Tag Archive | "Economics"

Economic Cycle Review


It is time for an economic cycle review.

Over the weekend I truly enjoyed speaking at Jyske Global Asset Manager’s seminar in Laguna Beach, California.

During that seminar I shared five reasons why we should expect a pull back in the US stock market now.

One reason is seasonality which we reviewed at this site in April.

Another reason is that we are seeing a shift in the economic cycle.

market-value

There are three phases in the economic cycle.

Phase I Recession

Lower Inflation Expected
Interest Rates Come Down
Depressed Demand
Rising Unemployment
PE Multiples Contract

This phase which we saw in 2007 and 2008 is an ideal time to invest in bonds.

Phase II Recovery

Inverted Yield Curve
Rush for Liquidity
Authorities Relax Money Supply
High Unemployment
High Level of Uncertainty

This phase which began in 2009 is an ideal time to invest in shares.

Phase III Boom

Rising Inflation
Short Rates Pushed Up
Bond Yields Rise
Falling Unemployment
PE Multiples Expand

There are many signs that the economy is transitioning into this phase and this phase is an ideal time to invest in cash and short term investments.

However… when in the boom phase we need to take some extra steps because cash during inflationary times can be a really lousy idea.

Warren Buffet mentioned this problem when he said: Clinging to cash equivalents or long-term government bonds at present yields is almost certainly a terrible policy if continued for long. Holders of these instruments, of course, have felt increasingly comfortable – in fact, almost smug – in following this policy as financial turmoil has mounted. They regard their judgment confirmed when they hear commentators proclaim “cash is king,” even though that wonderful cash is earning close to nothing and will surely find its purchasing power eroded over time.

We’ll look at the other three reasons why we can expect equities to falter now… plus ideas on cash substitute investments in upcoming messages.

See a Galapagos special here.

Gary

How We Can Serve You

How to Have Real Safety

garyheadshot

There are only three reasons why we should invest.  We invest for income.  We invest to resell our investments for more than we had invested.  We invest to make our world a better place.

We should not invest for fun, excitement or to get rich quick, or in a panic due to market corrections.

This is why the core Pi model portfolio (that forms the bulk of my own equity portfolio) consists of 19 shares and this position has not changed in over two years.  During these two years we have been steadily accumulating the same 19 shares and have not traded once.

The portfolio has done well in 2017, up 22.6%, better than the DJI Index.

motif

However one or even two year’s performance is not enough data to create a safe strategy.

The good value portfolio above is based entirely on good value financial information and mathematically based safety programs developed around models that date back 91 and 24 years.

The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets developed combining my 50 years of investing experience with study of the mathematical market value analysis of Keppler Asset Management and the mathematical trend analysis of Tradestops.com.

In my opinion, Keppler is one of the best market statisticians in the world.  Numerous very large fund managers, such as State Street Global Advisers, use his analysis to manage over $2.5 billion of funds.

The Pifolio analysis begins with Keppler who continually researches international major stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  He compares each major stock market’s history.

Fwd: keppler

Michael Kepler CEO Keppler Asset Management.

Michael is a brilliant mathematician.  We have tracked his analysis for over 20 years.   He continually researches international major stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  He compares each stock market’s history.  From this, he develops his Good Value Stock Market Strategy and rates each market as a Buy, Neutral or Sell market.  His analysis is rational, mathematical and does not cause worry about short term ups and downs.  Keppler’s strategy is to diversify into an equally weighted portfolio of the MSCI Indices of each BUY market.

This is an easy, simple and effective approach to zeroing in on value because little time, management and guesswork is required.  You are investing in a diversified portfolio of good value indices.

A BUY rating for an index does NOT imply that any stock in that country is an attractive investment, so you do not have to spend hours of research aimed at picking specific shares.  It is not appropriate or enough to instruct a stockbroker to simply select stocks in the BUY rated countries.  Investing in the index is like investing in all the shares in the index.  You save time because all you have to do is invest in the ETF to gain the profit potential of the entire market.

To achieve this goal of diversification the Pifolio consists of Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally use.

70% is diversified into Keppler’s good value (BUY rated) developed markets: Australia, Austria, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore and the United Kingdom.

30% of the Pifolio is invested in Keppler’s good value (BUY rated) emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

The Pifolio consists of iShares ETFs that invested in each of the MSCI indicies of the good value BUY markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

Pi uses math to reveal the best value markets then protects its positions using more math created by Richard Smith founder and CEO of Tradestops.com to track each share’s trend.

We use Smith’s  algorithms that calculate momentum of the good value markets.

dr richard smith

The Stock State Indicators at Tradestops.com act as a full life-cycle measure that indicates the health of each stock. They are designed to tell you at a glance exactly where any stock stands relative to Dr. Smith’s proprietary algorithms.

Kepppler’s analysis shows the value of markets.  The SSI signal indicates the current trend of each stock (performing well, or in a period of correction, or stopped out).

