Tag Archive | "Ben Bernanke"

Global Investment Advantage


The big advantage to global investments is that the sun always shines somewhere.

ecuador-opportunity

Follow the sun… and the opportunity… like this (a Galapagos Ecuador sunset actually).  There is opportunity here.  See why below.

Ecuador real estate offers great opportunity, but lets expand our investing view globally… then we’ll see more Ecuador real estate.

Recently, on the anniversary of the bankruptcy of Lehman Brothers, Ben Bernanke said that the US recession is probably over but the economy will remain weak for some time due to unemployment.

He said, “From a technical perspective, the recession is very likely over,”  He said the consensus is the economy is growing yet added that the economy would still feel “very weak” to Americans concerned about job security.   The stock market was not impressed and Wall Street fell  lower.

According to Jyske Global Asset Management, (JGAM) retail sales jumped 2.7% in August, the fastest rise in more than 3 years, but much of the spending came from the “cash for clunkers” boost and “back to school” month related sales. They question if Bernanke is correct.

JGAM also pointed out that the US dollar continued to slide hitting a 2009 low at 1.4748 to the euro while gold rise above $1,000 oz.

JGAM’s managed portfolios have performed very well.  Year–to-date they have risen between 8.7% and 28.7% depending on the risk profile and portfolio.

What can one do?

First, remember that the sun always shines somewhere as evidenced by a September 17, 2009 New York Times article entitled “Recovery Picks Up in China as U.S. Still Ails” by Keith Bradsher.

Here are some excerpts:  Investors’ interest in the real estate market is picking up as economic growth returns across the Chinese economy.

Just eight months ago, thousands of Chinese workers rioted outside factories closed by the global downturn.

Now many of those plants have reopened and are hiring again. Some executives are even struggling to find enough temporary staff to fill Christmas orders.

The image of laid-off workers here returning to jobs stands in sharp contrast to the United States, where even as the economy shows signs of improvement, the unemployment rate continues to march toward double digits.

In China, even the hardest-hit factories — those depending on exports to the United States and Europe — are starting to rehire workers. No one here is talking about a jobless recovery.

Even the real estate market is picking up. In this industrial town 90 miles northwest of Shanghai, prospective investors lined up one recent Saturday to buy apartments in the still-unfinished Rose Avenue complex. Many of them slept outside the sales office all night.

“The whole country’s economy is back on track,” said Shi Yingyi, a 34-year-old housewife who joined the throng. “I feel more confident now.”

The confidence stems from China’s three-pronged effort — a combination of stimulus, liberal bank lending and broad government support for exports.

The Chinese Central Bank said the country’s economy surged at an annualized rate of 14.9 percent in the second quarter. The United States’ economy shrank at an annual rate of 1 percent in that period.

“So often China and the U.S. are mixed together as being in the same situation, and that is totally wrong,” said Xu Xiaonian, an economist in Beijing with the China Europe International Business School.

But with more economic planning than the United States, China has been able to disburse its stimulus much faster, turning it into new rail lines and highways.

The state-controlled banking system here — which breezed through the global financial crisis with minimal losses as American financial institutions reeled — unleashed $1.2 trillion in extra lending to Chinese consumers and businesses in the first seven months of this year. That money is financing everything from a boom in car sales, up 82 percent in August from a year earlier, to frenzied factory construction.

To be sure, not all the laid off workers throughout China have been hired back.

“Some plants reduced worker numbers by 20 to 30 percent, now they hire back 10 percent,” said Stanley Lau, deputy chairman of the Federation of Hong Kong Industries, which represents export-oriented factories employing 10 million Chinese workers.

Global investors can kill two birds with one stone… invest in a faster growing economy and diversify out of the US dollar by investing in Chinese equities.

One way to invest in China is with the Jyske Invest China Equities Fund. This fund is available to non US residents and can be contained in portfolios of US residents managed by JGAM.

Jyske Invest recently wrote at its web site:

Market Comments, Q2 2009

Still signs that the economy will improve. For the second quarter, the fund generated a return of 38.01%, outperforming the benchmark by 0.21 percentage point. For the year to date, the fund posted a return of 40.71%, underperforming the benchmark by 1.38 percentage points.

Review

Over the past quarter the economic indicators continued the good trend. The PMI indicator, reflecting the general economic development, has now increased in six out of the latest seven months. When the PMI indicator is above 50, it is an indication that the economy is growing, which was the case in the past three months. The improvement of the economy has occurred earlier than expected.

Consumption indicators also show a positive trend. This is clearly reflected in the fund’s equities within consumption. Prices of several of the fund’s producers of sport equipment and cars such as China Dongxiang and Dongfeng Motor increased in particular.

