Tag Archive | "Hyflux"

How Investments Get All Wet


Since Earth Day this week, it’s a good time to take a look at investments in natural resources, like water.  This is a resource that is becoming increasingly more valuable.  Investing in water is a no brainer.  Right?

Such was my thinking when I first started writing about the Singapore water purification company, Hyflux, in 2004.   I invested myself.  The chart below shows how the share has performed since 2004.

tradestops

Hyflux shares did really well… for a while.

A reader sent this note:  “I know you’ve been investing in water companies for several years now, so I wanted to pass along this email update where I receive weekly roundups.  Today’s message addresses the growing need for potable water.

When time permits, please scroll down and read the article entitled  “More Precious Than Gold: Why You Should Invest in Water Now”.

The article featured shares in Hyflux, a water company, that just inked a long term deal with the Kingdom of Saudi Arabia to provide their citizens with water.

I replied that Hyflux may indeed be a good investment long term, (or not) but its share price failure over the past decade helped me shift totally to ETFs (except the sandalwood speculation I have).  I invested in Hyflux when it signed a similar deal with Libya before Gaddafi was removed.  The shares tanked.  A deal with Saudi Arabia may sound good, but the Middle East is a pretty volatile place.

I first wrote about Hyflux in 2004 when shares were in the .90 cent per share range.  The fundamentals were so good… the need for more water and Hyflux had a lot going on.  The price  shot to nearly $3.00 per share.  Wow, did I think I was smart! But, though the fundamentals for investing in water just keep getting better, here we are over a decade later with the Hyflux share price in the .40 cent range.

Only those who had a good stop loss in 2005 jumped out with a great profit.  But look at what happened next.  Even those investors who used a good stop loss had a hard time.  The pattern of the share price, the rapid rise, the fast decent and sideways motion from 2016 to 2012 was one that was mostly likely to create a Performance Gap.  Investors who were following this share reinvested in 2008 and were wiped out in 2009.  Then they reinvested in 2010 and were wiped out again in 2011.  This is the type of share movement where every type of investor (except those manipulating a market) lose.  This idea (investing in water) is right.  However, this specific share is an investor’s nightmare.

The current analysis at Tradestops.com  (1) shows that this share is in the SSI red zone (trending down) and it has a huge VQ of 39.6%.  This means that the share can rise and fall 39.6% without creating a trend.   This makes most stop losses meaningless.   These shares should only be viewed in the most highly speculative manner.

tradestops

tradestops

A recent article  in the Wall Street Journal “Indexes Beat Stock Pickers Even Over 15 Years” (1) backs up my decision to make life simple and invest in ETFs instead of specific shares.  The article reveals new data showing that 82% of all U.S. funds trailed their respective benchmarks over 15 years

It says, “Over the 15 years ended in December 2016, 82% of all U.S. funds trailed their respective benchmarks, according to the latest S&P Indices Versus Active funds scorecard. This was the first year that the analysis included 15 years of data, helping smooth out periods of volatility that can affect the performance of active managers.

“Among more than a dozen categories tracked, 95.4% of U.S. mid-cap funds, 93.2% of U.S. small-cap funds and 92.2% of U.S. large-cap funds trailed their respective benchmarks, according to the data.”

tradestops

The article pointed out how even the top performing managers were unreliable and gave the Sequoia Fund as an example.   This was the top performing large-cap growth mutual fund tracked by Morningstar for 15 years.  Then in 2015 the fund was badly burned by a heavy position in Valeant Pharmaceuticals International Inc. Valeant’s stock price has plunged 96% from its peak in August 2015.

This is why our course, Purposeful investment, focuses on the math nowadays rather than the fundamental ideas.

I still love the idea of investing in water, but if I were to do so, I would pick an ETF that tracks a water index.

For example, here is the five year share price chart for the Claymore Guggenheim S&P Global Water ETF (CGW) at www.finance.yahoo.com

water shares

Compare that performance to that of the Hyflux share chart at www.finance.yahoo.com

water shares

In addition the Claymore Guggenheim water ETF is in the green zone (trending up) and has a really low volatility quotient of  10.93% compared to the very high VQ 39.6% for Hyflux which is in the red zone (trending down).

tradestops

tradestops

One of our mantras is to invest in what we have a passion for.  Investing in water makes sense… if, water shares as a sector offer good value (and more so) if one has good diversification in the sector.

An ETF like this Guggenheim ETF provides the diversification, but its dividend in the last year was 1.52%.

Compared to the 3.27% dividend yield of the Keppler Asset Management Developed Market Top Value Portfolio we  track at our Purposeful investing Course shows that the value must be suspect.

keppler

Investing in water companies may not be much of a good value investment at this time.   This may be an idea with appeal that could leave our investments all wet!

Gary

(1) www.wsj.com: Indexes beat stock pickers even over 15 years

(2) Learn more on how to use the Tradestops.com “Magical Calculator” that shows how to improve investing discipline.

Borrow Low – Invest High

A special value investing tactic makes high risk, high profit speculations safer and more profitable.

For example in 2015, a 10,000 pound loan (in British pounds at $1.52 per pound) was used to purchase 1,091 shares of the silver ETF SLV.  Those shares rose to be worth $20,421 by 2016, a 34.34% additional profit.

 

From July 2015 to July 2016, the price of the silver ETF  iShares Silver Trust (Symbol SLV) rose from $13.92 and ounce to $18.71.  You can see the rise in the finance.yahoo.com chart below.

yahoo

A 10,000 pound loan (the pound was $1.52 per pound) purchased 1,091 shares of the silver ETF SLV.   Those shares rose to be worth $20,421 by 2016,  a 34.34% additional profit.

The profit did not stop there!

From 2015 to 2016 the pound dropped from $1.52 dollars per pound to only $1.39 dollars.  The 10,000 pound loan that had worth $15,200 in 2015 only required $13,900 to pay it off in 2016.

yahoo pound chart

The falling pound had created an extra $1,300 profit.

Do the math: 

Silver worth $20,421

Loan payoff  $13,900

Profit             $6,521

Cash Required  Zero

All this profit was made on the 10,000 pound loan.  No cash was required on the investor’s part.

The entire $6,521 was pure… extra profit.

Some investors borrowed less… others borrowed much more so their profits were even higher.