The SSI tells you one of five things:

Screen Shot 2017-08-08 at 6.51.59 AM

Screen Shot 2017-08-08 at 6.52.12 AM

Screen Shot 2017-08-08 at 6.52.22 AM

Akey component of the Stock State Indicator (SSI) system is momentum based on the latest 521 days of trading.  A stock changes from red to green in the SSI system only after it has already gone up a healthy amount and has started a solid uptrend.

How SSI Alerts Are Triggered

If the position has already moved more than its Volatility Quotient below a recent high, the SSI Stop Loss will trigger.  This is an indicator that the position has corrected more than what is normal for this stock.  It means to take caution.

Below is an example of how SSIs work.  This example shows the Developed Market Pifolio that we track at Tradestops.com.

tradestops

Equal Weight Good Value Developed Market Pifolio.

At the time this example was copied, all the ETFs in the Developed Market Pifolio (above) currently had a green SSI.

We do not know when the US market will fall.  We only do know that it will.  We also do not know if, when the US market corrects, global markets will follow or rise instead.

The fact that the Pifilios are invested in good value markets reduces long term risk.

Additional protection is added by using trailing stops based on the 521 day momentum of each stock in the Pifolio.

Take for example the graph below from our Tradestops account that shows the iShares MSCI United Kingdom ETF.  This ETF had a green SSI and a Volatility Index (VQ) of 13.26%.  This means the share can move 13.26% before there is a trend shift.

tradestops

iShares MSCI United Kingdom ETF (Symbol EWU)

Pi purchased the share at$31.26 and in this example the share was $34.43 and rising.  Tradestop’s algorithms suggested that if the price drops to $31.69 its momentum would have stopped and it would have shifted into trading sideways.   The stop loss price is currently $29.86.  If EWU continues to rise, both the yellow warning and the stop loss price will rise as well.

When the US stock market bull ends, know one knows for sure how long or how severe the correction will be.

When the bear arrives, what will happen to global and especially good value markets?

No  one knows the answer to this question.

What we do know is that the equally weighted, good value market Pifolios have the greatest potential long term and that math based trailing stops can be used to protect against a secular global stock market correction when it comes.

My fifty years of global investing experience helps take advantage of numerous long term cycles that are part of the universal math that affects all investments.

What you get when you subscribe to Pi.

You immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

You also receive two special reports.

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

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

The circumstances that created fortunes 30 years ago were an overvalued US market (compared to global markets) and an overvalued US dollar.  The two conditions are in place again!

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

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

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

This report sells for $29.95 but in this special offer, you receive the report, “Three Currency Patterns for 50% Profits or More” FREE when you subscribe to Pi.

Plus get the $39.95 report “The Platinum Dip 2018” free.

With investors watching global stock markets bounce up and down, many missed two really important profit generating events over the last two years.  The price of silver dipped below $14 an ounce as did shares of the iShares Silver ETF (SLV).   The second event is that the silver gold ratio hit 80, compared to a ratio of 230 only two years before.

In September 2015, I prepared a special report “Silver Dip 2015” about a silver speculation, leveraged with a British pound loan, that could increase the returns in a safe portfolio by as much as eight times.  The tactics described in that report generated 62.48% profit in just nine months.

I have updated this report and added how to use the Dip Strategy with platinum.   The “Platinum Dip 2018” report shares the latest in a series of long term lessons gained through 40 years of speculating and investing in precious metals.  I released the 2015 report, when the gold silver ratio slipped to 80.  The ratio has corrected and that profit has been taken and now a new precious metals dip has emerged.

I have prepared a new special report “Platinum Dip 2018” about a leveraged speculation that can increase the returns in a safe portfolio by as much as eight times.

You also learn from the Value Investing Seminar, our premier course, that we have been conducting for over 30 years.  Tens of thousands of delegates have paid up to $999 to attend.  Now you can join the seminar online FREE in this special offer.

This three day course is available in sessions that are 10 to 20 minutes long for easy, convenient learning.   You can listen to each session any time and as often as you desire.

The sooner you hear what I have to say about current markets, the better you’ll be able to cash in on perhaps the best investing opportunity since 1982.

seminars

Tens of thousands have paid up to $999 to attend.

In 2018 I celebrate my 52nd anniversary in the investing business and 50th year of writing about global investing.  Our reports and seminars have helped readers have better lives, with less stress yet make fortunes during up and down markets for decades.  This information is invaluable to investors large and small because even small amounts can easily be invested in the good value shares we cover in our seminar.

Stock and currency markets are cyclical.  These cycles create extra profit for value investors who invest when everyone else has the markets wrong.  One special seminar session looks at how to spot value from cycles.  Stocks rise from the cycle of war, productivity and demographics.  Cycles create recurring profits.  Economies and stock markets cycle up and down around every 15 to 20 years as shown in this graph.

stock-Charts

The effect of war cycles on the US Stock Market since 1906.

Bull and bear cycles are based on cycles of human interaction, war, technology and productivity.  Economic downturns can create war.

