Tag Archive | "Czech Republic"

International Investing Trick


Here is a global diversification trick that may do well in the likely global economic scenario ahead. Buy good value shares internationally as markets dive during the summer dip.

In a moment we’ll look at some Ecuador health ideas… first the investing trick.

Global equity markets have been in a bear market rally for six months but are now hitting the summer blues due to seasonality.

Share prices will probably drop now. Chances are there will be a strong global equity slump at least through October 2009.

This will create extra value in equity markets and provide good opportunity to pick up high value long term.

The bear market is likely to carry on until 2012-13, but good value shares acquired during dips are more likely to spike early and have extra potential after the bear ends.

Now through October 2009 could be a good time to invest in high value shares for long term appreciation.

But which shares… in which markets?

One way to approach this is to look for extra value created by inefficiencies in markets…to find markets where the values are best.

Statistically this is the best way to be absolutely sure of the best long term returns.

There are numerous investment managers who use very strict valuation criteria (usually based on dividend yields, cash flow, price earnings) to spot the best value markets.  They then try to apply similar criteria to select good value shares in the good value market.

The next goal is to decide how much should be weighted in major market and how much in emerging markets.

Here is a comparison of the Morgan Stanley Major Market versus Emerging Market indices.

The MSCI World Index is a market capitalization weighted index that measures the equity market performance of developed markets.  It includes 23 developed market country indices : Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States.

The MSCI Emerging Market Index includes Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Israel, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand, and Turkey.

MSCI Indices performances.  Total per annum return over:

Major                            Emerging
15 years    4.10%                   5.41%
10 years  -3.85%                   9.11%
5 years    -2.77%                  11.16%
3 years   -10.81%              -00.17%
1 year      -20.81%             -27.53%
3 mos.      14.30%               27.53%

Regardless of the time frame observed,  the emerging equities almost always seriously outperformed major markets… but as a class they also dropped further in the 2008 downturn.

Here is a year-on-year comparison for the past five years.

Major                   Emerging
2003  10.74%           29.63%
2004    6.46%           16.51%
2005   26.17%           54.41%

2006     7.40%          18.23%

2007     -1.66%         25.71%
2008   -50.30%      -37.64%
2009      5.39%         34.79%  3 months

This history suggests that emerging markets deserve a substantial ranking.

However before becoming too aggressive in over weighting emerging markets, we have to keep in mind two thoughts.

First economic thought. The last 15 years has been a catch-up era when the investing world caught on to the idea that emerging markets offered great opportunity.

Second economic thought. A great deal of emerging growth came from debt financed exports to the developed world. This leaves emerging economies holding huge amounts of debt for customers who may not be able to repay the debt nor continue to buy the same volume of goods as before.

The easiest way for investors to invest in good value during dips is via a value mutual fund.

You can select a value major market fund, a value emerging market fund or a value diversified fund.

The benefit of a value diversified fund is that the professional manager decides how much to weight in emerging and major markets.

For example I just sent a lesson to our multi currency subscribers that showed a US traded international diversified value fund that has risen 36.08% in the past quarter ending June 30, 2009.  This fund is 86% in major markets and 14% in emerging markets.

Learn how to read about this fund as a multi currency subscriber.

The most valuable asset we can have in tough economic times is good health. This is why we studied Ecuador health ideas at our June tour.

Cotacachi is considered sacred by the shamans… a place of wonderful mountains that ring the valley.  This is Mt. Cotacachi to the west.

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Mt. Imbabura to the east.

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The valley is surrounded by mountains like these twin peaks…

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creating wonderful, mystic  sunrises.

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The first afternoon of the tour we visited La Mirage Spa and the Shamana Estella.

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She began a theme that the many shamans we visited confirmed.   She said that the three keys to better health, increased longevity, more energy and fulfillment are good nutrition, proper exercise and good sleep.

The purpose of the Ecuador shamanic tour is to learn ways to unlock this healthy  combination in a natural low cost way!

The second day we joined Clemencia, the Shamana of Zuleta and drove 15 minutes from our hotel Meson de las Flores to Otavalo market where we visited the local food market…

ecuador-shaman-recap

filled with fruits…

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vegetables…

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flowers and …

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herbs.

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Here is the shamana speaking to the group with Merri and Mauricio translating.

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We learned the importance of the herbs to make good teas that hydrate the body are cedron, chamomile and lemon verbena.

