note about electric cars.

Electric Car Idea

Those readers who were able to get to the final paragraphs of my Electric Bicycle article might remember that I myself wondered what the Electric Bike Industry might lead to. I questioned how the industry could become more mainstream, how could it address safety concerns, convenience, and of course speed. I also pondered the question: “Two wheels or Three?”

Aptera answers “Three.”

electric-car

Aptera

After completing the article I researched a new electric “car” named the Aptera Typ-2e. This is an extraordinary vehicle on many accounts. The reason I italicized the word car when describing this vehicle is that it will be considered a motorcycle by the US government. It has three wheels, two in front, one in back. The cockpit is teardrop shaped cocoon with airbags, two comfy-looking seats, and a very sophisticated dashboard. Many have said the interior of the cockpit makes it seem like you are in a small airplane.

I have seen this car featured by videographers, and it is purported to have extraordinary acceleration and top speed. Please visit the Aptera Forum for the latest specifications sheets

I am sure it will be faster, safer, and more convenient than my electric bike.

It will cost a little more, though. Aptera reports they will be delivering the first of their vehicles in October of 2009, for an estimated cost of between $25,000.00 and $40,000. This vehicle is by far my favorite of all the electrics You may see the Aptera and 26 other electric cars reviewed here

If any reader has access to the Aptera, please invite me for a test drive, no matter where you are.

Maybe in a few years, when Aptera gets their initial “bugs” worked out, and the price slides down a bit due to enhanced production, you will see me and my daughter grinning behind the wheel of one of these cars.

This car differs a lot from the Fisker Karma we reviewed in yesterday’s post.

Will people buy the stylish Karma or the more functional Aptera?

Each of these technologies may help a bit.  Some solar… some wind… hydro… better batteries and such plus most importantly energy use reduction.

Perhaps micro production and savings will be the in thing instead just as the PC overwhelmed the mainframe computer.

Mark for example has been looking at micro wind power for us.  Wind energy is normal considered expensive… but Mark shows here that it does not need to be.  He writes:

Gary, I was at the farm a couple of times this winter. I went to the top and felt the consistency and strength of the wind up there. I have done lots of research on the cost-effectiveness of installing a windmill system. These pre-made windmill systems are expensive. Even with consistent wind, it takes a long time for a windmill system to pay back its initial investment costs.

I researched making our own windmill. It will be easy and cost eight cents on the dollar. I have already purchased a 33 foot aluminum sailboat mast. It is quite strong and will handle a medium-sized windmill. I would like to purchase the remaining components. The motor would cost about $200.00 (motor/generator, they are both the same thing). I would also like to purchase a fan blade kit. I think after the initial purchase, I will be able to manufacture our own fan blades. I will produce a template from the purchased blades, then manufacture future blade systems from the template. I think I can purchase the blade kit for another $100.

Perhaps the way of we receive, store and use energy will evolve into many inexpensive, small devices each saving a bit… as PCs and then lap tops and now hand helped devices have altered the way we receive and transmit information.   

We can see a bit of this at Neuton Power.  I have used a Neuton Electric lawn mower for five or six years and finally the battery died.  When I called to get a new one, I discovered they also have electric weed eaters, chain saws, hedge trimmers, blowers and power carts. The rep explained that when they introduced their weed eater they were overwhelmed with 1,500 orders.

I have mine on back order. It will take months for them to fill demand… so electric replacing gas is in… perhaps for now in small ways… but watch for this trend to grow.

Here is another nifty idea that saves energy and could create a business opportunity in Ecuador… the solar or sun oven.

sun-oven

Sun ovens cook with the sun… no electricity… fossil fuel, wood, charcoal or any pollution are required.   This may offer a  business opportunity in Ecuador or anywhere sunny.  Learn more about solar ovens here.

Whether the savings are large…

wind-turbine

Worlds-Largest-Wind-Turbine-Generator

or small…

energy-saver

Neuton electric weed eater.

Investing in alternate energy is wise for the future.

Gary

The greatest asset of all is the ability to earn wherever you live, which brings everlasting wealth.

This is why we offer our course Tangled Web… How to Have an Internet Business.

A clear mind and healthy body are also a vital assets… plus a second language is a powerful diversification tool.

This is why I am willing to pay you $300 to attend either our Ecuador Super Thinking plus Spanish seminar in September or our North Carolina International Business & Investing seminar in October.  Sign up for either seminar and I will email you our Tangled Web… How to Have an Internet Business Course (offered at $299) free plus I’ll knock an extra dollar off your seminar fee…. to round up the $300 savings.

Here are comments from a reader about the way we help:  Thank you for your inspiration and information outlining foreign banking and retirement.  Your comments and suggestions are welcome for planning the steps to evaluate the early stages of living abroad.

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.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799

High Voltage International Investing


Here are some international investing ideas that could bring a shock.

We can add energy to our international investment portfolios with investments in green energy!

electric-car

Will the new Chevy Volt add energy into an investment portfolio?

But which green investments make sense?

Ecuador for example is regreening the Galapagos. We’ll see why and how in a moment.  Does investing there provide an opportunity?

Green and alternate energy is important because the world has a lot of wasted energy in modern lifestyles…. that the environment can no longer afford.

Investing in electric energy not always simple though.

One main rule of good investing is to invest in what you know.  Yet the nature of the next new era of productivity is unknown.

In the computer era, who knew anything about Windows when Microsoft began?  In the .com era who knew what impact the internet would bring?  How can we imagine the unimaginable?

Who knows what will be …”the thing” of sustainability in the future?

For example, a recent message Investing in Chaos looked at the ideas of investing in new battery technology.  The idea looked pretty good to me… but a reader just sent me this note:

Hello Gary,  Your columns are a daily joy to read for me, including yesterday’s “Investing in Chaos” and the article it referenced about Ceramatec’s ‘wonder battery’.  Being a specialist in renewable solar electric energy, I’ve read hundreds of articles over three decades written for purposes of sensationalizing hardware equivalents of software ‘vaporware’, and this one fits the bill perfectly.

Identifying truly new technologies possessing wide ranging, paradigm-busting potential, is not easy, especially for readers and investors depending upon what they read in popular sources like newspapers as being bona-fide journalism.

Having received a great deal of very high value from your writings, I thought I’d send back a few words given this topic is so near and dear to my own heart and personal passion for purity in all things energetic (physical and otherwise).

Because breakthrough technologies involving renewable energy – especially solar-electric (photovoltaic) power, including batteries of all types – is core and central to my own life career work as an electrical engineer and research scientist in this field, I believe I can offer your readers a bit of technical feedback:

First and foremost, it is valid that storage of electricity generated by photovoltaic solar power sources – in batteries of many types, sizes and costs – is nearly as vital a technology as the solar cells that charge them. The claim in this article, though, that Ceramatec’s battery ‘concept’ (NOT a product yet, by a very long shot)”… could be the single most important breakthrough for clean, alternative energy since Socrates first noted solar heating 2,400 years ago.”

This is a huge overstatement, to say the least.

In no way would their technology, if and when ultimately developed into a useful product, compare to any one of a long list of truly authentic alternative energy breakthroughs, such as: silicon semiconductors (solar cells), electronic devices (MOSFET transistors, integrated circuits galore), power conversion methods (inverters), optical lenses (fresnel and others), super-insulators (thermal barriers), or even plain old window glass (for passive heating and active heat collectors).

Although several errors and misstatements fill the article, one in particular really stands out.

Readers may recognize its error quickly when explained economically: …”With the batteries expected to sell in the neighborhood of $2,000, that translates to less than 3 cents per kilowatt hour over the battery’s life. Conventional power from the grid typically costs in the neighborhood of 8 cents per kilowatt hour”

Re-read that last paragraph and let the information really sink in.

Knowing that batteries, like bank accounts, only store what’s put into them, the essential question  is: where do deposits come from, and what do they cost?

In solar energy systems, it’s solar energy in that equals energy out.  With the battery being not a SOURCE of energy but simply a ‘bank’, or RESERVOIR in which to temporarily store what’s generated by day for use at night.

Stating the daily cost of a battery (“less than 3 cents per kilowatt hour”), which, remember, supplies NO power (it only stores it) while in the same sentence making NO mention of the cost of what DOES supply the power, whether it be solar panels, wind turbines or just the normal electric-utility grid, implies at best and misleads at worst that the battery cost is all that counts, as if it were the SOURCE of the power itself.

And then comparing it so favorably to the cost of electricity from the utility (8 cents per kilowatt hour) which DOES SUPPLY ALL the power, is obviously grossly misleading; the TOTAL cost would be the sum of BOTH, or 3 + 8 or 11 cents per kilowatt hour!

Either the author has near zero understanding of what batteries do (store energy) and do not do (generate it), or as is often the case in local newspapers writing about local businesses, another agenda is being served.  To tell readers that “buckets deliver water cheap without being refilled”, can only cause misplaced interest.   Unfortunately, every bucket and battery and bank account must be refilled at some cost. The cost of the bucket should be, and usually is, nearly negligible. Cheap buckets do not mean cheap water.

Many thanks for all you do to bring so many new ideas, concepts, tools and awareness to all of us readers who tune into your thinking regularly.

The reminder from this reader provides a good lesson that we always have to use diligence in understanding the future. And aren’t we thankful when readers can come forth with information on these complicated subjects!  When we invest in new ideas and technology that we do not know… go slow!