The chart above shows the war – stock market cycle.  Military struggles (like the Civil War, WWI, WWII and the Cold War: WW III) super charge inventiveness that creates new forms of productivity…the steam engine, the internal combustion engine,  production line processes, jet engines, TV, farming techniques, plastics, telephone, computer and lastly during the Cold War, the internet.  The military technology shifts to domestic use.  A boom is created that leads to excess.  Excess leads to correction. Correction creates an economic downturn and again to war.

Details in the online seminar include:

* How to easily buy global currencies, shares and bonds.

* Trading down and the benefits of investing in real estate in Small Town USA.  We will share why this breakout value is special and why we have been recommending good value real estate in this area since 2009.

* What’s up with gold and silver?  One session looks at my current position on gold and silver and asset protection.  We review the state of the precious metal markets and potential problems ahead for US dollars.  Learn how low interest rates eliminate  opportunity costs of diversification in precious metals and foreign currencies.

* How to improve safety and increase profit with leverage and staying power.  The seminar reveals Warren Buffett’s value investing strategy from research published at Yale University’s website.  This research shows that the stocks Buffet chooses are safe (with low beta and low volatility), cheap (value stocks with low price-to-book ratios), and high quality (stocks of companies that are profitable, stable, growing, and with high payout ratios). His big, extra profits come from leverage and staying power.  At times Buffet’s portfolio, as all value portfolios, has fallen, but he has been willing and able to wait long periods for the value to reveal itself and prices to recover.

keppler asset management chart

This chart based on a 45 year portfolio study shows that holding a diversified good value portfolio (based on a  good value strategy) for 13 month’s time, increases the probability of out performance to 70%.  However those who can hold the portfolio for five years gain a 88% probability of beating the bellwether in the market and after ten years the probability increases to 97.5%.

Time is your friend when you use a good value strategy.  The longer you can hold onto a well balanced good value portfolio, the better the odds of outstanding success.

Learn how much leverage to use.  Leverage is like medicine, the key is dose.  The best ratio is normally 1.6 to 1.  We’ll sum up the strategy; how to leverage cheap, safe, quality stocks and for what period of time based on the times and each individual’s circumstances.

Learn to plan in a way so you never run out of money.  The seminar also has a session on the importance of having and sticking to a plan.  See how success is dependent on conviction, wherewithal, and skill to operate with leverage and significant risk.  Learn a three point strategy based on my 50 years of investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.

The online seminar also reveals  the results of a $80,000 share purchase cost test that found the least expensive way to invest in good value.  The keys to this portfolio are good value, low cost, minimal fuss and bother.  Plus a great savings of time.  Trading is minimal, usually not more than one or two shares are bought or sold in a year.  I wanted to find the very least expensive way to create and hold this portfolio so I performed this test.

I have good news about the cost of the seminar as well.   For almost three decades the seminar fee has been $799 for one or $999 for a couple. Tens of thousands paid this price, but online the seminar is $297.

In this special offer, you can get this online seminar FREE when you subscribe to our Personal investing Course.

Save $468.90 If You Act Now

Subscribe to the first year of The Personal investing Course (Pi).  The annual fee is $299, but to introduce you to this online, course that is based on real time investing, I am knocking $102 off the subscription.  Plus you receive FREE the $29.95 report “Three Currency Patterns for 50% Profits or More”, the $39.95 report “Silver Dip 2017” and our latest $297 online seminar for a total savings of $468.90.

ecuador-seminar

Triple Guarantee

Enroll in Pi.  Get the basic training, the 46 market value report, access to all the updates of the past two years, the two reports and the Value Investing Seminar right away. 

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

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

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

#3:  You can keep the two reports and Value Investing Seminar as my thanks for trying.

You have nothing to lose except the fear.   You gain the ultimate form of financial security as you reduce risk and increase profit potential.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, the “Platinum Dip 2018” and “Three Currency Patterns For 50% Profits or More” reports, and value investment seminar, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197 and receive all the above.

Gary

Seasonality


Seasonality can have a big impact on your wealth.

seasonality-in-equities

Spring blooms at our North Carolina farm.

In this era of great economic change… one constant we can be quite sure of is inflation…. which hurts those on fixed income and salaries the most.  Five ways to combat inflation are:

#1: Move where costs are lower.

#2: Invest in real estate.

#3: Invest in commodities.

#4: Have your own small business.

#5: Invest in equities.

Since current times force us to consider investing more in stock markets, about this time each year I remind readers about seasonality.

April showers bring May flowers in the

seasonality-in-equities

Blue Ridge like these on…

seasonality-in-equities

Little Horse Creek.

But spring also eliminates the bloom on the stock market.

May is a month to exercise extra caution in your equity portfolio.

A statistical analysis was done some years ago by Michael Keppler. This study shows that most appreciation in most major equity markets, is achieved from the beginning of November through the end of May.

Michael wrote: “Gary, We have done extensive research on seasonality and I am proud to announce that a shortened version of a major study which I have coauthored with our Director of Research, Dr. Xing Hong Xue, will be published in the Winter Issue of the Journal of Investing. Our research shows that basically in all major equity markets, nearly all returns are achieved from the beginning of November through the end of May. All the best to you and Merri. Michael

Keppler showed that over 30 Years Dow the Dow grew 8.16% overall.