This example came from our Purposeful investing Course (Pi) which studies three main layers of value investing tactics in real time.

Tactic #1: Diversify equally in good value developed and emerging stock markets.
Tactic #2:  Use trending algorithms to increase, reduce or hold positions in these markets.
Tactic #3:  Add spice to a portfolio speculating in precious metals, when their price is under “ideal conditions”, using leveraged, low value currency loans.

An “ideal condition” is a rare distortion in an economic fundamental that history has shown “almost always” corrects itself.

The words “almost always” indicates that there is risk.  There is risk that a basic fundamental has changed and the distortion will not correct in any targeted period of time.   Or a new fundamental has shifted dynamics to such an extent that the distortion never corrects.  There is always risk.

Profit is the reward for taking that risk, but there is always a chance of loss which is why the third layer speculation is to be used like a spice… sparingly.

Pi looks for several ideal conditions in precious metals using the price of gold based on over 40 years of speculation in precious metals.

The first condition is gold’s price to inflation.   Gold is the anchor of the strategy but its ricing is perhaps the most speculative since a meaningful inflation rate is hard to define.

Gaining a true perspective on gold’s value is difficult because the price of gold was fixed for many years.  The gold price was fixed at $35 an ounce at the end of WWII and this fixing did not take into account the huge inflation this conflict created.   This also impacts any accuracy in understanding what the real the price of gold should have been at the end of the war.

Statistics can be misleading.  In the report Platinum Dip 2018 there is an analysis of inflation.

These factors distort the accuracy of the picture.  How much is gold really worth now?  What is its real value?  This is truly THE golden question.

At this time the magic number we sue for gold is $1,225 an ounce.  If gold’s price is much higher than $1,225, than the Silver Dip or Platinum Dip are not in an ideal condition.

When gold is priced ideally, then there are several ratios that can alert us to an ideal condition.

The first ratio is the gold to silver ratio.  When the gold silver ratio reaches 80 we consider speculation in silver to be ideal (if gold is ideally priced).

This value indicator is simple because the gold silver ratio is rarely as high as 80, only three times in 36 years as the chart below shows.

gold silver spread

Chart from www.goldprice.org/gold-silver-ratio.html#36_year_gold_price

The spread was over 80 when we issued the original Silver Dip in the 1980s.  30 years later ideal conditions coincided again. The chart above shows how the spread was shooting towards 80 when we issued the Silver Dip 2015 report.

The spread hit 80 in 2015 and again in March 2016, but we can see from the chart above that a drop in the spread was on its way. The trend was for a continued lowering of the spread as silver’s price rise was much stronger than gold’s throughout 2016.

This chart below from infomine.com shows the trend clearly.

silver

http://www.infomine.com/investment/price-ratios/gold-silver/10-year/

Another ratio we watch is the gold to platinum ratio.   When the price of gold rises above the price of platinum, platinum’s price is at an ideal condition.

Platinum is a good value when it sells for less than gold and gold is close to our below its fair price ($1,225).   As the chart below shows, platinum costs more than gold more often than not.  The fundamental reasons for platinum’s high price, including platinum’s supply scarcity support this.

The chart below from Kitco.com shows the gold-platinum ratio.  The ratio is the red line and right axis.  The price of gold is the yellow line, left axis.  The price of platinum is the blue line, left axis, from 1975 to May 13, 2016.

gold

http://www.kitco.com/commentaries/2016-06-27/Gold-to-Platinum-Ratio.html

Notice how each time the gold-platinum ratio (red) has spiked, 1975, 1982, 1985, 2002, 2009, shortly after the price of platinum (blue line) has skyrocketed shortly after.

The gold-platinum ratio was at an almost  historical low when this report was written and the “Silver Dip 2017” recommended a shift from speculating  in silver to speculating in platinum. The 2017 report recommended leveraging the platinum ETF “ETFS Physical Platinum Shares” (Symbol) PPLT.

The spice.  This type of speculating is not done on its own, but as an adjunct that enhances an existing equity portfolio.  The portfolio is used as collateral for a loan that is invested in the metal with an “ideal condition price”.

Let’s examine how a speculation in silver (based on a gold silver ratio’s ideal condition) increased the profits of a portfolio of good value developed and emerging market equity ETFs.

This study looks at the $100,000 invested in a portfolio we began tracking in our Pi course.  The portfolios were started September 2015 (591 days before this study or 17 months ago).  70% was invested in ten good value developed market ETFs and 30% in 10 good value emerging market ETFs.

This is a list of the shares in the Developed Market Portfolio.

Screen Shot 2017-02-19 at 12.30.18 PM

This is a list of the shares in the Emerging Market Portfolio.

Screen Shot 2017-02-19 at 12.30.55 PM

The good value portfolio was up 4.64% (a gain of $3,248) since inception and the emerging market portfolio is up 6.72% (a gain of $2,016).

A portfolio of these shares with an original investment of $100,000 invested 70%-30% after 591 days (February 2017) was worth $105,267, a 5.26% gain.

In this study we examine the change in performance when an additional $10,000 was risked on the iShares Silver ETF (Symbol SLV) beginning March 2016 when the gold silver ratio broached 80.

Image from www.macrotrends.net/1441/gold-to-silver-ratio

The price of SLV was $14.01 in March 2016 and is currently $17.06.

Screen Shot 2017-02-19 at 12.50.25 PM

Image from https://finance.yahoo.com/chart/slv?

Let’s examine profits under three different exit strategies.

Exit strategy #1:  No exit.  The $10,000 was worth $12,163 at the time of this study (February 2017).

Exit Strategy #2: Exit when Tradestops issued a Stop Loss signal November 2016 at a price of $16.07 per share.  The $10,000 was worth $11,457.

Exit Strategy #3: Exit when the Gold silver ratio dropped below 70 on January 2017.  The $10,000 was worth $11,365.

The overall portfolio performance was improved in each situation.

Exit strategy #1:  Profits increased from $5,267 to $7,430.  A 10% increase in the portfolio added a 41% increase in profit.

Exit Strategy #2: Profits increased from $5,267 to $6,724.  A 10% increase in the portfolio added a 27% increase in profit.