The same questions can be raised about electric cars.

electric-car

The picture above is from a USA Today article entitled “Plug-in Fisker Karma car is stylishly environmental” by Chris Woodyard.  Here is an excerpt: Even as Ferraris, Lamborghinis and Rolls-Royces prowled the avenue, the obscure silver sedan parked at the curb gathered its share of stares and curiosity.

The Fisker Karma, as it is called, has looks that rival a Mercedes-Benz roadster. Yet the key to what makes it different is emblazoned on the sides in chrome letters:

The maker, Fisker Automotive, is trying to carve out a niche in what is fast becoming a crowded field of next-generation electric vehicles: a high-performance eco-car loaded with style.

The company has taken more than 1,400 refundable deposits so far for the Karma, which has a starting price of $87,900 and can top $100,000. The car can be driven for 50 miles on electric power alone before its auxiliary gasoline engine fires up to generate more juice and extend the range to up to 300 miles. The engine never directly drives the wheels.

The point never mentioned is the cost of electricity to charge the Karma.

This cost may not be much… I do not know and this is the point.  Use diligence as we move into new technologies.

See Jyske TV for an interview with Henrik Fisker the head of this company

Galapagos Green

Even Galapagos is turning to solar and wind power. Every year, more than 140,000 tourists descend on Galapagos and the island’s population has tripled to nearly 30,000 in the past two decades. To support all those people, 10 million gallons of diesel fuel and gasoline are shipped to the Galápagos annually, a fifth of which is used just to generate electricity. Regular tanker traffic in one of Earth’s most fragile ecosystems is a disaster waiting to happen (just ask an Alaskan), so the Ecuadoran government is trying to go green. Naturally, the remote location involves challenges, but several projects to cut fuel use and boost protections are up and running, with more in the works. See how Galapagos is becoming more green here.

Gary

The greatest asset of all is the ability to earn wherever you live, which brings everlasting wealth.

This is why we offer our course Tangled Web… How to Have an Internet Business.

A clear mind and healthy body are also a vital assets… plus a second language is a powerful diversification tool.

This is why I am willing to pay you $300 to attend either our Ecuador Super Thinking plus Spanish seminar in September or our North Carolina International Business & Investing seminar in October.  Sign up for either seminar and I will email you our Tangled Web… How to Have an Internet Business Course (offered at $299) free plus I’ll knock an extra dollar off your seminar fee…. to round up the $300 savings.

Here are comments from a reader about the way we help:  Merri, I am sitting here with a smile on my face.  I am always amazed at the turn around that I get from my emails to you.  I know you are busy with all of the projects that you and Gary address on a daily basis and appreciate very much you making time for mine.

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.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799

Read the entire USA Today article Plug-in Fisker Karma car is stylishly environmental

International Investing Clue


A recent New York Times article gives us an international investing clues.

Here is an excerpt:

WASHINGTON — Reacting to the violent swings in oil prices in recent months, federal regulators announced on Tuesday that they were considering new restrictions on “speculative” traders in markets for oil, natural gas and other energy products.

The move is a big departure from the hands-off approach to market regulation of the last two decades. It also highlights a broader shift toward tougher government oversight under President Obama.

When a government becomes heavily involved in commerce we can expect a loss somewhere. In this case the loss will be in the value of the US dollar.

One way to beat a falling dollar is to but real estate.  Merri and I are always searching for more real estate to but in Ecuador… like this. We (and two of our daughters) have six of these units just 133 steps to the beach.

international-investments

History has proven that governments do not run businesses well.

Take for example, the recent US government commercial decision to bailout numerous failed US businesses.

The bailout was the first error.

The idea of profit, loss and accountability is to weed out businesses that are not productive, competitive or are no longer needed due to change.

When governments invest in infrastructure… this can be okay… even productive for a nation as a whole.

When governments interfere in commerce and spend billions on losers… expect little good.

As soon as those current bailouts began… the question of bonuses and high salaries of the bailed out executives arose.  Is it fair for executives of failed companies to get big bonuses?

Of course not.

This is why failed businesses normally go broke… so the executives do not get paid at all.

Since the government provided bailouts… the executives who led the business into disaster are still employed.  They have all this government money and since many of them are by definition, losers…  they’ll use the losing strategy of spending that money in unproductive ways…  like with big, personal bonuses.

That’s wrong… unless the government once again steps in.

But is further involvement right?

The current solution has been to create a pay czar.

The word Czar is derived from the name Caesar and originally an meant Emperor in European medieval times. The word has since been used to define rulers with a rank like a Roman emperor… a title with an imperial connotation like a King.

Most of modern North America and Europe are nations founded on revolutions that struck down people like that, who claimed to be czars and kings.

Why do we now let our government create new ones?

This cannot be good economic news.

The US has war czar Lute, energy czar Browner… and now pay czar Feinberg.

In fact a recent Fox news article entitled “Obama’s Czars Draw Criticism From Both Sides of the Political Aisle” says: By some accounts, Obama has nearly three dozen czars in his administration, managing everything from closing the Guantanamo Bay detention facility to ending the genocide in Darfur.

So many Czars… all spending US dollars.

Government spending is the least productive type of of expenditure… because Czars  spend taxpayer’s money… not their own.

international-investments

Merri and I are look for more real estate in Florida as well. Values are getting better. One lake front property that was listed at $799,000 two months ago is now offered at $349.

Lots of unproductive spending by a government will cause its currency (in this case the US dollar) to fall.

This is my belief… in the continued long term fall of the US dollar.

If you also believe that the greenback will weaken from current levels, this could be a good time for you to borrow US dollars and invest the loan in other major currencies like the euro, Norwegian, Swedish and Danish kroner, British pound and Canadian, Australian and new Zealand dollars.

You can do this at Jyske Bank or Jyske Global Asset Management.

When using leverage with an advisory account clients living in the US are limited to currencies and US registered securities.

Such investors can use ADRs and ETFs.   These US securities have a collateral value (equities have a 67% value i.e. 2x leverage).  When using US securities JGAM requires a W9.

ETF’s traded on the NYSE can be used as collateral if Jyske bank accepts the paper and allocates an collateral value (normally not a problem but this can depend on liquidity).

US citizens living outside of the US have no limitations whatsoever and can buy any security with leverage as long as the bank has a collataral value associated with the security.

Gary

Merri and I are also looking for more property in Ashe County North Carolina where there is plenty of fresh water.

international-investments

There are several large tracts (40 to 100 acres) near our farm now for sale. A broker up here recently sent me this note.

“I am convinced that someone will make some money on this property. The Bank is eager to sell and will consider all offers.

Also, concerning other properties — right now there are entire subdivisions just sitting there unsold, with roads and underground power in place, that are being offered at steep discounts by developers who need to get out from under their mortgage commitments.

Some of these are river front properties that will be quite valuable in the future.

There are also some larger undeveloped tracts available for pretty good prices compared to two years ago.”

Our 2009 course and tour schedule.

Sept. 17-21 Ecuador Spanish Course
Sept. 23-24 Imbabura Real Estate Tour
Sept. 25-28 Ecuador Coastal Real Estate Tour

Oct. 9-11 IBEZ North Carolina

Oct. 21-24 Ecuador Import Export Tour

Nov. 6-8 IBEZ Ecuador
Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour

Attend any two Ecuador courses 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.

Ecuador Living Fear Eclipsed


Living in Ecuador or anywhere abroad requires overcoming fear and change.

Today’s rare solar eclipse comes only every two or three generations and is thought to represent times of change.  There is a need for us to feel positive.

Below we’ll look at change in bond markets and how to retire the the 4.75% ISS Capital 2010 bond sandwich that created an 18% profit since the beginning of 2009.  We’ll see how to change this Multi currency sandwich to a better bond now.

Multi currency investments… retirement in Ecuador or living abroad anywhere… represents change and this can create fear… but when we embrace the change it’s good.

A note sent by a reader asking about really early retirement in Ecuador and change said:

I would like to know how to find out about the government of Ecuador and if it is stable for Americans.  When I read the American Military was moving out and the leaders of Ecuador were friendly to Iran.  Personally, I don’t want to put my money in property that I might have it taken from me later.  At my age, I can not afford that and I don’t want to change to some where the local government does not want Americans.  Can you guide me as to how to find out before we go down?  Thanks

ecuador-retirement tags;

Ecuador is Land of the Sun so…

ecuador-spanish-program

The shamans will be watching the sunrise today and the eclipse.

My experience is that anyone who says they are sure how the politics in a country will turn out is truth challenged… or perhaps is not thinking things through.  Too many factors are involved to really know.

We take risk anywhere we are.  There are risks everywhere… all types… and we can never predict them all.

Germany for example seems like a safe place to be.

Yet a recent article in The Telegraph newspaper said:

A 14-year old German boy was hit in the hand by a pea-sized meteorite that scared the bejeezus out of him and left a scar.

“When it hit me it knocked me flying and then was still going fast enough to bury itself into the road,” Gerrit Blank said in a newspaper account. Astronomers have analyzed the object and conclude it was indeed a natural object from space.

Who would have guessed?  There are all types of risk wherever we are!

Ecuador is also a land of mountains.

ecuador-retirement tags;

This is Mt Imbaura view from Cotacachi, Ecuador.  The masculine mountain.

ecuador-retirement tags;

This is Mt. Cotacachi on the other side of the valley… the feminine mountain.

Here is my reply to the political – legal question about retirement in Ecuador above.

I have written a lot about this over the past two years.