There was 8.36% Growth in the months November through April.
There was 0.37 growth in the months May  to October.
$100 invested in the Dow grew to $848 overall over the 3o years.
$100 invested in the Dow grew to $1,067 if it were invested only in the months of November through April.

$100 invested in the Dow dropped to $79 if it were invested only in the months of May to October.

Historically the best five months where there are the best chances of equity profits end in about 30 days. There is no on-off switch I know of but we should be thinking more about risk aversion beginning about now.

This equity warning is important because large numbers of investors have borrowed currencies to leverage stock investments. These investors will dump shares quickly to pay off loans so share prices are more likely to drop quickly over the next month or so.

These borrowers tend to be nervous investors because of their leveraged positions. If fear sweeps the market, these investors dump quickly to pay off their loans. This pushes the markets down quickly, especially the emerging markets which tend to be thinner markets to begin with.

The months ahead are when the chances of profit in markets are at their lowest. Risks are at the highest.

This is reason enough for an equity warning. May flowers may be upon us, so you have been reminded!  This may be a good time to start cleaning up your equity portfolio.

P1000262

For details on our May Spanish Course in Ecuador with Jean Marie Butterlin Click here

Gary

Join us in North Carolina this June 24 to 27 to learn more about investing cycles and Quantum Wealth. June 24-27 Quantum Wealth and International Investing and Business North Carolina

Our North Carolina courses in 2010 will be conducted in the new…

ecuador-wine and cheese

West Jefferson Hampton Inn.

ecuador-wine and cheese

Just opening this June 2009 with very nice rooms and…

ecuador-wine and cheese

really great…

ecuador-wine and cheese

views.

ecuador-wine and cheese

During this course we’ll enjoy an organic  wine tasting at the New River Winery. Here are delegates at a previous wine tasting.

Ecuador-tour

We’ll also have an informal afternoon tea at our summer home in the mountains. Here are delegates at our house with Lucy our Appaloosa.

Ecuador-tour

May 9-12       Super Thinking + Spanish Course, Cotacachi Ecuador

Ecuador-tour

Merri, Shaman apprentice Don Alphonso with Jean Marie Butterlin who will conduct our May Super Thinking + Spanish and Shamanic courses.

May  13-14    Ecuador Shamanic Minga

ecuador-shaman

You can also enjoy a May or June real estate course and save on multiple tours.

May  16-17    Imbabura Real Estate Tour

May  19-20    Coastal Real Estate Tour

May  22-23    Quito Real Estate Tour

May  25-26    Cuenca Real Estate Tour

June 30-Jul 1 Imbabura Real Estate Tour

July 3-4      Coastal Real Estate Tour
July 6-7      Quito Real Estate Tour
July 9-10     Cuenca Real Estate Tour

Mother’s Day roses in Ecuador.

ecuador-mother's-day-Roses

Swiss Multicurrency Sandwich


Here is an update on the Swiss MultiCurrency Sandwich.

Currencies are being devalued around the world.  This means we have to work harder to maintain purchasing power of our wealth . The MultiCurrency Sandwich is one way to enhance earnings.

I am updating my report Borrow Low – Deposit High and noticed in my research that the Swiss Franc now looks overvalued… and its loan rate is very low.

Last March 18 a message at this site suggested to borrow Swiss francs and Japanese yen to invest in currencies with higher yields.

Since then both the yen and Swiss franc have weakened which has locked in some forex profits. Here you can see how the yen peaked in late February and has dropped versus the euro.

currency chart

Here we’ll review the Swiss Franc opportunity as the Swiss franc has strengthened but may be taking a turn as it recently dropped back from 1.43 francs per euro to 1.44.

currency chart

The ideal MultiCurrency Sandwich position is when we spot a combination of events:

#1:  A very strong currency

#2:  The strong currency has weak fundamentals.

#3: This strong currency has risen so high it is overvalued.

#4:  This strong currency has a very low interest rate.

#5:  Another currency that has fallen so much (versus the strong currency) that it is undervalued.

#6:  This weak currency has strong fundamentals.

#7:   This weak currency has a high interest rate.

The Swiss franc has appreciated versus the euro significantly in the last year.

You can see the franc’s surge against the euro in this chart (all charts here are from www.finance.yahoo.com).

swiss-franc-chart

This creates opportunity for a linked currency situation or a more speculative investment in emerging bonds..

Here is an excerpt from the Borrow Low update to show a linked currency MulitCurrency Sandwich.

For example as this report is being updated you can borrow Swiss francs at an interest rate of between 2.375% and 1.625% (depending on the amount borrowed).  You can invest in AAA British Treasury bonds that pay in the 4% range.

The dollar at this update (April 2010) is worth 1.06 Swiss francs and the British pound 1.64 Swiss francs.

Assume for this example that you have $100,000 invested in a US dollar Treasury Bond paying you 4%. This $100,0000 bring in $4,000 a year income.

You can use that bond as collateral to make a SFR424,000 Swiss Franc loan at  2.375% range.