Exit Strategy #3: Profits increased from $5,267 to $6,632.  A 10% increase in the portfolio added a 26% increase in profit.

All of these additional profits were gained without a penny of extra investment.  All the profits came from loans that were invested in silver.

The other benefit beyond profit is safety from time.

When leveraging investments, time is most important.  Because leverage is secured by the entire portfolio rather than just the additional investment, the odds of a margin call are almost nil so the investor gets to determine how long the investment will have to mature.

Let’s take an example of the good value Pifolio above.

In this study the loan was $10,000.

The collateral is not the $10,000 investment in silver, but the entire portfolio which is now $115,267 ($105,267 plus the $10,000 in silver).

This means (if the rules of the lender requires a two to one loan ratio) that the portfolio would have to drop around 75% before there would be a margin call.  Such a loss is highly unlikely.

This margin has as much time as is needed to let fundamental forces work through the market.

Any profit gained comes without adding a penny to the portfolio.

The most important elements of making good investments are price and time.  There is always something about investments we won’t know, but the one thing we can trust is that investments purchased at the right price, and given time, have the highest odds that profits will flow.

Silver is falling. 

slv

Chart from finance.yahoo.com/chart/SLV?

Recently the silver ETF iShares Silver Trust (symbol SLV)  was priced 18.62% below the highest close of $19.60 from last August.   The mathematical system we track created a stop loss price of $16.18, showing that this precious metal moved into selling territory.  Now the share price is in the $15 per ounce range.

We Use Math to Spot Value. 

Whether one likes to trade or invest and hold, math based financial information works better than the spin, rumor and conjecture of the daily economic news.   Mathematical based investing can put us on a solid path to everlasting wealth that is not easily diverted by the daily drama that seems to be unfolding in the modern world.

For example, our Purposeful investing Course teaches three mathematically based routines that have been proven to out perform the market over time .

The first routine in the course is the quarterly examination by Keppler Asset Management of 43 equity markets and analysis of their value.  This makes it possible to create a base portfolio of Country ETFs based on basic value.  This passive approach to investing in ETFs is simply to invest in Country ETFs of good value equity markets.

For example, Keppler’s analysis in 2017 shows that the “Good Value Developed Market” Portfolio is twice the value of a US market index fund and a much better value than any of the other indices shown.  These are based on the cornerstones of value, price to book, price to earnings and dividend yield (except the European dividend yield).

The Good Value Developed Market Portfolio offers even better value than the Morgan Stanley Capital Index  Emerging Market Index.

keppler

History shows, that over the long run, math and value drive the price of markets.

Using math makes it simple, easy and inexpensive to diversify in the predictability of good value.

The second tool Pi provides is a way to actively monitor and shift the good value markets using trending and volatility algorithms.  These algorithms allow us to trade good value markets through downtrends and upticks to increase profits in a diversified even more.

These trending algorithms use the math that spotted the current condition of silver.

Use math to spot distortions that create ideal conditions for speculation.

Pi teaches the strategy of speculating in metals when speculative conditions are absolutely ideal.  The Silver Dip relies on a really simple theory… gold should rise about the same rate as other basic goods and the rise and fall of silver’s and platinum’s price should maintain a parity with gold.

Our math based study has created an ideal price for gold and though its trending up it has passed the good value level we use.  Gold is still okay, but not a bargain any more.  Value investors only seek bargains.

When “Silver Dip 2017” was written profits on silver had been taken.

Platinum conditions are ideal for 2018.

Since 2014 the price of platinum has fallen below the price of gold and at the beginning of this year reached a historical low.  The distorted gold platinum spread suggests that platinum is a very good value so we are updating our dip report, and it will be the “Platinum Dip 2018”.

The report explains how to speculate in platinum plus outlines the following:

  • How to use theDip strategy in platinum without adding a penny of cash if you already have investments.
  • How to invest as little as a thousand dollars in platinum if you do not have a current investment portfolio.
  • Why this is a speculation, not an investment and who should and should not speculate and how to limit losses and take profits.
  • Three reasons conditions are better for a Platinum Dip now.
  • Three different ways to invest and speculate in gold, silver or platinum in the US or abroad.
  • How to buy gold and silver or platinum with or without dollar leverage margin accounts.

The “Platinum Dip 2018” also contains four matrices that calculate profits and losses so investors can determine cut off positions in advance to protect profits and/or losses.  The report also looks at how to switch time horizons for greater safety.

The first way the Dip adds extra performance is with leverage.

The second way to enhance performance is to maintain the leverage in poor value currencies.   Choosing which currencies to borrow is almost as important as choosing which metal to invest in.  The examples in this report have shown loans made in British pounds.  Other times it has been better to borrow Japanese yen, Swiss francs, once Mexican pesos.

Currently the best currency to borrow is US dollars.

The Platinum Dip 2018 report reviews each currency and which is best to borrow now and what to watch for.  Sometimes it is best to borrow a second currency and pay off the initial loan in mid stream.

Rising interest rates make the US stock market highly dangerous in the short term. “The Platinum Dip 2017” shows how to create a safe, diversified good value stock portfolio and use it to generate much higher returns with a little controlled speculation in platinum.

Learn how to get platinum loans for as low as 1.58%.  See why to beware of  certain brokers and trading platforms, how to choose a good bank or broker and how platinum profits are taxed.

The report includes a complex comparison of gold and silver with other costs of living from 1942 to today to help determine the real value of gold, silver and platinum.

Finally, learn why and how to use advisers to manage profits from the gold and silver dips.

Current circumstances could cause the price of platinum to rise rapidly at any time.  Do not delay reading this report.

The Silver Dip sold for $79 in 1986.  Due to savings created by online publishing (we eliminated the cost of paper and postage), we are able to offer this report for $39.95.

Order now by clicking here.  Silver Dip 2017  $39.95

Get the Silver Dip 2017 FREE when you subscribe to the Purposeful investing Course.  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.  You also receive the $39.95 report “Silver Dip 2017” FREE.

Triple Guarantee

Enroll in Pi.  Get the first monthly issue of Pi and the three reports 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 purposeful 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 three reports 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 a Pi annual subscription for $197 and your initial 160 page online introduction and the regular bi weekly emailed updates for a year.