Please see http://www.ecuadorliving.com/2009/06/23/ecuador-iran.html
http://www.ecuadorliving.com/2008/09/30/ecuadors-new-constitution.html
http://www.ecuadorliving.com/2007/09/26/interesting-presidential-facts.html

Having worked and lived on every continent over 41 years…I have learned to have feelings beyond what is read in the daily press.  I hope my actions speak louder than my words.

Since Correa has come to power I have invested almost a million dollars in Ecuador buying condos, buildings and houses.

I do have reservations about the Ecuador government… just as I have reservations about the US government and most governments.

Every country has its problems as does Ecuador… but in my opinion (backed by my actions) one of Ecuador’s problems is not the likelihood of confiscation of small individual properties.

Please see why at

http://www.ecuadorliving.com/2008/10/30/property-confiscation-ecuador.html

One of Ecuador’s problems is not the likelihood of unfair treatment of non Ecuadorian residents.  See why at http://www.garyascott.com/2008/08/04/2271.html and http://www.garyascott.com/2007/03/06/1591.html

One never knows how politics turn out.  I have a good friend who hated US taxes (he made a lot of money) so he gave up his citizenship, moved everything overseas and took citizenship in what everyone would agree is a very civilized and safe country… only to have serious tax problems there. One never knows everything.

In a recent message I wrote that there are seven qualities that can unlock enormous business and investing opportunity now during our times of rapid economic change:

#1: Bravery to accept risk
#2: Flexibility
#3: Resilience
#4: Tenacity
#5: Acceptance
#6: Bird’s eye view
#7: Patience

ecuador-retirement tags;

Mt. Imbabura close up. We should not make mountains out of molehills. There are…

ecuador-retirement tags;

mountains enough without creating more.  It is rare by the way to see this much ice on Mt. Cotacachi.  By noon the ice on the mountain is always gone.

A lot of bravery is required to do something like retire in Ecuador or move abroad because most of our backgrounds did not prepare us for such a move.

Our backgrounds did not prepare us for the political evolution in our own country either!

We can research as much as we like (some research is good) but in the end there is always some risk in the new.

Education is learning the rules (what the establishment says is so). Experience is learning the exceptions to the rules (reality). To get experience requires some risk.

See more about Ecuador Retirement risk here.

Mt Cotacachi from

Mt. Cotacachi seen from Meson de las Flores.

I feel that most negative publicity about Ecuador is overblown (as is negative news in the US).   Because Ecuador is more unknown than the US, this bad news helps keep prices low for those of us who take the time to investigate the realities in Ecuador.

How we feel about and react to the news is a very personal matter for every person.

People have personalities that typically break down into seven lifestyles; Innovators, Early Adaptors,  Early Majority, Late Majority, the Deliberate, Skeptical Mass and the Laggards.

Each of these lifestyles has its own benefit. Most important is to know which lifestyle fits you comfortably and to stay in that comfort zone.

If you feel totally comfortable with the US and are not ready to accept the differences in politics between those in elsewhere and the US, you should never do something that leaves you uncomfortable.

Pioneers

My son reminded me yesterday that as the world celebrates this week as the 40th anniversary of the moon landings, it is interesting to remember that of the 12 human beings to have walked on the moon, half of them are of Scottish descent.

This includes the first two to walk on the moon: Neil Armstrong and Edwin ‘Buzz’ Aldrin and the first person to drive on the moon, Dave Scott.

Alan Bean was the fourth person to walk on the moon and took and left a piece of the McBean tartan to the moon.  Even the first game to be played on the moon is a Scottish one – Golf!

Many Scots are Pioneers.  I have noted in my 41 years of travel and work globally that almost wherever one goes, they’ll find a Scot there.

So my comfort level in Ecuador as a pioneer who is always heading for a new place may differ from yours.

Change in Bond Sandwiches

I have even found that many North American investors have been uncomfortable investing outside the US…  much less living abroad or taking retirement elsewhere.

This fear has proven unfounded and now even as US CDS are paying 1% or less are even more, Jyske Bank made 18% profit since the beginning of 2009 with a 4.75% ISS Capital 2010 bond multi currency sandwich. That’s profit at a rate of 36% per annum.

Now Jyske has switched the sandwich to a 7.25% Bombardier 2016 bond. The Bombardier bond has a longer duration and also offers an attractive extra yield spread of 350 basis points above the ISS bond plus has a better rating.

Learn about this entire investment as a Multi Currency subscriber.

We are in times of change and this brings increased risk. To turn this risk into opportunity… decide who you are; Innovator, Early Adaptor, Early Majority, Late Majority, the Deliberate, Skeptical Mass or a Laggard.  Then look at the advantages of that lifestyle and enjoy them and your comfort zone.

Whether you want to retire in Ecuador… change residency… live or invest abroad… this understanding and action can help you eclipse your fears.

Gary

Join Merri me and Thomas Fischer of JGAM in North Carolina this July and enroll in our multi currency course free. Save $175.

Learn more about global investing, how to have an international business and early retirement in Ecuador.

July 24-26 IBEZ North Carolina

Oct. 9-11 IBEZ North Carolina

Or join us in Ecuador and learn more about living and retiring in Ecuador.

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
Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour

Bank Privacy Gone


The problem of getting Bank Privacy is gone.  Now the problem is being able to get a good international bank at all.

The problem is that Americans have lost control of their wealth.

An insidious form of of loss has been taking place for decades and now we are in the end game.

The theft has taken place in the same way the Nazis robbed the Germans of control.

A German industrialist once explained how the Nazi’s took over when he explained that very few people were Nazis.  However many enjoyed how the Nazis brought back an external German pride.  Most were just too busy to care.  The majority let it all happen at an early stage.   Too late the realization came that the Nazis were in total control.   See how this has happened to your wealth here.

This is what has happened to American wealth.

Now we are in the end game.  I have been warning about this problem of reduced bank privacy for over 2o years… first in my printed books and newsletters… later at my web site.

Here is what I wrote at this site almost nine years ago to the day, July 13, 2000.

More on the loss of bank privacy

Bank privacy no longer exists. Some years ago I wrote about the insidious tactics that the US and other governments have used to erode financial privacy and personal liberty and pointed out that the problem is that the government does not attack the individual but puts the pressure on the overseas financial institutions. The current additional move by the US government to collect tax is just one more small step.

The message below shows that one of our readers does not understand this yet. After his message I put my comments below.

“Gary  How can a non-US institution, and there must be many thousands of them in hundreds of countries, be “forced” to comply with the IRS and become a tax collector for them? I would think that most of them would tell the IRS to stick it. Or simply ignore it. Sounds more like scare tactics for US “taxpayers.”

The problem began in the 70s when the SEC sued an investment manager in the US who was managing an overseas mutual fund which kept all its money in Switzerland. The SEC demand to the Swiss bank (Credit Suisse) that they return the money (it was many millions) to the US. The Swiss bank pointed out that the fund had not broken any law and that they had no legal way to return the money.

The US simply seized an equivalent amount of Credit Suisse’s money in the US. The was the beginning of the end of bank privacy. The simple fact is for an international bank to operate it must hold accounts in the US, England, Germany, Japan, etc. This makes these institutions vulnerable to the authorities in each country.

Now we can see that this bank privacy problem has grown so serious that more and more international banks will not accept US investors.

Excerpts from USA TODAY article entitled “Some foreign banks drop U.S. clients because of UBS flap”  by Kevin McCoy shows how far the loss of bank privacy has grown.

The closely watched Justice Department court fight to get the names of 52,000 suspected American tax evaders from Swiss banking giant UBS has prompted some other foreign banks to drop U.S. clients they once welcomed, tax experts said Monday.

Eager to avoid a similar struggle with federal prosecutors, banks including Credit Suisse and HSBC in recent weeks have notified American clients they must close their offshore accounts or transfer them to the institutions’ U.S.-based operations, where tax reporting requirements are far stricter.

“Overall, the international banking community, and particularly the offshore banking community, has been very friendly to American account holders,” said William Sharp, a tax law specialist at the Sharp Kemm law firm in Tampa. “That changed in the past couple of months as a result of the UBS case.”

The owner of an HSBC account in Jersey, one of the English Channel islands, recently received a 45-day notice to close the account, said Robert McKenzie, a tax law specialist at Arnstein & Lehr in Chicago. A client with an offshore Credit Suisse account got a similar notice, he said.

Some foreign banks elsewhere now avoid offshore business with Americans because they know the Justice Department plans “to extend this effort to other jurisdictions beyond Switzerland,” said Martin Press, a tax expert at Gunster Yoakley Valdes-Fauli & Stewart in Fort Lauderdale.

It was a smart move. Overseas banks do not vote and do not lobby in Congress.   US banks of course do not mind the competition getting kicked.

A few writers, (ourselves included) have been sounding the warning… in our case for decades.

Yet we are small potatoes and this never reached the majority of the public awareness.

The freedom to bank abroad has never been removed. Conditions have just been set so overseas banks cannot serve Americans.

Clever.  This leaves US investors with fewer ways to protect against inflation created by irresponsible spending.

The loss of bank privacy is not as bad as the loss of being able to use competent international banks.

Fortunately some banks like Jyske Bank (the Danish bank I have worked with for decades) has taken the time and considerable expense to qualify to serve US customers and actively accept them.

One way to overcome this problem is move.  Live and/or retire outside the US. Retire in Ecuador or somewhere you enjoy… as many Germans who saw what was coming did before the Nazis took total control.

This is one reason why so many Americans are moving abroad. See more at America Moving Abroad.