The Swiss Franc loan could have then been converted to £258,536, which could be invested in the  AAA rated 4.5 % British TREASURY 07-03-2019  bond that was yielding appx 3.9% in April 2010.

You earn  GPB10,082 per annum interest which is worth  SFR16,534 less loan interest of  SFR10,070 which means you enhance  your income  by just over $6,000 a year.

In other words, your $100,000 now earns $10,000 a year rather than  $4,000. .. a 150% increase in income.

The tactic is not quite this simple. We’ll look at the complexities in a moment, but this is the idea.

The entire instruction to make the loan in Swiss francs, convert the francs to pounds and invest the pounds could have been given in one simple letter, fax, phone call or email.

This example showed how to invest in a very safe bond in linked currencies . The pound is linked to the euro and the euro is linked to the Swiss franc.   Later we’ll see how because the pound was weak in April 2010 and the Swiss franc at an almost all time high… there was some interesting forex potential also.

Many currencies are linked either by government choice or through tradition and regional economic circumstances. Take the Swiss franc British pound link as an example.  The pound is linked to the euro and the Swiss franc is linked to the euro by economic necessity.

currency chart

Here you can see how the Swiss franc strengthened versus the pound until the end of March.

Many investors make the mistake of thinking that the Swiss franc can be a super strong currency.  I have warned about this error for well over a decade. However, the mistakes of other investors can make opportunity for you.

Years ago in a different world, Switzerland was isolated and fiercely independent.  Its mountainous terrain and well organized citizen’s army gave them the strength to claim and enforce neutrality.

The small population (about 6 million) believed in personal privacy and hence banking privacy. The people were incredibly conservative and highly efficient. They did not believe in government debt and demanded that their national bank keep a large amount of gold as a reserve for their currency. This made Switzerland an ideal banking center in those days plus made Switzerland a refuge in times of turmoil. Swiss francs in a Swiss bank account were one of the ultimate forms of financial safety at that time.

This all changed. The computer, new tactics in war and the global economic community turned everything upside down. The computer was like the Colt .45, a great equalizer, making bankers in England, Italy or Spain etc. as efficient as the Swiss. New instruments of war, intercontinental and cruise missiles, nuclear weapons, etc. dramatically reduced Switzerland’s natural defenses.

Most of all, the global economic community forced Swiss banks to deal in US dollars, British pounds, Japanese yen and German marks. Swiss banks
had to open centers abroad and hence became vulnerable to other countries’ laws. They lost some of their independence!

Today Swiss banks are affected by what happens in the US and other countries (they have a huge investments globally. More importantly the Swiss franc is no longer the reserve currency of last resort.

Switzerland is a tiny country poor in terms of natural resources lacking oil, minerals and the ability to feed itself. Switzerland’s wealth is in its industrious, precise people. It is a trading nation and must maintain a currency at parity with the nations where it exports goods.  Switzerland must export to survive. Half of its exports go to Germany. When the Swiss franc becomes too strong, especially against the euro, the Swiss must act to force its parity down.

The last time the Swiss franc was too strong, the Swiss imposed a 12% per quarter negative tax on Swiss franc accounts held by overseas investors.

Switzerland is a good banking center, yes. The Swiss franc is a strong, stable currency, yes. Yet the Swiss cannot afford to let the franc rise too high.

I have shared this information for at least fifteen years warning not to invest too much in Swiss francs when it is strong.  In fact you should borrow Swiss francs and invest in euros and other related currencies, as shown above, when Swiss franc interest rates are down (as they are now).  This creates a double distortion that creates two opportunities.  You gain the positive carry on euro rates over the Swiss franc loans.  You also gain an extra chance for a foreign exchange profit.

Currencies globally are losing their purchasing power. To maintain the value of our wealth we need to do more than just save. The multi currency sandwich is one way to enhance the earnings of your capital.

I am updating Borrow Low-Deposit High now. When the new update is complete, it will be offered at $79.

This report will include ideas on were to invest in China and Russia with Japanese yen or Swiss franc loans (or both) now.

You do not have to wait and miss this yen opportunity, buy our report “Borrow Low-Deposit High” for $49.  I will email it to you immediately… plus when the new update is complete, I’ll email that to you also… FREE.

The report helps you see why and where to invest and learn why and how currencies and interest rates rise and or fall.

Finally, as always you are protected by our 30 day completely satisfied or your money back guarantee.

Borrow Low Deposit High – How to Use the Multi Currency Investment Sandwich… click here to get this emailed report for only $49.

This is also why we maintain close contact with Jyske Bank, Denmark’s second largest bank. Denmark is rated by Standard & Poor’s as the safest country in the world to bank in. Jyske Bank is the only bank we know that specializes in the Borrow Low-Deposit High strategy. Jyske Bank is also one of the leading currency traders in the world. Unlike most banks (that trade only eight hours a day) Jyske maintains a 24 hour trading service. They have been our bank for over twenty years and help us stay informed about global equity markets, plus global currency parity and interest rate trends so we can learn from portfolios that are real time. What you learn from is actually happening as our service unfolds.