Gary

Investing in Water Part II


Yesterday’s message, Water I, looked at the importance of water.

little horse creek

Little Horse Creek at Merrily Farms

That article viewed investing in land with water.

Another way I invest in water is with shares in water processing companies.

An interesting downwards trend has developed in water shares.  I always look twice when something about a clearly needed fundamental seems amiss. In this case… the world needs water!   Why would shares in water companies fall?

This series will revisit the three water companies we held in our Green Portfolio that rose 260%+ before the 2007 crash…  Hyflux, Kurita Water Industries and  Séché Environnement SA.

Then we’ll look at an investing tip that can make sure that water shares do not leave your investments and savings all wet.

This message looks at Hyflux Ltd chart from sg.finance.yahoo.com.   Hyflux trades in the USA as OTC code HYFXY.

water share chart

(click on photo to enlarge)

Hyflux shares up +590% in ten years.

We have been recommending (and investing ourselves) in Hyflux since 2004.  Each time the price drops I mention these shares again.

Right now one downwards concern (that could continue to press) on Hyflux shares are its large contracts in the Middle East and North Africa region. This business contributes 60 percent to the groups revenue.

We first recommended Hyflux in 2004.  Then we wrote about Hyflux again in 2008…  both times before the shares began to rise.  You can see in the chart above how those who purchased Hyflux in 2004 and 2008 have been in a position to make huge profits.

Here is what I wrote in 2008:

#1: Is Hyflux a well managed company?

I have liked the management team for years. The group is headed by Olivia Lum who has proven to be an astute leader. Hyflux Limited SGX: 600 began in 1989 as Hydrochem (S) Private Limited, a trading company selling water treatment systems in Singapore, Malaysia and Indonesia and later, China. Lum has been progressive. She added a team of scientists and engineers that created technology for Singapore’s water recycling plants that filter and treat waste water.

These technologies are based on semipermeable membranes and reverse osmosis that is capable of extracting potable water from residual, sewage and salt waters.

Hyflux was the first water treatment system company to be listed on Singapore’s equivalent of NADAQ in 2001 and the first to be upgraded to Singapore’s main exchange in 2003, again making history.

The group has been expanding geographically first to China, then lucrative Middle Eastern markets and is now entering India, Southeast Asia and Africa.

#2: Is the company in a growth industry?

There are few sectors with as much potential as water. China, the Middle East and India offer special opportunity.

#3: Are the shares available at a good value?

The shares are certainly a better value than a few months ago as the chart above shows.

I am writing about Hyflux again now because the global stock market sag has pushed Hyflux shares down once again and created extra value.
However as you can see from the company’s financials, sales, profits and dividends are at all time highs!

hyflux data

This is a good time to be looking at Hyflux shares.

An investment in Hyflux by the way, also represents an investment in Singapore dollars so all the numbers above have been enhanced by this added forex growth.

spre dollar

This chart from sg.finance.yahoo shows the benefits of a multi currency portfolio as the Singapore dollar has given a 20% extra profit versus the US dollar over the past five years.

More Vital point About Investments and Water.

The United Nations Water agency UNwater.org says:  A Drought in Your Portfolio?

The World Water Assessment Programme (WWAP) participated in the EIRIS conference on global water risk research. The conference explored the investment case for considering the risks and opportunities arising from water scarcity as part of a wider sustainable investment strategy, and heralded the launch of the EIRIS’ Global Water Risk report.

The report shows that out of the 2000 global companies analysed 54% are exposed to water risks but take little or no action to mitigate them, and approximately half show no evidence of any management response to water risks whatsoever.

The shares fell in 2011 due in part to the facts that the Middle East and North Africa (MENA) region, contributes 60 percent to the group revenue and delays to the company’s Libya contract as well as overall concerns about its Middle Eastern exposure.

On the positive side, not long after Hyflux was chosen as the preferred bidder to build and run Singapore’s largest-ever desalination plant, it was worth a total of S$890 million ($703 million).

Hyflux also added a concession to build and operate a plant to treat up 150,000 cubic meters of wastewater per day for Zunyi City in China’s Guizhou province.

An August 2012 Reuter’s article entitled “DBS downgrades Hyflux to hold” Said:   DBS Vickers downgraded water treatment firm Hyflux Ltd to hold from buy and cut its target price to S$1.45 from S$1.66, citing less-than-expected second quarter earnings due to weak margins for Singapore.

This was interesting since Hyflux had record profits in the first quarter of 2012 and second quarter net profits rose 21 percent from a year earlier to S$17.5 million.

What caught my attention in the article was the statement: The Arab Spring caused a drought in water contracts over the last 2-3 years, resulting in pent-up demand, DBS said, adding it believes Hyflux was bidding for two major projects in Saudi Arabia and Oman.

This creates a special three point opportunity… strong currency… undervalued sector and pent up demand for a well managed company.

This may not be quite the time to jump in (though I do hold Hyflux shares myself since I usually try to get in ahead of the rise).

Here are three important points about share investing to remember.

#1: Cheap stocks outperform expensive stocks.

#2: Stocks in companies with rising earnings outperform stocks in companies with falling earnings.

#3: Stocks with high earnings and rising earnings outperform stocks with low and falling earnings.

In other words, look for high quality companies with share prices already in established up trends that are cheap (price earnings), with high and rising earnings and increasing attention from the market.

Hyflux shares meet all the criteria except the action and market attention.  When these events fall into place expect some great opportunity.

We’ll look at Kurita Water Industries and  Séché Environnement SA later in this Water Investment series because water shares have been falling while the need for good water in on the rise.

Go to Part Three of this “Investing in Water Report” report. Click Here.

Gary

Multi Currency Value Investing Seminar

Old Accord Creates New Profits – Multi Currency Investments.

Earn more with multi currency stock market breakouts.

Improve Safety – Increase Profits

Learn how to improve the safety of your savings and investments by selecting good value and diversified investments in a multi-currency portfolio.

Few decisions are as important to your wealth as the value of the markets and currencies you invest in.  This has been our area of expertise since the 1970s and we have worked with and advised some of the largest currency traders in the world.