Gary

Join us at our North Carolina farm this July or October for our International business & investing seminars below. Learn more about early retirement and Ecuador.

July 24-26 IBEZ North Carolina

Oct. 9-11 IBEZ North Carolina

Or join us in Ecuador and learn more about living and retiring in Ecuador.

July 24-26 IBEZ North Carolina

Oct. 9-11 IBEZ North Carolina

Or join us in Ecuador and learn more about living and retiring in Ecuador.

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
Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour

See the entire article Some foreign banks drop U.S. clients because of UBS flap at http://www.usatoday.com/money/industries/banking/2009-07-12-ubs-secrecy-case_N.htm

Protected: Ecuador Dentist & Doctor Flexibility


This content is password protected. To view it please enter your password below:

Ecuador Risk


Ecuador has risks.

As does everywhere.  In fact our world has more risk then ever before.

ecuador-risk

Are quiet Ecuador streets like this Cotacachi avenue at risk?

ecuador-risk

The young Ecuadorian children who go to school early, alone don’t seem to feel much risk.  Yet?

Change creates risk and we live in an era of increasingly rapid change.

Those who welcome this fact are those who have the best chance of success. ahead.

This is the era of rapid change… the era of  extra risk.  The current time period within this era is of accelerated change and risk.

This is an important message about how to manage risk in Ecuador or anywhere.

ecuador-risk

Even young children play alone in the Cotacachi Ecuador streets without much risk

Yet we must always take care.

Take for example the US travel advisory for Ecuador… read  without perspective. Ecuador risk would seem high.

Here are excerpts from the US travel advisory for Ecuador:

SAFETY AND SECURITY: The U.S. Embassy in Quito advises caution when traveling to the northern border region of Ecuador, to include areas in the provinces of Sucumbios, Orellana and Carchi, northern Esmeraldas, and southern Esmeraldas, south of Atacames.  U.S. government personnel are under limitations with respect to traveling alone and over-nighting in these areas due to the spread of organized crime, drug trafficking, small arms trafficking, and incursions by various Colombian terrorist organizations.

CRIME:  Crime is a serious problem in Ecuador, and visitors should be alert and cautious.  Non-violent crime is common: hundreds of Americans are robbed every year in Ecuador.   Incidents of rape have increased, even in well-traveled tourists areas and when the victims traveled in groups for safety. Shootings, kidnappings, and carjackings are still relatively rare, but American citizens have been victimized by those crimes.  The Ecuadorian government has increased police patrols in tourist areas, but travelers should remain alert to their surroundings and maintain constant control of personal belongings.

Criminals sometimes use incapacitating drugs such as scopolamine on unsuspecting tourists in order to rob them.  These so-called date rape drugs are put into drinks in order to drug the unsuspecting victim.  This drug can render the victim disoriented and can cause prolonged unconsciousness and serious medical problems.  Never allow a stranger to “buy” you a drink and never leave your drink unattended.  Several American citizens have reported thefts of property following ingestion of such substances.

Does Ecuador sound risky?

Ecuador sounds risky until you read the travel advisory for Italy.  Here are excerpts from the US travel advisory for Italy:

Some travelers are victims of rape and beatings.  There are incidents of drinks laced with drugs being used by criminals to rob, and in some cases, assault tourists.  Many of these incidents occur in the vicinity of Rome’s Termini train station and at major tourist centers such as Campo de Fiori and Piazza Navona, as well as in Florence and Naples.  Criminals using this tactic “befriend” a traveler at a train station, bus stop, restaurant, café or bar in tourist areas, then eventually offer a drink laced with a sleeping drug.  When the tourist falls asleep, criminals steal the traveler’s valuables.  There are also instances where the victim is assaulted, either physically or sexually.

Petty crimes such as pick-pocketing, theft from parked cars, and purse snatching are serious problems, especially in large cities.  Clients of Internet cafes in major cities are also targeted.  Tourists who have tried to resist petty thieves on motor scooters have suffered broken arms and collarbones.

The U.S. Secret Service in Rome is assisting Italian Law Enforcement authorities in investigating an increase in the appearance of ATM skimming devices.

Organized criminal groups operate throughout Italy, but are more prevalent in the south.  They occasionally resort to violence to intimidate or to settle disputes.

Italy could seem risky as well until you read the travel advisory for Spain .  Here are excerpts from the US travel advisory for Spain.

SAFETY AND SECURITY:     Spain and Andorra share with the rest of the world an increased threat of international terrorist incidents.  Like other countries in the Schengen area, Spain’s open borders with its Western European neighbors allow the possibility of terrorist groups entering and exiting the country with anonymity.  Spain’s proximity to North Africa makes it vulnerable to attack from Al Qaeda terrorists in the Maghreb region.  Americans are reminded to remain vigilant with regard to their personal security and to exercise caution.

In the deadliest terrorist attack in recent European history, in March 2004, Islamist extremists bombed four commuter trains entering Madrid, causing 191 deaths and over 1,400 injuries.  Spanish authorities tried the suspected terrorists and their co-conspirators in February 2007 and convicted in October 2007.

The Basque Fatherland and Liberty (ETA) terrorist organization remains active in Spain.  ETA has historically avoided targeting foreigners, directing their attacks against the police, military, local politicians, and Spanish government targets as well as attempts to disrupt transportation and daily life. However, foreigners have been killed or injured collaterally in ETA attacks.  Two examples of this are the Barajas Airport bombing in December 2006, in which two Ecuadorian nationals were killed and the bombing at the University of Navarre in October 2008, in which 17 students were injured including one American student.  In addition, bombs have been used as part of criminal extortion of businesses, particularly in the Basque region. The risk of “being in the wrong place at the wrong time” in event of an ETA action is a concern for foreign visitors and tourists.  U.S. tourists traveling to Spain should remain vigilant, exercise caution, monitor local developments, and avoid demonstrations and other potentially violent situations.

Street crimes against tourists occur in the principal tourist areas.  Madrid and Barcelona, in particular, report incidents of pick-pocketing, mugging and occasional violent attacks, some of which require the victim to seek medical attention.  Although crimes occur at all times of day and night and to people of all ages, older tourists and Asian Americans seem to be particularly at risk.  Criminals frequent tourist areas and major attractions such as museums, monuments, restaurants, outdoor cafes, Internet cafes, hotel lobbies, beach resorts, city buses, subways, trains, train stations, airports, and ATMs.

Thieves often work in teams of two or more people.  In many cases, one person distracts a victim while the accomplices perform the robbery.   Spanish authorities warn of the availability of so-called “date-rape” drugs and other drugs, including “GBH” and liquid ecstasy.  Americans should not lower their personal security awareness because they are on vacation.

We could go on… in Europe…  in Asia… or anywhere.

ecuador-risk

Parents in Cotacachi Ecuador do not feel much risk when they let their children play in the parks.

Mostly, places are not the cause of risk.  The causes of risk  are within,  our awareness, our actions, our  patterns and habits.

If one becomes aware of change and adapts accordingly… there is no risk.  There is opportunity instead.

Early adapters are called risk takers.   They are not.

Real risk takers are those who do not  adapt because…  we know…  there is change.

The real risk is living by OLD rules in a NEW world.

The real risk is believing in General Motors for example… because it is the biggest… oldest… so it must be safest.

ecuador-risk

Young lovers in Ecuador can meet safely in out of the way places.

The world is new every day and each day, some old rule no longer works.

The old rules used to say that the Western world was safe… and the emerging world riskier.   The old rules said that the Western world had low crime…  the emerging world had high crime.

Yet look at excerpts of a recent New York Times article entitled “Prison Spending Outpaces All but Medicaid” by Solomon Moore (See a link to the entire article below) says:

One in every 31 adults, or 7.3 million Americans, is in prison, on parole or probation, at a cost to the states of $47 billion in 2008, according to a new study.

Criminal correction spending is outpacing budget growth in education, transportation and public assistance, based on state and federal data. Only Medicaid spending grew faster than state corrections spending, which quadrupled in the past two decades, according to the report Monday by the Pew Center on the States, the first breakdown of spending in confinement and supervision in the past seven years.

This suggests that the US has quite a lot of risk… both in crime and health.

ecuador-risk

Ecuador people are by nature, caring, friendly and warm.

Sometimes I get letters like the one below from readers who have been victims of crime in Ecuador.  This reader lost her computer and camera when she forgot them in the business lounge at the Radisson hotel in Quito.

Dear Gary,  Can you believe, the Quito police, working with the Radisson hotel, found my  briefcase with the computer and other small items and had them sent by Federal Express to me.  I had provided them with the receipts of all the items stolen, for the items they were not able to send me  (camera and cellular phone) I was reimbursed via bank transfer. I still can’t believe it.  This was a good ending and so unexpected.  send you all love, and good thoughts. Laura

New rules about risk are being written every day and our daughter Francesca shared some thoughts on this when she recently visited us here.

Fran is quite a traveler.  Here early studies were in England… Gloucestershire and Birmingham.  Then she spent more for more than a year in Spain and Costa Rica, and moved to Naples and Delray, Florida which were bases for her to  manage real estate tours in Argentina, Belize, Chile, Ecuador and Uruguay.

She worked for several years doing human rights training in Geneva, Switzerland before returning to get her Masters degree at London School of Economics.

Then  she worked in London for the Crown Agents where she was assigned
as a project manager and consultant to governments in Nigeria,  Peru, Sierra Leone and South Africa.