More importantly, Jyske Bank  has created an entire subsidiary that provides a stable and safe institution for US investors  who wish to invest globally including a Borrow Low-Deposit High strategy.

Gary

Save $100 more. There is another important benefit you gain when you order my emailed report “Borrow Low-Deposit High”.  You can save $100 at the next Jyske seminar where I review the new H.I.R.E. overseas banking regulations.

Share strategies with me in California and Save.

I speak at the Jyske Global Asset Management’s April 30 – May 2 Foreign Exchange Investment Seminar in Laguna Beach, California.

The normal seminar fee is$499 or $750 for two.

However Jyske is providing the same discount to our premium subscribers (including those who order Borrow Low – Deposit High) as to their clients… $399 single and $599 for a couple.  You save $100…even though the emailed report “Borrow Low Deposit High” is only $49.

Order “Borrow Low-Deposit High – How to Use the Multi Currency Investment Sandwich”… click here to get this emailed report for only $49. Save $100 on JGAM’s California seminar.

See more on the JGAM California seminar here.

If you have questions about Jyske’s seminars contact Thomas Fischer of JGAM at fischer@jgam.com

Learn more about the IRS and Mother’s Day roses in Ecuador.

ecuador-mother's-day-Roses

Join us in North Carolina this June to learn more about how to bank abroad. June 24-27 International Investing and Business North Carolina

Gary

See an idea on Ecuador retirement here.

Our Ecuador exports tour is filled but you can still learn about Ecuador real estate.

Apr. 17-18   Imbabura Real Estate Tour ($499 or couple $749)
Apr. 20-21  Coastal Mid Coast Real Estate Tour ($499 or couple $749)
Apr. 23-24  Quito & Mindo Real Estate Tour ($499 or couple $749)

April 26-27 Cuenca Real Estate Tour

May 9-12       Super Thinking + Spanish Course, Cotacachi Ecuador

May  13-14    Ecuador Shamanic Minga

May  16-17    Imbabura Real Estate Tour

May  19-20    Coastal Real Estate Tour

May  22-23    Quito Real Estate Tour

May  25-26    Cuenca Real Estate Tour

You enjoy discounts by attending multiple seminars and tours.

Here are our multi tour adventure discounts.

Two Pack… 2 seminar courses & tours $998 Couple  $1,349 Save $149 on couple

Three Pack… 3 seminar courses & tours   $1399 Couple  $1,899 Save $98 single or $348 on a couple or more

Four Pack… 4 seminar courses & tours   $1,699 Couple $2,299 Save $98 single or $697 on a couple or more

Five Pack… 5 seminar courses & tours  $1,999 Couple $2,699 Save $496 single or $1,046 on a couple or more

Six Pack… 6 seminars courses & tours  $2,199 Couple $3,099 Save $795 single or $1,395 on a couple or more

Here is the balance of our 2010 schedule.

June 24-27 International Investing and Business North Carolina

June 28-29    Ecuador Travel & Andes

June 30-Jul 1 Imbabura Real Estate Tour

July 3-4      Coastal Real Estate Tour

July 6-7      Quito Real Estate Tour
July 9-10     Cuenca Real Estate Tour

Sept.   3-6   Ecuador Export Tour
Sept.   8-9   Imbabura Real Estate Tour
Sept. 11-12   Coastal Real Estate Tour
Sept. 14-15   Cuenca Real Estate Tour
Sept. 17-18   Ecuador Shamanic Mingo

Oct.    7     Quantum Wealth North Carolina
Oct.   8-10   International Investing & Business North Carolina
Oct.   11-12  Travel to Quito and Andean Tour
Oct.  13-14   Imbabura Real Estate Tour
Oct.  16-17   Coastal Real Estate Tour
Oct.  19-20   Quito Real Estate Tour
Oct. 22-23    Cuenca Real Estate Tour

Nov.    4-7   Super Thinking + Spanish Course Florida
Nov.    8-9   Travel to Quito and Andean Tour
Nov. 10-11    Imbabura Real Estate Tour
Nov. 13-14    Coastal Real Estate Tour
Nov. 16-17    Quito Real Estate
Nov. 19-20    Cuenca Real Estate Tour

Dec.   3-5    Ecuador Shamanic Mingo
Dec.   7-8    Imbabura Real Estate Tour
Dec.  10-11   Coastal Real Estate Tour
Dec. 13-14    Quito Real Estate Tour
Dec. 16-17    Cuenca Real Estate Tour

Borrow Low Despoit High in Japan


This may once again be the time to borrow low in Japan to invest high elsewhere.

See how this five year chart from www.finance.yahoo.com may mean money in the bank… a fortune actually.

Multi Currency Chart

Excerpts from a recent BBC article entitled “Japan’s economic growth rate revised down” helps explain why a new fortune may be in the making with the Japanese yen…

Here is the excerpt:  Japan’s economy grew by less than first estimated in the final quarter of 2009, revised figures have shown.  The Cabinet Office said the economy expanded by 0.9% between October and December of last year, down from its initial estimate of 1.1%.\

On an annualised basis, economic growth was 3.8% in the quarter, down from the initial estimate of 4.6%.