There are clear indications of a turnaround in the real estate sector. The number of transactions increases sharply and the number of unsold apartments is on the decline. Our allocation to Chinese real estate companies has been high, which had a favourable impact on the relative return.

Outlook

We expect the favourable economic development to continue into the last six months of the year and that the government will continue to pursue a relaxed policy. The risk is that the policy is tightened again, which will adversely affect the equity market.
The market is no longer undervalued. Perhaps the valuation is fairer. A positive economic development and increasing earnings must drive equity prices higher now. The development in earnings estimates will be followed closely.

Jyske Invest adds that past performance is not a reliable indicator of future results. The value of and return on your investment may fall, and you may not get back the full amount invested.

The fund invests chiefly directly and indirectly in equities issued by companies which are based in China including Hong Kong or which pursue more than 50% of their activities (by sales or production) in China including Hong Kong.

Risk factors

The fund’s investments have a high risk profile and may see substantial fluctuations in the market value of the fund’s assets. The objective is to obtain a higher average return over time.

Performance of the fund for the last five years is below:

china-fund

Returns by year.

china-fund

Recent major investments.

china-fund

An ETF traded on the New York Stock Exchange that investors can use to invest in China is the SPDR S&P China Fund (symbol: GXC).  Any investors can buy this through Jyske or most stock brokers.

This fund aims to track the S&P Citigroup BMI China Index, a market capitalization weighted index that defines and measures the investable universe of publicly traded companies domiciled in China.  This is an easy way to hold the equivalent of a broad spread of Chinese shares.

Here is a chart from finance.yahoo.com showing the movement since inception of this ETF.

china-fund

For investors who want to invest in the Chinese yuan but not the Chinese stock market the WisdomTree Dreyfus Chinese Yuan Fund  Investment ETF  is listed on the New York Stock Exchange (symbol: CYB).

This ETF  seeks to earn current income reflecting money market rates in China, as well as provide exposure to the movement of the Chinese Yuan relative to the U.S. Dollar.

For more information US investors can contact Thomas Fischer at Jyske Global Asset Management at fischer@jgam.com

Non US investors contact Rene Mathys at Jyske Bank Private Bank at mathys@jbpb.dk

Investors in China and/or the yuan should exercise caution and recognize that there can be short term volatility.   There are huge amounts of borrowed dollars invested in China and any time there is a wave of fear or profit taking this thinly traded market and the yuan can drop rapidly.  For example in August 2009 18.4%, or nearly 500 billion yuan of the funds in the market were pulled as investors locked in profits on the Chinese stock market.

There had been months of gains, so the sudden pull back was not surprising as doubts about valuations and the sustainability of the economic recovery began to grow with rising prices.   Shanghai’s stock market declined 21.8% in one month.  There can be sudden and sharp pressure any time investors turn cautious.  However after the 21% drop in this market, autumn may be a better time to buy.

There is an Ecuador agricultural opportunity… in the Galapagos.

ecuador-opportunity

Here is an aerial view.

ecuador-opportunity

Stay tuned as I’ll introduce this in an upcoming message.

Gary

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

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

This course can help you create your own internet business.

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

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

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

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

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

Even Better Get All three Courses Free

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

Head south to Ecuador!

ecuador-hotel

Oct. 21-24 Ecuador Import Export Tour

Oct. 25-26 Imbabura Real Estate Tour

ecuador-hotel

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

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

Nov. 6-8 IBEZ Ecuador Seminar

ecuador-hotel

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

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

ecuador-hotel

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

December 6-8 Beyond Logic Shamanic Tour

December 9-10 Imbabura Real Estate Tour

December 11-13 Ecuador Coastal Real Estate Tour

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

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

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

Read the entire article “Recovery Picks Up in China as U.S. Still Ails” here

Multi Currency Survival Lessons


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

#5: Always live beneath your means.

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

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

Here is what is happening and what will happen.

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

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

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

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

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

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

All of this money was not supported by value.

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

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

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

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

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

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

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

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

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

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

farm colors

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

multi-currency-value-beach-condos

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

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

multi-currency-value-view

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

multi-currency-value-fishermen

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

multi-currency-value-fish

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

multi-currency-value-andean condos

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

multi-currency-value-real estate

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

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

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

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

Gary

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

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

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

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

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

autumn-gold

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

blue-ridge-leaf-change

Gary

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

Or join us in November to inspect Ecuador property for sale

Vistazul-Ecuador-beach-condos-model

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

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

We still have space in November

Join us in Cotacachi at El Meson de las Flores.

cotacachi-daybreak

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

See these condos at $46,000 in Cotacachi.

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

Dine with delegates at the Vistazul clubhouse.

Ecuador-fishng-view-4

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