She has worked the last several years  as a development planning, monitoring & evaluation consultant in Swaziland and is returning there now on a contract with the United Nations.

As a young, single woman (now married) she has had to be aware of risks traveling everywhere from Florida to London to Lagos.

ecuador-risk

Here I am with Francesca on her wedding day.

Fran & Sam rode to their reception in Richmond Park on a bicycle built for tow.

ecuador-water

Riding a bike through London traffic… now that is risky!

ecuador-water

Here are some common sense thoughts that Francesca shares about living with risk.

Living with Risk by Francesca Scott

We’re living in risky times; from the economic collapse, to swine flu, to erratic weather conditions.  It sometimes surprises me when people ask me if I’m not worried about living in Swaziland (my current home), because, they say, Africa is such a dangerous place.  I figure that when I return to London, my risk of being attacked in a terrorist attack skyrockets.  And I am still dumbfounded by the fact that children are screened for guns at schools in the United States.  By the way in England for the first time screening for knives has begun in some inner-city London schools.

The issue of risk came to mind recently, when I was visiting my Grandma. One evening over dinner, the discussion turned to the security situation in Swaziland, and I mused that in certain ways I feel safer in Swaziland than I do in parts of London. My Grandma commented that gangs were increasingly becoming a problem in Portland, her home city, and that she didn’t feel that safe these days.  The next day, as we stopped at the local bank, I was surprised by the thick wall of bullet proof glass completely separating the staff from the general public. They don’t have that in banks in London, or in Mbabane, Swaziland’s capital city.

I began thinking about how easily we adapt to different risks within our local environments. In many countries, one would be crazy not to have bars on lower windows. In central London, I hold my bag very close to my chest – I value my purse and cell phone too much. My mother-in-law, who lives in Australia, actually leaves her keys in her car when she stops at a store to pick up groceries (gasp!).  Sadly, I doubt that will last for much longer.   So does my Dad in NC.  They have a policy on the farm that all keys remain in all vehicles…just in case someone needs to jump in one!

Each country has a different risk profile, from pick-pockets, to pollution, to drug barons.  I am not saying that Swaziland does not have its dangers – my house has been broken into several times, and I drive much more defensively than I would in the US or the UK (mostly to avoid wayward cows that have drifted onto the road).  The important thing is to be fully informed about the risks.  This might sound obvious, but sometimes people are scared off by unfamiliar risks or misinformation.

It’s also worth remembering that there are often a variety of ways to mitigate those risks through effective prevention methods, so long as you know the rules. Most of us are guilty of exposing ourselves to unnecessary risk as a result of ignorance at one time or other, and are lucky that we’ve lived to tell the tell. I was threatened at knife point by a drug addict in a park in Spain, when I lived there as a student.  When I recounted my story to my Spanish roommate, she told me that I was a fool to be in that park in the first place, ‘…didn’t you know that it’s the favorite haunt for heroine addicts in the city?’  Well, no, obviously I didn’t know at that time, but it was a valuable lesson for me about the importance of knowing the rules.

I must admit to being a little scared before I went to Swaziland.  After all, it’s in one of the poorest parts of the world, and only three hours drive from Johannesburg, a gang-ridden, violent city. I also couldn’t shake off all those awful images of Africa I’ve seen on the evening news. I told myself that I would try it out for six months (I figured I could survive for that length of time in an underground bunker living off tinned corned beef and bottled water if it was that bad), and make a decision from there about whether or not it was for me. Two-and-a-half years later, I still thoroughly enjoy living here and am very glad that I resisted my initial anxieties.

For those considering buying property, or even moving to Ecuador, or any other country – developed, developing or downright poverty stricken for that matter – I would recommend to take the time to become fully informed about the types of risks you might face.  You can find out a lot from the internet and books, but it would be a shame to be scared off by some of what you read or by the well intentioned comments of a neighbor who hasn’t ever lived away from their home town.

Everyone comes from a different starting point, and everyone has a different risk threshold.

Also, the dramatic stories tend to be more interesting to tell.  While reading around can certainly offer you a variety of different and valuable viewpoints, it’s also important to talk to people who have lived in the country. Locals can be an invaluable source of information, while ex-pats may be more appreciative of the kinds of risks unanticipated by a foreigner, risks that may seem glaringly obvious to a local. Also, find out what you can do to mitigate those risks. Often you can reduce your exposure significantly using the appropriate precautions. If you think that the benefits outweigh those risks, then go down and check out the country for yourself.  That’s the only way you can really know if the level of risk is one that you could tolerate.

It might be that the risks are in some countries and in some places, in fact, just too high, pushing you beyond your comfort zone, or that the restrictions necessary to reduce your risks would make you feel stressed and claustrophobic. It’s no fun lying restless at night at night because you’re worried over a break-in, even though you have an alarm, or resent the lack of privacy from having a guard permanently outside your house. If you’re looking for the exact replica of your own community, with the same level of risk, and a Starbucks around the corner thank you very much, then somewhere like an emerging country really may not be for you. There will inevitably be new and different risks in poorer countries, some to which you, as a foreigner, could be at much higher risk than a local.

But take a moment to reflect on the risks that you face in your daily environment back home, and you might find that such risks are relative. While some risks will be new when you move abroad, you will also leave some behind. Therefore, before making any decision of moving to a country other than your own, I recommend making sure that you are informed by the reality on the ground, not some misconception fed by the media or well-intentioned homebodies. Only with that information can you gauge whether you’ll be comfortable with the type and level of risk you might face. For an adventurous soul, you may well find that the benefits of living in a new culture, the fun of exploring a foreign terrain, make everything worthwhile.

Risk assessment is a vital part of survival and success in today’s world.

This has always been true so always consider risk… but when you evaluate danger… don’t  just look at the places where you will be.   Review your thinking, your habits and patterns to see how you can turn risk into opportunity.

Gary

Join us here at our hotel Meson de las Flores.  Learn more turning risk into opportunity at our courses and tours.

ecuador-risk

June 12-14 Shamanic Mingo Tour

June 16-17 Imbabura Real Estate Tour

June 18-21 Ecuador Coastal Real Estate Tour

July 4-8  Ecuador Export Tour

July 8-9 Imbabura Real Estate Tour

July 10-13 Ecuador Coastal Real Estate Tour

July 24-26 IBEZ North Carolina

Sept. 17-21 Ecuador Spanish Course

Sept. 23-24 Imbabura Real Estate Tour

Sept. 25-28 Ecuador Coastal Real Estate Tour

Oct. 9-11 IBEZ North Carolina

Oct. 21-24 Ecuador Import Export Expedition

Nov. 6-8 IBEZ Ecuador

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

Attend any two Ecuador courses or tours in a calendar month…$949 for one.  $1,349 for two.

Attend any three Ecuador courses or tours in a calendar month…$1,199 for one.  $1,799 for two.

See the entire article Prison Spending Outpaces All but Medicaid at http://www.nytimes.com/2009/03/03/us/03prison.html

The American Dream Goes South at Florida Investment Seminar


I’ll focus on how the American dream is heading south at JGAM’s multi currency seminar in Florida this May.

If looked at one way… the American dream is dead. Let’s ramble through economic history for a moment to see why.

In the early 1980s the US had a challenge… a severe recession from July 1981 to November 1982.  Inflation was high so the Fed  slowed the rate of growth of the money supply and raised interest rates. The federal funds rate rose to 20% by June 1981. The prime interest rate, at the time a highly important economic measure, eventually reached 21.5% in June 1982. Businesses went broke by the drove… 50 percent over the previous year.  Especially hard hit were farmers and real estate developers.

The recession was the most serious recession since the Great Depression.

This was tough but inflation eased and the economy rebounded.  Growth took off again… real growth without bad inflation because the real estate overhang and subsequent bankruptcy of the Savings & Loan industry was dealt with by the Resolution Trust Corporation.

RTC liquidated via auction and a massive sell off to private business, the real estate that had been assets of savings and loan associations that were insolvent.

The US government had the sense then not to try and control these assets.  Entrepreneurs bought the assets for pennies on the dollar and turned the property into viable deals in ways that no government agency ever could.

Japan then had a serious recession and the same opportunity.  There was a real estate and stock bubble in Japan in the 1980s.   Then in 1989 there was a massive withdrawal of confidence. Investment collapsed, causing the Nikkei index to fall more than 60 percent.

The Japanese government however decided that it could provide a fix. the Japanese felt they could not let big Japanese businesses go broke.  Between 1992 and 1995, Japan tried six spending programs totaling 65.5 trillion yen. They cut  taxes in 1994. In 1998 they cut taxes again and launched stimulus packages worth more than 40 trillion yen.,  A year later… another stimulus program. In 2000 11 trillion yen more was spent to stimulate the economy.

Over a decade the Japanese government provided 10 stimulus packages worth more than a 100 trillion yen.   The main result was to ruin the Japanese government’s credit with public debt that exceeds 100 percent of GDP. This is the highest percent of debt of all major nations.

Any other results?  Here is evidence… the main Japanese stock index the Nikkei 225 from 1989 till 2009.  Japanese society is indebted for life and the stock exchange has fallen from over 35,000 to  7,600 in 20 years.

Wow that really worked well… so

power-investing

now the US government has decided to do the same thing.

Last week the government  offered another $30 billion in funds to A.I.G. insurance.  This is the fourth round of aid to the American International Group. The government already owns nearly 80 percent of the insurer’s holding company. How much more can they buy?