The downward revision in economic growth is likely to increase pressure on the Bank of Japan to ease monetary policy.

However, with interest rates already down to 0.1%, it does not have much room to move. This is bad for an economy as it tends to make consumers and businesses delay major purchases in the expectation that prices will fall further in the future.

A slowing Japanese economy is just one reason why it may now make sense to borrow Japanese yen to invest elsewhere.  Borrowing low and depositing high is called the Multi Currency Sandwich and this investing technique has been a phenomenal way to invest for over 20 years.

Since the end of the US dollar’s link to gold the fluctuations between currencies have created some of the world’s greatest (such as George Soros’) fortunes.

multi-currency-seminar

See below why at our International Investing and Business Seminars we have delegates come to our house for afternoon tea or lunch.  Here I am arriving at our house with Don Childs (our US Spanish instructor) and delegates during our last Mt. Dora seminar.

This personal touch in part is because one great, very exciting Multi Currency Sandwich that lasted nearly two decades has been to borrow Japanese yen at a very low interest rate and reinvest the loan in higher yielding currencies.

Back at the end of 1988, the yen hit dizzy heights in the 120 Yen per U.S Dollar range. Yen interest rates dropped into the low 4% range. This created a classic sandwich opportunity. The yen was a strong currency at an all time high with a low interest rate. This is the formula that Multi Currency investment sandwich investors always looks for.

Now, twenty years later the yen is again a strong currency and the interest rate has fallen as low as 1.375%!

I have been writing and publishing information about international investing for nearly forty years (since May 1968 to be exact). Fortunately I stumbled across and wrote about the Borrow Low-Deposit High Strategy at an early stage so the original readers of my report “Borrow Low Deposit High–How to Use the Multi Currency Investment Sandwich” have been able to borrow yen at low rates and redeposit the loans in other currencies at much higher rates (without forex loss) for over 20 years!

This is not a fast trading technique and in fact most positions are aimed with a five year horizon…pretty sleepy compared to people who trade currencies (an entirely different approach). Yet for most of us, slow and sleepy mean SAFE! However the Borrow Low Deposit High tactic can be really profitable.

How sleepy and safe?

Imagine this. Over the past 20 years, the cost of a Japanese yen loan has averaged about 2%. The US dollar interest rate has averaged 4% over this same period.  If one invested $100,000 in safe US dollar bonds or CDS held in huge, safe banks for this period and used this loan as collateral to borrow $400,000 worth of yen to reinvest in safe US dollar CDs or bonds, they have earned an average $12,000 a year and turned a safe 4% investment into a safe 12% investment. They added an extra $144,000 of income (on a $100,000 investment) over the 20 years!

Investing for 20 years in US dollar bonds or CDs is about as sleepy and safe as one can get.

Yet many smart Multi Currency Investment Sandwich investors have done much, much better.

How much better?

Take for example one year’s review of three Borrow Low Deposit High model portfolios we created and tracked.

In 2007 these portfolios rose:

Dollar Short +48.19%
Emerging Market +122.62%
Green 266.30%

Is this enough better?

Let me hasten to add that this type of performance is not guaranteed.   Do not ignore the fact that as sleepy and safe as Borrow Low-Deposit High can be that there can also be risks.  Had we invested in these same portfolios above in 2008, they would have lost a lot of money. Here is how they performed in a bad year.

Dollar Short Portfolio -35.21%
Green Portfolio -56.08%
Emerging Market -73.79%

The price for extra performance in leverage is added volatility and risk.

Yet we saw in yesterday’s message that one portfolio in 2009 used Borrow Low tactics to invest mainly in bonds and earned 66% profit in just nine months!

Tracking these portfolios for many years has taught us some valuable lessons.

For example catch areas of likely growth where a borrowed currency is hedged to the invested currency.

For example we watched Eastern European markets enjoy great growth at a time when the Swiss franc was loosely linked to the Eastern European currencies.

In that year, the Jyske Invest Eastern European Equity Fund rose from $51,000 to $76,138, a return of nearly 50%.

Had you leveraged this loan two times with a 2.75% Swiss franc loan, the return on a $50,000 investment would have been over $225,000 in one year.

The Czech koruna was also loosely linked to the other Eastern European currencies.

The Jyske Fund above performed really well over five years, up from 110 euro to 500 euro since 2001. That was an increase of 3.54 times. If you had invested $100,000 and borrowed $200,000 more in Czech koruna at 3.75% and invested in this fund for the past five years the initial $100,000 would now be worth over a million dollars! Your loan costs would be $37,500. Your profit on $100,000 after interest would be $1,024,500 on $100,000 of cash invested.

Plus because of the loose link, your currency risk would have been reduced. How much better can we ask than that?

Now two golden Borrow Low Deposit High opportunities may be on the horizon.  Japanese yen loans invested in China and Swiss franc loans invested in Russia.