Gain Protection First – Against the Dollar’s Purchasing Power Loss.  In 1913 the The Federal Reserve Act created the Federal Reserve Bank to protect the purchasing power of the US dollar, which has since lost about 94% of its purchasing power.  Here is its price compared with gold since 1900.

priced in gold

Dollar chart from pricedingold.com (1)

The Fed has let the dollar lose most of its strength plus has allowed interest rates to fall so low, that safe investments cannot keep pace with the drop in purchasing power.

multi-currency-chart

Chart from Grandfather Economic Report (2)

Many investors have forgotten about the risk of a falling dollar because the greenback has been strong for the past five years.  This temporary dollar strength came after the great recession of 2009 just as there was temporary dollar strength after the great recession of the 1980s.  Then about six years after the recession, an agreement was made by major governments to weaken the dollar.

There was a severe global economic recession affecting much of the developed world in the late 1970s and early 1980s.  The United States and Japan exited the recession relatively early, but high unemployment would continue to affect Europe and the UK through to at least 1985.  As a consequence between 1980 and 1985, the US dollar had appreciated by about 50% against the Japanese yen, Deutsche mark, French franc and British pound, the currencies of the next four biggest economies at the time. Then the governments reached an agreement and exchange rate values of the dollar versus the yen declined by 51% from 1985 to 1987.

Now the world is again in the same place.  The recession is over.  Europe is a bit behind in recovery and the dollar is higher than before the recession.

There is no reason for the greenback to be  strong.

The agreement in 1985 was called the Plaza Accord.   Over just two years the greenback dropped nearly 50% versus other major currencies.  The next accord will generate great profits for those who know what to do while it ruins the purchasing power of dollar back investments.

The strong US dollar and low interest rates have created one of the biggest stock and multi currency breakout opportunities in history.  Learn how to create a plan to profit from multi currency shifts ahead.

One reason for the potential gains is that stock markets and currency values are cyclical.  Due to low interest rates created by the 2009 economic downturn, the US and a few other equity markets have risen to some of their highest prices, ever.  These markets offer very poor value now.  The steep valuation creates incredible profit potential but also hides some enormous risks.  Learn how to develop an investing strategy based of earnings, cash flows, dividends and book values to increase potential for profit and reduce the risks.

Next Extra Profit Created by Value Breakouts

Over the history of US equity markets, the  price of overall markets have risen about 9.1 percent, respectively, compounded annually.  Yet over more than a hundred years of stock market activity,  a majority of the profits have come from just a very few dramatic breakouts.

Equity markets are ruled in the short term by emotions that create unpredictable ups and downs.  Numerous fears of defaults, worries of double dip recessions, high unemployment, concerns about fiscal cliffs, hold investors back.  Yet global population growth and advances in production and prosperity are relentless economic fundamentals that increase value.

When fear holds back a a fundamentally rising value, rising profit potential grows.  Values increase as prices stagnate.  Then markets break free and rocket upwards creating wealth, prosperity and growth.

Find out which breakouts are likely to take place next.

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 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 create war.

Here is the war stock cycle.  Military struggles (like the Civil War, WWI, WWII and the Cold War: WWIII) 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.

Learn how the Cyber War (WWIV) may change the way we live and act and how this will affect currencies and investments.

Learn:

* 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), but 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 outperformance 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.  Buffett leverages his portfolio at a ratio of approximately 1.6 to 1.  This rate of expansion by the way is called the “Golden Ratio”.  It is a mathematical formula that controls the growth of most natural things; trees, the shape of leaves, the spiral of shells, as well as the way economies and societies grow.

We’ll sum the strategy, how to leverage cheap, safe, quality stocks and for what period of time based on your 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 (almost) years of investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.

Enjoy investing more with slow, worry free, good value investing.  Stress, worry and fear are three of an investor’s worst enemies.  These are major foundations of the Behavior Gap, a trait exhibited by most investors, that causes them to underperform any market they choose.  The behavior gap is created by natural human responses to fear.  The losses created by this gap grow when investors trade short term under stress.

Learn how to put meaning into your investing by creating profitable strategies that combine good value investments with unique, personal goals.

Learn how to span the behavior gap.  Behavior gaps are among the biggest reasons why so many investors fail.  Human evolution makes fear the second most powerful motivator.  (Greed is the third.)  Fear creates investment losses due to behavior gaps.  Fear motivates us more strongly than desire.  By nature investors are risk adverse, when they should embrace risk.  Purpose is the most powerful motivator,  stronger than fear and greed.  One powerful way to overcome the behavior gap is to invest with a purpose.

Combine your needs and capabilities with the secrets and the math of our good value model portfolio.

Share ideas about my good value portfolio.  My personal investment portfolio comes from a continual analysis of international stock markets and a comparison of 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.

Markets included in this portfolio are:

• Norway
• Australia
• Hong Kong
• Japan
• Singapore
• United Kingdom
• Taiwan
• South Korea
• China

These markets have been chosen based on four pillars of valuation.

• Absolute Valuation
• Relative Valuation
• Current versus Historic Valuation
• Current Relative versus Relative Historic Valuation

Learn how to use Country ETFs to easily construct a diversified, risk-controlled, equally weighted representative country portfolios in all of these good value countries.

To achieve this goal my portfolio consists of Country Index ETFs that track an index of shares in a specific country.  These country ETFs provide diversification into a basket of equities in the good value countries.  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.

This is an easy, simple and effective approach to zeroing in on value because little 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 pick and choose shares.  You can invest in the index which is like investing in all the shares in the index.  All you have to do is invest in an ETF that in turn invests passively in all the shares of the index.

Learn 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 a test.

The Test for Low Cost Trading

Research put every part of this portfolio in place, except knowing the best, easiest and least expensive way to buy.  A search for an optimal way to buy and hold boiled down to two methods.  One tactic to test was to use a unique online broker that appeared to offer the lowest cost deal.  The other approach was to use a community bank in Smalltown USA.  The small town bank that I use looks after my 401K trust account and their service is first class.  The benefit of small banks is that they still treat us as a human beings (instead of a number) and when we need, it’s easy to go right to the top to answer a question or get a problem resolved.  There are no call centers and the bank and the person looking after my account is just around the corner.

I created a test to see which offered the least expensive service.

Working with my banker in Smalltown USA,  I created two accounts, one at the online broker and the other at the bank. I placed $40,000 in each.