This sounds like a good investment since the insurance giant was about to report a $62 billion loss after the government has already given a $60 billion loan, a $40 billion purchase of preferred shares and purchased $50 billion of the company’s toxic assets.

Behind this, the government has invested $50 billion in Citigroup… $45 billion in Bank of America.  The Us auto bailout could cost another 100 billion. More on that in a later message.

This is all taking place as the US economy spirals down at an accelerated pace.

Yet the current administration is basing its spending on calculations that suggest vigorous rates of economic growth in years to come.

They have suggested this economic growth will come in 2010.

I wonder?

There seems to  a disconnect between the Federal projections and fiscal reality.   Current conditions are not yet at the level of the 1980s, when unemployment exceeded 10 percent, but they could be soon.

Moody’s chief economist now places the odds of “a mild depression” at 25 percent. In that view, the unemployment rate would reach 10.5 percent by the end of 2011 — up from 7.6 percent at the end of January — average home prices would fall 20 percent on top of the 27 percent they have plunged already, and losses in the financial system would more than triple, to $3.7 trillion.

Yet President Obama calls this a “once in a generation” opportunity and proposed a 10-year budget that overhauls health care, arrests global warming and expands the federal role in education.

How to pay for it?   Tax more corporations and the wealthiest taxpayers.

Wrong!  Higher tax will simply kill business or drive it abroad.  What a  good idea to chase away the last of the success.

The President said  he would shrink annual deficits.  His explanation is that he will increase revenue from rich individuals and polluting industries, reduce war costs and assume a good rate of economic growth by 2010.

The rich will stop working or leave the US.  The polluters will move to Mexico or China or wherever.   The high rate of economic growth will not appear.  Stopping the war will help… but not enough.

Technology means that politicians can no longer ignore the global market and tax its citizens to death.

Take for example what is happening in Ecuador.  Remittances sent by  Ecuadorians who work abroad fell 22 percent in the last quarter of 2008.

$643.9 million was sent from October to December 2008. This is $181.7 million less than in Oct.to Dec.2007.

A similar drop was experienced in the third quarter of 2008 and is caused by the global financial crisis and especially the economic slowdown in the United States, where it is estimated 1.5 million Ecuadorians live and work.

The U.S. employment rate has crashed especially in manufacturing and construction which employ a large number of Ecuadorians.

The same is true in  Spain – where 600,000 Ecuadorians live. this is the second-leading destination for Ecuadorians.

This means that there are more Ecuadorians to serve for less in Ecuador.  This forces the Ecuador cost of living down down.

So if you are an American who is about to be super taxed… where would you choose to live?  Our farm manager sent us this note recently, “We had 4 inches of snow in China Grove.”

multi-currency-florida-course

Would you rather live there and pay more tax or…

multi-currency-florida-course

enjoy open air dining as Merri and are doing here in our Cotacachi hotel courtyard with Dan Prescher and Suzan Haskins or…

multi-currency-investing-florida-course

would you rather enjoy a mountain train ride as these…

multi-currency-investing-florida-course new Cotacachi residents are doing…  passing through green mountains  and blue skies.  Getting a sun burn.

multi-currency-investing-florida-course

The is the train from Ibarra to Salinas Ecuador.  Would you rather be taxed extra to be in this pool or…

multi-currency-investing-florida-course

be here on Ecuador’s coast with tax advantages?

multi-currency-investing-florida-course

Which view will the rich prefer?  This in the US or…

multi-currency-investing-florida-course

this… especially if this San Clemente Ecuador ocean view costs much, much less?

multi-currency-investing-florida-course

Where would I prefer to walk with my hound?  Here in sub zero temperatures or

multi-currency-investing-florida-course

here in Cotacachi Ecuador…especially if I am taxed less and the cost of living is much lower and government interference in my life is less?

multi-currency-investing-florida-course

Technology and the global market gives us as individuals enormous power to live where and as we choose that politicians can no longer ignore.

The government’s attitude to increase taxes on those who work hard could turn the existing brain drain from the US into a brain torrent.

In short there are many reasons I see that suggest the economic mess will  last for years in the US,  just as it has in Japan.

Recently, Warren Buffett wrote in his company’s annual report that “the economy will be in shambles, throughout 2009, and, for that matter, probably well beyond.”

This is not the picture we expect of the American dream.  However the picture is not bad for all.  Not all Italians became poor when Rome fell.  Italy is still a great place to live.  There are still millions of Japanese who have thrived over the past 15 years of Japanese recession.  The end of the America dream does not have to be the end of your dream.

In the US we can expect the rich to get richer… the poor poorer.   We can see why from our study of Power Distance Index.  We looked at PDI, and what it is, in a recent message about JGAM’s multi currency seminar.

There is more about Power Distance Index at http://www.clearlycultural.com which says:

Hofstede’s Power Distance Index measures the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. This represents inequality (more versus less), but defined from below, not from above. It suggests that a society’s level of inequality is endorsed by the followers as much as by the leaders.

For example, Germany has a 35 on the cultural scale of Hofstede’s analysis. Compared to Arab countries where the power distance is very high (80) and Austria where it very low (11), Germany is somewhat in the middle. Germany does not have a large gap between the wealthy and the poor, but have a strong belief in equality for each citizen. Germans have the opportunity to rise in society.

On the other hand, the power distance in the United States scores a 40 on the cultural scale. The United States exhibits a more unequal distribution of wealth compared to German society. As the years go by it seems that the distance between the ‘have’ and ‘have-nots’ grows larger and larger.

The trick then is to not accept the PDI from the lower end. Let me explain.

Excerpts from 2007 article by a Stefan Bach , Giacomo Corneo  and Viktor Steiner at www.voxeu.org entitled German income inequality outlines an idea.  The article says:

Paul Krugman frequently mentions that America’s super rich make the 19th Century wealthy look poor. “We know what John D. Rockefeller, the richest man in Gilded Age America, made in 1894 … $1.25 million, almost 7,000 times the average per capita income in the United States at the time.” Krugman wrote. ”But that makes him a mere piker by modern standards … James Simons, a hedge fund manager, took home $1.7 billion, more than 38,000 times the average income.”

Surely such extremes cannot happen on Continental Europe with its social market economics and social solidarity. The authors of Policy Insight No. 4 shows that although income inequality in Germany is a long way from reaching US proportions, the trend is in that direction. Germany rich are getting richer, and its super-rich are getting super-richer.

In other words as a society progresses, those with power get richer while the majority of  the population become poorer.

Note above that power is determined  from below, not from above. It suggests that a society’s level of inequality is endorsed by the followers as much as by the leaders.”

Power is an illusion that keeps most investors and business people depressed while a few gain from this social falsification.

The internet destroys this illusion. The web gives us all power!  Today we have as much opportunity as the rich to gain from the changes that this economic correction will bring.

This is why Merri, our webmaster and I have created a new course on how to build a web business with a webmaster.  More on this in a moment.

First what you can do as an investor or with your own business.

One answer we saw above is to live in a better lower cost environment like Ecuador.

Another answer is to be a multi currency investor. Despite America’s government spending , the dollar has been gaining, particularly against European currencies. The euro slipped to under $1.26, nearing a two-year low and down from a high of almost $1.60. This is caused as fearful investors jump into 10-year Treasury bonds… which have been shown to be terrible long term investments.   All the US government spending means that the US dollar will fall. But against what?

The euro is not a trustworthy currency now. A March 1, 2009 New York Times article by Steven Erlanger and Stephen Castle entitled “Growing Economic Crisis Threatens the Idea of One Europe” explains why.  Here is an excerpt from that article:

The leaders of the European Union gathered Sunday in Brussels in an emergency summit meeting that seemed to highlight the very worries it was designed to calm: that the world economic crisis has unleashed forces threatening to split Europe into rival camps.

With uncertain leadership and few powerful collective institutions, the European Union is struggling with the strains this crisis has inevitably produced among 27 countries with uneven levels of development.

Whether Europe can reach across constituencies to create consensus, however, has been an open, and suddenly pressing, question.

“The European Union will now have to prove whether it is just a fair-weather union or has a real joint political destiny,” said Stefan Kornelius, the foreign editor of the German newspaper Süddeutsche Zeitung. “We always said you can’t really have a currency union without a political union, and we don’t have one. There is no joint fiscal policy, no joint tax policy, no joint policy on which industries to subsidize or not. And none of the leaders is strong enough to pull the others out of the mud.”

Thomas Klau, Paris director of the European Council on Foreign Relations, an independent research and advocacy group, said, “This crisis affects the political union that backs the euro and of course the E.U. as a whole, and solidarity is at the heart of the debate.”

“All of that is in doubt if the cornerstone of the E.U. — its internal market, economic union and solidarity — is in question,” said Ronald D. Asmus, a former State Department official who runs the Brussels office of the German Marshall Fund.

If the the euro is a good currency for diversification, which currencies are?

Our multi currency course helps you learn how to diversify into safe currencies.  Our studies currently suggest that the Danish, Swedish, Norwegian kroner and Canadian dollar make sense. For example beginning in March the Swedish kroner hit a new record low. The Eastern European problems are having an adverse impact on the Swedish banks.   Also the Norwegian currency is a good technical buy.

You can join us to understand why these currencies make sense by subscribing to our on line multi currency course.

You can also join us for a currency review at JGAM’s Naples Florida investment course May 29 to 31, 2009.  This course is $499 ($750 for two) but free to those who have subscribed to our on line multi currency course.

Another way you can attend JGAM Florida seminar free is to subscribe to our course on how to have a web based business.   You can enroll in this special course for $299 and attend the JGAM course in Naples free.