Multi Currency Chart

Japanese yen loans have been one of my favorite money making vehicles for over 20 years. I first borrowed yen at 111 around 1988.  Then  the yen strengthened (bad news for a borrower) to 79!    My paper losses looked formidable, yet I held on and watched the yen tumble all the way to 146 yen per dollar (shown in chart above) by 2002.  I exited and my forex profits were huge… plus I had been earning the positive carry (difference between the loan cost and investment return) for all the years I held the loan.

Please let me repeat. The formula that Multi Currency investment sandwich investors always considers is a strong currency at an all time high with a low interest rate.

The yen is almost there… too strong versus the US dollar in the perfect position to borrow!  Plus because the Chinese yuan is likely to rise versus the US dollar, the yuan is likely to rise versus the yen as well… which makes the idea of investments in China financed with yen loans especially strong now.

However before you make these investments, please let me remind you of several important lessons about risk we have learned in the past two decades of making and tracking Multi Currency Sandwich portfolios.  The longer you can hold a position the less likely you are to lose.

One lesson for example is that many portfolios that lost short term became profitable if held for the year. The lesson is that when a properly constructed portfolio is leveraged and diversified, it can be safe and profitable regardless of the underlying idea, if an investor sticks to his beliefs and does not panic during short term drops.

We also learned that past performance is no guarantee of future profits. The profitability of the portfolios changed dramatically based on varying entry and exit points! This reminded us that such high performance may not materialize for all and that we must plan our profit and loss potential.

These and other important lessons, plus the upcoming Japanese yen potential are why I am updating my report Borrow Low Deposit High. This report teaches how to Borrow Low & Deposit High and helps you learn the risk as well as the potential rewards.

This is also why we maintain close contact with Jyske Bank, Denmark’s second largest bank. Denmark is rated by Standard & Poor’s as the safest country in the world to bank in. Jyske Bank is the only bank we know that specializes in the Borrow Low Deposit High strategy. Jyske Bank is also one of the leading currency traders in the world. Unlike most banks (that trade only eight hours a day) Jyske maintains a 24 hour trading service. They have been our bank for over twenty years and help us stay informed about global equity markets, plus global currency parity and interest rate trends so we can learn from portfolios that are real time. What you learn from is actually happening as our service unfolds.

More importantly Jyske Bank provides a stable and safe institution for those who wish to employee a Borrow Low-Deposit High strategy based on what they learn.

Our emailed Borrow Low-Deposit High report can help you learn how to expand your profits with up to 400% loans just as our reports have helped thousands of readers do over the past twenty years.

You can learn why this profit is available in my new updated “Borrow Low-Deposit High–How to Use the Multi Currency Investment Sandwich” emailed report. This email report explains everything you need to know about how to create and invest in the Multi Currency Investment Sandwich.  (See details below.)

Tens of thousands of readers have purchased this report, and several updates, since it was first published in the 1980s. You however can have the most up to date edition at a $30 savings.

I am updating Borrow Low-Deposit High now. When the new update is complete it will be offered at $79.

This report will include ideas on were to invest in China and Russia (both neighbors of Japan)  now.

Finding the right Chinese investment requires care.  Take the WisdomTree Dreyfus Chinese Yuan Fund (Trading symbol CYB) as an example. This fund seeks to achieve total returns reflective of both money market rates in China available to foreign investors and changes in value of the Chinese Yuan relative to the U.S. dollar.

The fund invests in very short-term, investment grade instruments, so has a very low yield. However its yield since inception is 2.26% so this fund might pay the cost of the loan.

However the ideal is to borrow low-invest high, not borrow low-invest low… so we’ll be looking at Chinese investments with higher yield potential in the report.

You do not have to wait and miss this yen opportunity, buy our report “Borrow Low-Deposit High” for $49.  I will email it to you immediately… plus when the new update is complete, I’ll email that to you also… FREE.

The report helps you see why and where to invest and learn why and how currencies and interest rates rise and or fall.

Finally, as always you are protected by our 30 day completely satisfied or your money back guarantee

Borrow Low Deposit High – How to Use the Multi Currency Investment Sandwich… click here to get this emailed report for only $49.

Gary

Save $100 more. There is another important benefit you gain when you order my emailed report “Borrow Low-Deposit High”.  You can save $100 at the next Jyske seminar where I review this tactic.

Share strategies with me in California and Save.

I speak at the Jyske Global Asset Management’s April 30 – May 2 Foreign Exchange Investment Seminar in Laguna Beach, California.

The normal seminar fee is$499 or $750 for two.

However Jyske is providing the same discount to our premium subscribers (including those who order Borrow Low – Deposit High) as to their clients… $399 single and $599 for a couple.  You save $100…even though the emailed report “Borrow Low Deposit High” is only $49.

Order “Borrow Low-Deposit High – How to Use the Multi Currency Investment Sandwich”… click here to get this emailed report for only $49. Save $100 on JGAM’s California seminar.

See more on the JGAM California seminar here.

If you have questions about Jyske’s seminars contact Thomas Fischer of JGAM at fischer@jgam.com

See other ways to fight inflation here.

Read the entire article Japan’s economic growth rate revised down