I set up the order for the country ETFs online, while my trust manager set up orders for the identical amounts of the same shares in his system.  Then we got on the phone, coordinated our timing and on a count of three each pushed the button “BUY”.

The results of this test  show how you can gain on any purchase of country ETFs.

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 “Silver Dip 2017” 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.

Your subscription will be charged $299 a year from now, but you can cancel at any time.

Gary

 

Gary

(1) Dollar chart from pricedingold.com

(2) Grandfather Economic Report

 

Read  DBS downgrades Hyflux to hold

International Multi Currency Investments in Necessity


International multi currency investments in necessity are  a good way to store value.

water

This spring fed…

water

pond in our back yard is one reason we bought our North Carolina farm.

Last Saturday’s message Storing Wealth Made EZ looked at how stagflationary pressures have put almost every investment at risk and raised the question, “How can one store wealth in such an atmosphere?”

That message said: Traditionally Swiss francs and precious metals, especially gold and silver are the favored stores of wealth.  These investments should usually play a part in portfolios as insurance. 5% to 10% of a portfolio in metals and hard currencies is a general rule of thumb.

These hard assets were good ideas for speculation a year or two or even a few months ago.  Not when they are at all times highs though. History suggests that their high price puts their promise as a store of value at risk. In previous monetary corrections when the price of Swiss francs, gold and silver exploded upwards… the peak was followed by a harsh… extended downfall.

So I was not surprised to see that last week, before the collapse of Gold’s price, JGAM took profits on the wise gold positions that they had accumulated earlier in the year.

JGAM-Team

The JGAM Team

JGAM announced:  On 25 August JGAM’s Investment Committee held an ad hoc meeting, deciding to carry out the decision we took on 11 August:  “It’s our intention to use a rebound in equity prices to reallocate even more into defensive stocks. Furthermore, we intend to turn up and down on risk exposure by use of currency positions using tight stop losses to limit downside risk and locking in gains by use of trailing take profit stops, i.e. using the successful disciplined approach from our Managed FX portfolios.” (Quote from the 11 August meeting.)

Prior to this week, stock markets have fallen four weeks in a row. However, this week we have seen the expected rebound which causes us to take action and further reduce risk exposure by selling stocks and move all managed portfolios into an underweight equity position. Also, we take profit on approximately half of our gold position. The price of gold has risen to record high levels since we entered the position, and we are taking the opportunity to book some of the gain. However, we still keep a gold position of approximately 5% as a hedge in case stock markets plunge again. Furthermore, we put a take profit stop on our Swiss franc position to make sure we don’t lose the gain we have obtained.

We have done all this before Ben Bernanke spoke in Jackson Hole today, Friday. Markets are optimistic that the Fed’s chairman will announce policy actions that will cause a shift in investor sentiments and stop the sliding stock prices. However, at JGAM we think it will be difficult for Mr. Bernanke to fulfill markets’ high expectations. We still have difficulties seeing where the growth shall come from in the present deleveraging environment we are in and policymakers lack of room for maneuver. Add to this the smoldering and unsolved eurozone debt crisis. Therefore, we expect to be able to pick up stocks at more attractive levels on a longer-term horizon. However, short-term we are prepared to scale up and down our risk exposure by using currency investments. E.g., if Ben Bernanke succeeds in creating a positive sentiment in the stock market, we are ready to quickly take on risk exposure through new currency positions positively correlated to growth and stock prices. We will keep you updated.

We now know since JGAM issued that report that Bernake surprised everyone because he did not offer any plans for additional measures to bolster short-term growth.  He said that that the economy was recovering and the nation’s long-term prospects remained strong instead.

Regarding gold we remain in agreement with JGAM’s advice of last week… take profits if you have not.

kitco-gold-chart

How long will the gold bull hold?  This chart from Kitco.com shows the similarity of the run up from 1976 to 1980 and 2002 to now.

It makes good diversification sense to hold a percent of your portfolio in gold… yes… absolutely.   Gold as insurance… a permanent but small portion of your portfolio is different from gold as a speculation.  Gold can be a good speculation…  as the chart above shows.   When it is at an all time high… beware.  Very few people find value at the top of a bubble and the history of serious sharp declines in all speculation and all bubbles exists.

The Kitco.com website says: In an article titled, “What Goes (Straight) Up …”, KITCO.com analyst John Nadler said the bears are seeking to test the 1680 to 1650 level, and that a bounce from there would not be surprising. He also made an allusion to memory of the large decline in 1980 (which was about 45%).

In an interview with The Street, titled “Expect a 35% Correction in Gold,” he said that a 35% decline was possible, and that something in the 1480 area might be a bottoming level.

This begs the question then, where does one store value?

Necessity is always a good place to store value… food, clothing and shelter.  However, the root of all three of our basics is water.  Water investments offer great potential. This does not negate the need to suit such investments to your needs.

While the world’s population tripled in the 20th century, the use of renewable water resources has grown six-fold. Within the next fifty years, the world population will increase by another 40% to 50%.  This population growth – coupled with added water demand per person from industrialization and urbanization – will result in an increasing demand for water.

Yet the world may be entering an era of less water!

A August 22, 2011 article in Time Magazine  entitled “Parched Earth” by Bryan Walsh says:  Hurricanes announce themselves on radar screens before slamming into an unlucky coast. Tornadoes strike with little warning, but no one can doubt what’s going on the moment a black funnel cloud touches down. If we’re lucky, a tsunami offers a brief tip-off — the unnatural sight of the ocean swiftly retreating from the beach — before it cuts a swath of death and destruction.

But a drought is different. It begins with a few dry weeks strung end to end, cloudless skies and hot weather. Lawns brown as if toasted, and river and lake levels drop, like puddles drying after the rain. Farmers worry over wilting crops as soil turns to useless dust. But for most of us, life goes on as normal, the dry days in the background — until one moment we wake up and realize we’re living through a natural crisis.

This summer the python has gripped much of the southern U.S., from the burned fringes of Arizona — singed by massive wildfires — to usually swampy Georgia. Hardest hit is Texas, which is suffering through the worst one-year drought on record, receiving an average of just 6.53 in. (17 cm) of rain so far this year, well off the 34 in. (86 cm) it receives over a normal 12 months. At the end of July, a record-breaking 12% of the continental U.S. was in a state of “exceptional drought” — the most severe ranking given by the National Drought Mitigation Center. More than 2 million acres (809,000 hectares) of farmland in Texas have been abandoned, and streets are cracking as trees desperately draw the remaining moisture from the ground. Taps are dry in one North Texas town.