Here is a special offer on this course “Tangled Web – How to Have a Web Business“.

Or join us for an upcoming course in North Carolina or Ecuador.

Gary

Future 2009 courses

May 29-31  JGAM Multi Currency investment Seminar Naples Florida

June 12-14 Shamanic Mingo Tour
June 16-17 Imbabura Real Estate Tour
June 18-21 Ecuador Coastal Real Estate Tour

July 3-6 Ecuador Import Export Expedition
July 8-9 Imbabura Real Estate Tour
July 10-13 Ecuador Coastal Real Estate Tour

July 24-26 IBEZ North Carolina

Sept. 17-21 Ecuador Spanish Course
Sept. 23-24 Imbabura Real Estate Tour
Sept. 25-28 Ecuador Coastal Real Estate Tour

Oct. 9-11 IBEZ North Carolina

Oct. 21-24 Ecuador Import Export Expedition

Nov. 6-8 IBEZ Ecuador
Nov. 9-10 Imbabura Real Estate Tour
Nov. 11-14 Ecuador Coastal Real Estate Tour

Attend any two Ecuador courses 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

Cotacachi Spanish Schedule


Our Cotacachi Spanish course just finished. See yesterday’s message Cotacachi Health Opportunities about this course.

During the course Cotacachi was the center of a massive demonstration that may lead to some significant political impact.

Here is a comment about this from Journalists without borders.

Community journalist arrested during indigenous people’s protests against mining law.

Reporters Without Borders today demanded an explanation from the authorities about the reasons and circumstances of the arrest yesterday of community journalist Francisco Farinango in Ñaño Loma, in the Pichincha region of northern Ecuador.

The reporter on Radio Intipacho was arrested with three other members of his Tupigachi community on the sidelines of nationwide demonstrations by indigenous communities against a new mining law, which locally degenerated into clashes with security forces. The capital Quito is in the Pichincha region.

Police sources cited by the national press said that the journalist had been accused of having “incited” his companions to demonstrate and would shortly appear before a court. A total of nine people were held and six others injured during the demonstration.

“An arrest against the background of a demonstration, possibly a riot, makes it difficult to check the allegation that Farinango had ‘incited’ members of his community to rise up,” the worldwide press freedom organisation said.

“Why him in particular?” it asked. A community journalist is by his nature witness and actor in an event that affects his community, a witness who could be awkward in a crisis. We fear that the arrest of Francisco Farinango only serves to punish his media and we ask the authorities to clarify their reasons,” it said.

Indigenous communities mounted protests in nine of the countries 24 provinces on 20 January against the environmental consequences on their lands of a new law allowing open cast mining. The day was marked by some localised blocking of roads and clashes with police.

Interior minister, Fernando Bustamante, said there had been an “attempt to destabilise the country and its government”, a statement which provoked an outcry from representatives of the National Confederation of Indigenous Nationalities (CONAIE), who said they held the minister responsible for the physical wellbeing of the detainees, along with his counterpart at internal and external security, Gustavo Larrea, and the President, Rafael Correa Delgado.

We look more deeply into this demonstration and the political impact  in our upcoming Ecuador Living update. 

You can get that update as a subscriber to Ecuador Living.

Of course our Cotacachi Spanish course delagtes did not see any of this in Cotacachi. They saw a parade instead.

Cotacachi-spanish-course

Friendly fun colors…

Cotacachi-spanish-course

beautiful people…in beautiful dress and…

Cotacachi-spanish-course

beautiful sounds.

Cotacachi-spanish-course

See more pictures of the partade at Cotacachi Surprise Parade

Having bragged about the success of the Cotacachi Spanish Course,  I must announce that  we have canceled our May Cotacachi Spanish course.   In a way this is good news…created by bad news….that creates more good news.

Here is the bad news that creates the good news.  The global investment world gave their opinion of President Obama’s inaugural speech with this.

New York Times excerpt:  Dow Falls More Than 330 Points; S.&P. Drops More Than 5 Percent After hearing the new president’s inaugural address, investors went back to selling stocks, sending the major indexes down sharply. Traders on the floor of the New York Stock Exchange paused at times to watch the inauguration ceremony and President Barack Obama’s remarks, but the
transition of power did not erase investors’ intensifying concerns about the struggling economy. At the close, the Dow Jones industrial average was down more than 330 points, or about 4 percent, while the broader Standard & Poor’s
500-stock index fell 5.2 percent.

I really like Obama but do not feel that increased US government spending is the way to resolve the world’s economic imbalances.

This news  creates some unprecedented opportunity and I have been working closely with Jyske Bank and Jyske Global Asset Management (JGAM) to help our readers understand why and how the current economic  corrections create phenomenal investing value.

Therefore we have agreed to replace our May Spanish course with a Global Asset Value to join up with JGAM and speak at their JGAM Global Asset Value Strategy Seminar  in Naples Florida, May 29 to 31.

Investing values are so special now and investors have been hit s hard that we feel it important enough to take the unprecedented step of canceling a course in Ecuador (we have not done this in the past 20 years).

One way to take advantage of this opportunity is by investing British pounds now.

Here is an excerpt from today’s Multi Currency course.

Jyske Global Asset Management just set me this note.

At the Investment Committee meeting on the 15th of January we decided to take a long position in GBP & JPY against USD.

The stop loss level in GBP was reached before the position was taken. We thus had an Ad Hoc meeting today to consider our options.

We decided to take the long position in GBP at these new levels as we feel it has fallen to much to quickly and should be poised for a rebound.

We sell USD against GBP at 1.3986 with a stop loss at 1.35 which is below the low of  1.3730 set in August 2001.   We executed the USD/JPY as agreed at the meeting on the 15th of January. We sold USD at 90.166 with a stop loss at 103.00

See the entire lesson and ways to invest in pounds now by subscribing to our Multi Currency Portfolios course.

Another way to beat the economic downturn is with your web based business.  Here is an excerpt from our newest course Tangled Webs – A Web Business Course – Lesson Three.

The creek sighs into an inky night’s prefect harmony of…katydid, cricket and the  hoot owls that punctuate nature’s noisy silence and lulls us in our sleep.

Merri and I slept in our Colman tent next to this water fall, dreaming content in our evolution…from the US, to Hong Kong and Europe, years in London to Florida and  a 5,000 square foot house on the beach…rising to this…a tent deep in a Blue Ridge woods.

tangled-web

This is how we started our farm…from a tent….open fire cooking and boiling water from the creek. When I say remote…I mean remote. Here is one of our farm views.

tangled-web We are isolated.  Here is the office/seminar center we built in the deep woods.

tangled-web

Our hacienda in the Andes is even more remote. Here I am with  Merri  building a hut on the hacienda.

tangled-web

Friends who knew us first when we lived in Florida and drove a Rolls Royce were often shocked when they came to visit and discover that we were instead driving a beat up Ford pickup and living in a tent!

We had a Bentley as well!  Here is our daughter Cheri enjoying our classic Bentley T.

tangled-web

What an evolution.   Let me tell you about this Ford truck.

Brown Betty we called her. 1987-brown-rusting, scratched-143,000 miles-long bed-four wheel drive-eight speed stick on the floor-big engine-huge six ply snow tires. I bought her for $2,400 bucks.

This truck was tough! When Merri, me and Ma (our pumpkin patch hound) have a heavy job from carrying railroad ties (we were building a bridge on the land) to taking rusted barbed wire we pulled out of the creek to the dump, the truck got the job done. We did not worry about the innumerable dents scratches and nicks we put on that truck for a minute.

This was the perfect vehicle for the farm at that time.  Rain, mud, frozen roads or snow, that truck kept going. With chains she was a Sherman tank that could carry hay.

We have since upgraded to a more fuel efficient…but still dented and scratched  mid size pickup. Here is our grandson Garren learning how to climb on back the hard way Christmas 2008.

tangled-web

Isually I drive my little Suzuki 4-banger…now 23 years old!

tangled-web

What does beat up trucks and Rolls Royces have to do with having a web business?

First we may have been the poorest looking multi millionaires around….but please do not make a mistake… we are multi millionaires…even after the 2008 crash and our business is booming..all because of the internet and our web based business.

You can be also and this course shares how to have financial success.

To read this entire lesson and the rest of the course, enroll here

Or better join us in March or February and get this course free and save $299.

Sheri clary will be at our February courses and available for consultations about bio-identical hormones. Our February Cotacachi schedule is:

Feb 9-11 Beyond Logic Keys to More Wealth & Better Health

Join Merri, me and Blaine Watson, plus enjoy a shamanic ceremony in the Cotacachi Shamanic Valley.

Feb. 13-15 International Business & Investing Made EZ

Join Merri, me and Peter Laub of Jyske Global Asset Management at OUR INTERNATIONAL INVESTING & BUSINESS COURSE IN ECUADOR. We review economic conditions, Ecuador real estate, my entire portfolio plus investing and business ideas for the months ahead.

Feb. 16-17 Imbabura Real Estate Tour

Here is some bad news created by good news.  I just received this note from the flower farm we work with.

“Gary, please stop Valentine´s orders, the flowers on pre-book are running out. Thanks.  Roberto Javier Ribadeneira”

The bad news is we are out of Valentine roses.

The good news is we sold almost 20,000 roses in just over a month and earned almost an extra $7,500 (which we are donating to help the poor of Ecuador).