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We learned how other herbs relax such as chamomile and valerian root. Plus we were told to boil lettuce in milk as a prebedtime drink for better sleep.

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On the other hand, tea from cinnamon, paprika, cloves and ginger help reduce sluggishness in digestion and to speed the system when we need to be fired up.

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You can read this entire report as an Ecuador Living subscriber.

Gary

We hope you’ll join us and enjoy Ecuador’s or North Carolina’s beauty soon.

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Sunrise from Meson de las Flores.

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

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.

America Leads the Way


America Leads the way…sadly often in the wrong direction.

Though my name is Scott, I like so many Americans am also Irish, thanks to my Grandma McGee.  In fact though she lived in Oregon for more than sixty years, she never became a US citizen.

Yet I have done nothing about this and remain only a US citizen…nor do I intend to.  First, it’s a lot of work registering that Irish citizenship…getting all the documents together and such.  Yet there are other reasons…we’ll see in a moment.

In a recent discussion with a friend, who was also a dual national,  I learned that he gave up his American citizenship.

His reasons were good but for many this does not make sense.  The second reason I remain in the US…this is one of the countries I know my way around best.  I have friends and family and a terrific support system developed here.

The number one rule for good investing and business is to do what you love. Rule #2 is to do or invest in what you know.

I love the US, this magnificent country and the wonderful people so the US is a good place for me to be.

Too few people who leave the US think of this personal aspect.  They become so caught up in high taxation or the bad parts of this nation’s evolution and want to leave. I do not blame them but recommend that they are sure they know where they are going before they irrevocably leave the US.

While recently visiting friends in Seattle, I was talking with their cleaning lady and her daughter from the Czech Republic.  They told me how they had moved to America to be in the land of the free and to live the American dream.  Now they are going back for better opportunity in Eastern Europe.  Plus they feel they will have more freedom there.

For the Czech couple, this may make sense.  They know the Czech Republic and have more friends, family and support back in their original home.

This is a pretty bad commentary on America where opportunity used to be so good that to was worth giving up the old for the new.

Now maybe it’s not.  So many freedoms have been lost in America.   So many new regulations have been been born.  Life is now so complicated.  America is  burdened with an overworked tort system, a failing health and insurance system and monumental federal debt that has and continues to destroy the dollar.

Many Americans feel stifled.  Many fear things will get even worse.

There can be tax benefits to moving abroad (though new tax laws tax those who leave and any gifts they give to Americans before they leave).  It is certainly easier to open a bank account abroad if you are not a US citizen, plus if one has immigrated, a citizenship elsewhere can make life in one’s new country easier and better as well.

Plus I know from living abroad for decades how one feels out from under the eye “Big Brother”, once you live in another country.

Despite these facts, (this may seem strange for me, as one of the first proponents of being a one man multi national), I have no plans to abandon my US citizenship….nor my residence in the US.

This is a well informed choice.  I have lived for many years in Asia, Europe and Latin America as well as the US….so my choice is based on experience.

This global lifestyle has confirmed one important fact….every country has its great good points and its flaws.

If I know and like the US, have children and grandchildren here…why move?
Why spend the time and resources to make a switch?

I see nothing wrong with changing citizenships, especially for those who earn and live abroad, but except in certain cases, I wonder if the benefits are worth the effort?

Instead I devote my efforts to maintaining flexibility and utilizing options.

To me flexibility in earning and asset allocation are more important than citizenship because change is taking place everywhere.  I would rather be a US citizen and have one or two other places to go if everything goes south here, than abandon one of the places I know best, for somewhere new that could have negative changes as well.

America has problems but regrettably as the world’s biggest economy leads the way for other nations to follow.

Take federal deficit spending as an example. For many years it was easy to invest out of the US dollar. The American government was a spendthrift going deeper and deeper into a more of debt.  Other industrial, nations, especially Germany and Japan were much more fiscally prudent.  The the Japanese and German’s learned from the US how to borrow massively every time the economy slowed.

There is a great erosion of freedom in other countries also not just the US.

Let’s look at some specifics.

A July 2 USA Today article entitled “IRS gets OK to request UBS information” says:

“A federal judge in Miami authorized the Internal Revenue Service to request information from UBS about U.S. taxpayers who may be using Swiss bank accounts to evade federal income taxes,” the Justice Department said Tuesday.