And there’s evidence — when it comes to rainfall, at least — that the good years we’ve enjoyed in the past may have been more of an aberration than we realize. The Southwest in particular has a history over the past two millennia of severe droughts that lasted for decades; deeper in the geologic past, dust bowls endured for centuries. Just as worrying, climate change is expected to further dry out much of the region, multiplying the impact of population growth and expanding demand for water. What the South is facing may be not just a drought but the first signs of a permanent dry, one to which we’ll need to adapt — if we can.

This article was accompanied by a 17 Photo Essay “Picturing the American Drought” by George Steinmet

dry lake

This, one of the 17, photo entitled “The Island,” shows a resort on Lake Travis, that is normally a peninsula surrounded almost completely by water. All the photos are linked below.

Let’s revisit Hyflux:

Hyflux chart from sg.finance.yahoo.com.   Hyflux trades in the USA as OTC code HYFXY.hyflux five year chart

We have been recommending Hyflux for over five years.  Each time the price drops I mention this again.

I invested in Hyflux shares myself yesterday.

There is one concern that may also be pressing (and could continue to press) on Hyflux shares.  The Middle East and North Africa (MENA) region, contributes 60 percent to the group revenue.

Hyflux announced last February that three water purification projects in Libya, worth hundreds of millions of dollars, could be delayed.

We first recommended Hyflux in 2004.  Then we wrote about Hyflux again in 2008…  both times before the shares began to rise.  You can see those who purchased Hyflux in 2004 and 2008 have been in a position to make huge profits.

Here is what I wrote in 2008:

#1: Is Hyflux a well managed company?

I have liked the management team for years. The group is headed by Olivia Lum who has proven to be an astute leader. Hyflux Limited SGX: 600 began in 1989 as Hydrochem (S) Private Limited, a trading company selling water treatment systems in Singapore, Malaysia and Indonesia and later, China. Lum has been progressive. She added a team of scientists and engineers that created technology for Singapore’s water recycling plants that filter and treat waste water.

These technologies are based on semipermeable membranes and reverse osmosis that is capable of extracting potable water from residual, sewage and salt waters.

Hyflux was the first water treatment system company to be listed on Singapore’s equivalent of NADAQ in 2001 and the first to be upgraded to Singapore’s main exchange in 2003, again making history.

The group has been expanding geographically first to China, then lucrative Middle Eastern markets and is now entering India, Southeast Asia and Africa.

#2: Is the company in a growth industry?

There are few sectors with as much potential as water. China, the Middle East and India offer special opportunity.

#3: Are the shares available at a good value?

The shares are certainly a better value than a few months ago. Here is the share price over the last year.

I am writing about Hyflux again now because the global stock market sag has pushed Hyflux shares down once again and created extra value.
However as you can see from the company’s financials, sales, profits and dividends are at all time highs!

hyflux data

This may be a good time to look at Hyflux for our portfolios now.

An investment in Hyflux by the way, also represents an investment in Singapore dollars so all the numbers above have been enhanced by this added forex growth.

singapore-dollar-chart

This chart from sg.finance.yahoo shows the benefits of a multi currency portfolio as the Singapore dollar has risen versus the US dollar since 2004

One More Vital point About Investments and Water.

The United Nations Water agency UNwater.org says:  A Drought in Your Portfolio?

The World Water Assessment Programme (WWAP) participated in the EIRIS conference on global water risk research. The conference explored the investment case for considering the risks and opportunities arising from water scarcity as part of a wider sustainable investment strategy, and heralded the launch of the EIRIS’ Global Water Risk report.

The report shows that out of the 2000 global companies analysed 54% are exposed to water risks but take little or no action to mitigate them, and approximately half show no evidence of any management response to water risks whatsoever.

So when thinking about any investment look at the water element… this is becoming a necessity that can help your future from becoming all wet!

Gary

Join Merri and me at our next International Investing & Business seminar when we look at eleven ways to profit from investing and business in water.

Picturing the American Drought: by George Steinmet

Read Time Magazine’s article Parched Earth

International Investment Gains


Our latest International Investment & Business Seminar here in Ashe County,  North Carolina  looked at International Investment gains that were up 14% in the first six months of this year.

When these seminars begin… there is always a hint of excitement.   Thomas Fisher has flown in from Denmark. Our webmaster, David Cross, has arrived from Oregon and delegates have come from all over the world.

We’ll look at some of the international investments we view (including Ecuador opportunity) but let’s also allow some of the delegates to tell you how they felt about this seminar.

One delegate wrote:

Hi Gary, Merri and David,  Thanks for a great weekend.  As a new club member, I’m looking forward to the next time that we can spend some time together and to reading “Ecuador Living”.  Sincerely,

When our North Carolina international investing and business seminars begin, I rise at dawn on the farm and then…

international-investment-seminar

we drive into West Jefferson where we conduct the seminar.

We are casual at our international investment seminars but serious.

international-investment-seminar

Many delegates make international investing and business… even lifestyle decisions based on the economic updates we share, so I and our other speakers, Thomas Fischer of Jyske Global Asset Management, our webmaster David Cross and Merri have spent enormous time getting prepared.

This year our July North Carolina course was conducted at at the Ashe County Arts Center in West Jefferson.

The Arts Center is housed in a historic WPA building featuring a gallery so we share our information amidst local art and crafts, statuary and exhibits from over four-dozen artists.  Here is some of the art we saw.

international-investing-seminar

The seminar began with a historical review that led us to three places to invest now.

#1: Multi Currency Sandwich in value markets, emerging markets and wellness.

#2: The environment.

#3: Real Estate in the US and Ecuador.

Plus we saw why many of us would need our own business.

The first historical fundamental we covered was a way to predict where markets might go next.  We saw for example that the Dow has moved in approximate 15-17 year up and down cycles for over 100 years.

We viewed how the Dow appears to be in the 10th year of a 15 to 17 year down cycle that began in 1999.  We compared the last two years of this cycle, with the equivalent period in the 1968 to 1982 bear cycle.