We know how to help you create your own import export business to secure your purchasing power. Join us in march for our Cotacachi Import Export expedition and real estate tours.

This is why Merri, our webmaster and I decided to create a new course on how to build a web business with a webmaster.  Here is a special offer on this new course.

You can enroll in this special course for $299. However if you sign up for all three courses in February or March 2009, I will send it to you free. You save $299.

March 8-9 Imbabura Real Estate Tour

March 10-15 Ecuador Export Expedition

March 16-19 Coastal Real Estate Tour

Bob Shane will be at our March course and will be available to provide health balancing.

Get our web based course FREE if you join us in Ecuador this February or March.

Attend any two Ecuador courses 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

Cotacachi Real Estate Protection


Cotacachi real estate protection and more.

Recent messages have looked at the growth potential of Ecuador real estate.

We have been at this area in Cotacachi where this dirt road is being paved…seeing its rapid progress.

cotacachi-real-estate

We’ll see more of the progress below. First  let’s look more at the process of  how I search for Cotacachi real estate… or actually property anywhere.

The principle of the search is vital because many people who thought of retiring will not be able to do so.  Those on fixed incomes are always those who fare worst during economic upheavals.

The US dollar is at considerable risk due to high US debt.  So too is Social Security.

In addition corporate pension are not looking good.  In the late 1990s our messages voiced a lot of concern about how corporate pensions were dramatically
underfunded.

Then the stock market recovery in the mid 2000s eased this problem.  2002 was  a low point for America’s pension funds.  The top 500 corporations had a combined  pension deficit exceeding $200 billion.   Thanks to a boom in the global economy  which allowed catch up contributions and strong stock market gains, this combined deficit turned into a combined surplus of $60 billion by the end of 2007.

The 2008 market and economic crash destroyed this surplus. It is estimated that the combined pensions of these same 500 company pensions have lost almost $265 billion in 2008.  The estimates are that 200 of these 500 pension funds are now less than 80 percent funded. They have less than 80 cents for every dollar of benefits promised.

The puts corporations between a rock and  hard spot. because The Pension Protection Act of 2006, passed due to a string of big corporate bankruptcies and pension failures in the early 2000s forces companies to fund pensions on a regular schedule.

The funded ratio s important because the 2006 law forces companies to bring their plans up to 100 percent funding in seven years, starting in 2008. They have to be t 92 percent funded this year, 94 percent next year etc.  That’s the rock.

The hard spot.  There are tow. The pensions values are way down due to stock market collapse and profits are now low or non existent.

Companies are asking Congress to excuse them from having to replenish the required amounts now and this is likely to happen.  The business reality is you cannot extract blood from a turnip nor make a corporation to pay money it does not have into a pension.

Forcing pension funding on man corporations will simply push the firms into bankruptcy.

Some firms will be bankrupt anyway and the federal government will have to insure their plans through the Pension Benefit Guaranty Corporation.  This insurance is limited so people can lose benefits.  Yet even the limited benefits are more than America can afford. This puts added pressure on the greenback thus reducing purchasing power of the pensions even more.

Yet what is the choice?  If companies are required to put new money into pensions they will not have the cash to keep business going.

This is  a serious concern for some firms like NCR Corporation, I.B.M., Rockwell Collins, the ITT Corporation, Northrop Grumman and the Pactiv Corporation.  Their pension obligations are five or six times larger than their next biggest liability.

In short pensions are millstones dragging these corporations down.  How can these firms grow and prosper in today’s competitive atmosphere when a huge chunk of their income is sucked into pension obligations rather than growth?

The bottom line…pensions lose.  History suggests they always have. Logic says they always will.

So what does one do?

#1:  Most important… stay fit… body and mind. You’ll have to keep earning your keep and you cannot do this without energy.  Do not just rely on the expensive pharmaceutical solutions either. This is why our upcoming courses have a health element.  See Beyond Logic.

#2: Diversify currencies. Usually the way pensions are ruined is through currency destruction rather than non payment.. Social Security and the Pension Benefit Guaranty Corporation will make sure you get exactly the dollars promised.  the only problem us that the dollars will by less.  Maybe much less.

#3: Diversify in global shares. History shows this is always the best long term investment.

Here is an excerpt from yesterday’s multi currency lesson on why diversifying into global shares now makes sense.

“We have not seen anything like this since the end of the 40s: dividend yields of 5 percent and more, while 10-year US government bonds offer yields of only 2.5 percent!

Will investors be emotionally able to take advantage of the stock market crash of 2008, or will recent losses make them succumb to a bear market psychology? Are there lessons to be learned from historical parallels to today’s markets?

Book value growth is the most important component of long-term stock market returns. It comprises not only the annual earnings growth but also the change in value of a company’s net assets. If the valuation of a stock does not change, book value growth and stock price performance are identical. However, as a rule, stock prices fluctuate much more strongly than the underlying book values due to changes in valuation.


The irrational investor comes into play here, driving prices up during times of euphoria or, as is currently the case, driving prices down during times of pessimism.


As a result, the first decade of the new millennium threatens to provide a negative return — during the first nine years, the return was  – 1.7 percent per year!
This would make it the first decade with negative nominal total returns after the quasi zero return for US stocks in the 30s.

Low valuations and a lack of investment alternatives

Interestingly, these negative returns have yet to reflect poor fundamentals: Over the past nine years, the companies included in the MSCI USA Index had an average annual earnings growth of 4.4 percent, cash flow growth of 6.7 percent, and dividend growth of 6.6 percent.

The decline in stock prices since the end of 1999 is due to valuations falling 50 percent over the same period. Therefore, the problem of low total returns is rooted in the past:

In December 1999, investors were willing to pay 31 times earnings and 5.8 times book value for US stocks included in the MSCI USA Index.

Today’s price/earnings ratio is 13.5 and the price to book value ratio is
1.7. These are not yet bargain valuations in absolute terms. What makes stocks attractive today is the lack of investment alternatives.

In other words, it is mainly opportunity costs, in particular the low yields of fixed-income securities, that make stocks interesting investments today.
The current price/earnings ratio of the MSCI USA Index of 13.5 implies an earnings yield of 7.4 percent (100/13.5). Even if one assumes the depression scenario of the 30s, i.e. flat stock prices over 10 years, and assumes that corporate earnings will shrink 1.5 percent per year on average for the next 10 years, the earnings yield of the MSCI USA Index would still be 6.5 percent at the end of 2018 — 2.6 times higher than today’s 10-year US government bond yields. Such a drastic earnings decline would correspond to the average drop in earnings of the companies contained in the S&P 500 Index during the decade of the depression ending in 1939 — a scenario that is overly pessimistic in my view.

Favorable outlook for US stocks

A more realistic assumption would be for book value to grow in the order of 6 to 8 percent over  the next 10 years. Based on this expectation, the Dow Jones Industrials Index stands a good chance of exceeding, over the next 10 years, its previous high of 14,164.53 reached on October 9, 2007.

From the year-end 2008 level of 8,776.39, this would require an average annual price return of only 4.9 percent (which is below the historical average), with a dividend yield of  currently 3 percent per annum thrown into the bargain.
The risk of losing money with US stocks over the next 10 years is therefore minimal from today’s perspective, while it is a certainty that investors will not earn more than 2.5 percent per annum with US government bonds over the next 10 years.

You can read this entire lesson and Keppler’s entire conclusion as a multi currency portfolio course subscriber.

#4: Diversify in real estate. History shows this is always the second best investment.

#5: Diversify residences and lifestyles… globally if you can.This is why Merri and I live in North Carolina and Ecuador. Each place has some problems and risks…but we have options as events unfold.

Remember globalization is really the way humanity should evolve.  The concept of nations, borders, superior races, cultures and creeds are fictions of the global imagination and liabilities we have inherited from our past.   Modern technology means we should deal with whoever…anywhere in the world serves us best.

As the world has evolved we have progressed but bad times hinder this type of growth. This creates opportunity if we stay focused on reality. Invest in globalization. Sell that which hinders globalization short!

Match your living to your investing.  Go where you choose. I like Ecuador for its sweet people, great weather, natural beauty, fresh food and low cost living. North Carolina offers small town USA benefits were we can enjoy nature and if necessary even feed ourselves in the worst times.  This is why Merri and I are in Ecuador. We love the lifestyle and the real estate opportunity. 

We also love the progress here in Cotacachi.  Here is that paved road today.

cotacachi-real-estate

They have turned the road and a great deal of the cross street is cobbled now as well.

cotacachi-real-estate

This work is done by sweet, humble people who just get to work and get the job done.   There is no crew of four, with one working and three standing round, here.cotacachi-real-estate

Learn more about Ecuador as an Ecuador Living subscriber.

#6: Hold some commodities as insurance.
We’ll probably never need it…but it makes us feel better. I keep more than enough gold socked away and expect my children will inherit it. So far it has been my worst investment over the last 30 years until I add in the value of sleeping well at night instead of worrying…”am I guessing wrong”!

#7: Remember that every day of life is a gift!
We do not need big cars, loads of shopping and new things and expensive materialism to be happy.  Turn your passion into profit and do what you love.  The prospect of working, serving and being useful beyond this age that society has determined we can be and should retire should be fun and exciting.

I look forward to sharing this excitement with you.

Gary

Join us in Cotacachi this February.

Feb 9-11 Beyond Logic Keys to More Wealth & Better Health

Feb. 13-15 International Business & Investing Made EZ

Feb. 16-17 Imbabura Real Estate Tour

Attend any two Ecuador courses 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