“The so-called John Doe summons is used to obtain information about possible tax fraud by people whose identities are unknown. The judge granted the government’s request for a court order a day after it made what a Justice Department spokesman called an unprecedented request for the records. The order ‘directs UBS to produce records identifying U.S. taxpayers with accounts at UBS in Switzerland who elected to have their accounts remain hidden from the IRS,’ the Justice Department said in a statement.”

To me this is a horrible breach of law. How can UBS know if a taxpayer has their account hidden from the IRS?

Yet the US is not alone. Take the UK as an example. I love England was resident there for a decade in this nation and was resident there for many years…but the wonderful freedoms of the Common Law have been eroding just ike in the US.

A recent article at Telegraph.com entitled “Safety deposit box raids yield £1bn of drugs, cash and guns” by Richard Edwards, says:

“Police have seized a potential £1 billion ‘treasure trove’ of cash, drugs and guns in an unprecedented raid on concrete vaults holding 7,000 safety deposit boxes.
Police officers close Park Street in Mayfair before raiding Park Lane Safe Deposit in connection with suspected money laundering operations.”

“Members of the public who have innocently and legally stored their valuables were ‘inevitably’ going to get swept up in the disruption, it was predicted. Police said they could use a freephone number – 0800 030 4613 – to claim back their goods.”

In both cases, innocent parties who have done nothing illegal nor even irregular are going to be inconvenienced at the least.

Let’s look at Canada in another example. Many Canadians are in a fuss over the proposed C-51 laws.  WWW.stop c51 warns Canadians that Bill C-51 will allow government agents to:

* Enter private property without a warrant                    Section 23 (4)
* Confiscate your property at their discretion, at your cost     Section 23.3 a
* Dispose of your property at their discretion, at your cost     Section 23.3 c
* Seize your bank accounts without a warrant                     Section 23 (2)
* Levy fines of up to $5,000,000.00 / 2 years in jail per offense. Section 31.1
* Allow laws to be created in Canada, behind closed doors, with the assistance of foreign governments, industrial and trade organizations     Section 30.7
* Allow ‘Crack house style’ of enforcement on natural health providers
Section 23.1″
Plus the site warns more losses of freedom.

There is a government site that says this law will not create these problems but one wonders.  When income tax was first introduced in the US, it was promised it would never rise beyond 2%!

America has enormous tort problems. Every US business worries about lawsuits,
but before you move to France to escape this problem read this article:

“A French court on Monday ordered the online auction giant eBay to pay 38.6 million euros, or $61 million, in damages to the French luxury goods company LVMH, in the latest round in a long-running legal battle over the sale of counterfeit goods on the Internet.

“LVMH, a maker of high-end leather goods, perfumes and other fashion and luxury products, successfully challenged eBay for a second time in the French court, arguing that 90 percent of the Louis Vuitton bags and Dior perfumes sold on eBay are fakes.

“The court ruled that eBay, which earns a commission on the sales, was not doing enough to stamp out counterfeit sales.”

Change is everywhere.  We should always look for a balance in our living, earning and investing, that fits our lifestyle and circumstances.  We should seek flexibility and options…but remember that problems are everywhere.

Thank God for problems.  Problems are a sign of evolution and problems create opportunity.  Who wants to live in a land without opportunity?

The problems we see from eroding freedoms are not dilemmas unique to the USA.
They are problems of increased populations all trying to do and have more.  Life seems more complicated today because it is more complicated in some ways.

The more moving parts a machine has…the more likely it will break.   Our social systems have more and more people moving faster and governments working to do just that-govern. One definition of govern is: “manipulate b: to control the speed of (as a machine) especially by automatic means.”

Wherever you live…work…earn look for the problems and figure out the opportunity. If part of that opportunity comes in the form of a new residence or citizenship…that’s great. Go for it…yet realize that this is not the best solution for everyone.

Until next message, may all your freedom come from within and all your problems be good.

Gary

Learn ways to increase your earnings options though international business.

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Here is what a reader recently wrote about this course:

“We are now generating business from our Ecuador site www.retire-in-ecuador.com. People are responding to go and live in Ecuador. Our imports from Ecuador are also going well. We have only been trading for 6 weeks, and some customers (gift shops) have re-ordered four times. We only need 100 like them and we will have a sustainable business. We are currently establishing about 10 new customers per week, and are in the process of appointing agents for the other states. We will soon have an “Andes Artisans” site operating www.andes-artisans.com. So keep an eye out.”