We saw an amazing 93% correlation between then and now.

The chart below from Moore Research compares the Dow from 1976 through 1978 to the Dow of the last 18 months. The Blue line is what happened in the equivalent period in the 1970s to now.

global-trends

Here is what another delegate wrote about this seminar:

Hello Merri & Gary,  Now that I am back home and settled into the normal routine, it’s time to drop you a line to say how much my brother Rick and I enjoyed attending the conference last weekend.   Experiencing the beauty of Ashe County and the pleasant disposition of the people who live there contributed to the picture of the place that you paint via the letters and photos sent out to your readers.  Not only was the information presented there of great value, but Rick and I found that all of the other participants we met are great people indeed, just as you’ve mentioned.  Your ability to attract like-minded souls is a service in itself, and one that provides lessons we can all strive to emulate going forward.

Thank you again for providing the opportunity of meeting you both in person; I will begin to make use of the information to enhance my own life and look forward to seeing you both again some day.  Best wishes.

Then we looked at the multi currency sandwich and how you can currently borrow US dollars at 3% to invest the loan in higher yielding shares and bonds.  Pound loans are 4%.

We also saw how the British pound was a potentially undervalued currency versus the US dollar.

We looked at how Jyske Global Asset management’s Low Risk Portfolio with a 100% loan rose 11.4% since 2009 or at 23% per annum pace.

Then we reviewed an 18% six month profit with 4.75% ISS Capital 2010 bond (or growth at 36% per annum pace).

We reviewed a  7.25% Bombardier 2016 bond. that offered a longer duration and higher spread of 3.5%.

This led us to a multi currency sandwich with $100,000 invested and $50,000 US$ loan at 3% and $50,000 loan in British pounds at 4%.

The $200,000 was invested $100,000 in US the 7.5% dollar bond above.  $50,000 was invested in a Pound denominated bond issued by Hungary due 2016 and yielding 10%.  $50,000 was invested in British shares because Britain is one of the best valued major markets at this time.

Here is what another delegate shared about the seminar:

Merri, My wife  and I would like to thank you and Gary for a wonderful course. We thoroughly enjoyed all the information presented by Gary, Thomas and David. And we thank you for your hospitality with having us to your lovely “piece of paradise” in Lansing. The lunch was delicious and your presentation of import/export items was quite interesting.  We look forward to visiting Ecuador in September of 2010. And we look forward to visiting and staying at your hotel in Cotacatchi.

We then reveiwed the best and worst value equity markets around the world and saw that the best valued major markets are now Austria, France, Germany, Italy, Singapore and the UK.

Here is what another delegate had to say about this seminar.

Hi Gary & Merri,  I thoroughly enjoyed the time you so graciously allowed me to attend at your seminar and am not surprised, in the least, that you are getting rave reviews.  You and Merri make such a wonderful team offering these seminars with professionalism and charm, and here in Ashe County, with a unique local flavor.  We all thoroughly enjoyed meeting and getting acquainted with many of your delegates.  As it was last year as well, many of the people you attract with your seminars are well traveled, interesting and very personable.  Thank you for your friendship and generosity,

In another session we looked at the importance of investing in the environment. We saw three ways to gain from sustainability changes ahead.

#1: Adaptation.  Investing in solutions to health problems is an example. Poor food produced in our central food system creates blood sugar problems, so Novo Norsk a Danish company that is the largest producer of insulin makes sense.

#2: Mitigation.  Cleaning up the mess humanity offers profit especially with water. Hyflux, a Singapore company, and Kurita Water, a Japanese firm, both have potential in this field.

#3: Structural Change.   Vestas Wind Turbines is a Danish company and is the largest maker of wind turbines to produce energy.

Here is what anther delegates sent to Merri and me about this seminar:

As a retiree who saw her retirement sustain considerable loss due to the economy, I found the information you presented during the three days to be extremely helpful and showed a plausible way for me to have some recovery.  Besides all of the relevant information, your emphasis on honesty and the importance of not to be deceptive was reassuring.  The bottom line is, that what gave real value to the information we were receiving and what made us feel comfortable was, that we felt you, Thomas and David were all people of good character.  Something that is very important to us.  Thank you, Gary and Merri, for providing a wonderful Seminar. Sincere regards.

On Saturday evening we drove to Lansing and looked at how small businesses can grow as we visited the New River Winery for a wine tasting. The winery is housed in another old WPA building which originally was the Lansing school.

international-investing-seminar

Here is Haskell McGuire one of New River founders showing us the winery.

international-investment-seminar

New River’s flagship wines are Bohemia Red and Bohemia White. These were followed by the introduction of signature wines, Back Porch Blueberry.  New River now has several new wines in production including:  Pinot Blanc, Viogner, Hellbender Red, Lansing School White, Big Laurel Blush, and Seyval.

The winery started small and is growing by leaps and bounds. Vineyards and wineries are one of the fastest growing business sectors in North Carolina.

Here is an unedited quite from another delegate:

Dear Gary and Merri:  We so enjoyed attending the IBEZ Seminar this past weekend in Jefferson, NC.  We loved the high country area, the nice people we met and particularly enjoyed the visit and tour of the New River Winery.  We were lucky to sit at a table with four utterly charming southern women, one of whom was Haskell’s wife.  We had a long drive home on Sunday and were sad that we had to leave and not be able to join you and our group for lunch at your farm and sad that we missed Merri’s cooking.  We hope someday in the future we may have the opportunity to visit your property as we heard it is quite beautiful.

Then we began the international business sessions of the course and David began teaching how to use the internet in business.

We started by looking at a Time Magazine quote which said:

Throw away your briefcase: you’re not going to office. You can kiss benefits goodbye. Your new boss won’t look much like your old one. There’s no longer a ladder, and you may never get to retire, but there’s a world of opportunity if you figure out a new path.

On Sunday we continued the course at our farm. Everyone was invited up to the house for lunch.

international-investment-seminar

We did a review of Ecuador export products.

international-investment-seminar

Like this leather coat and these baby alpaca sweaters.

international-investment-seminar

Another delegate wrote:

Hi Gary, Just a quick note to tell you again how much I enjoyed the seminar and seeing your lovely farm.  I spoke to you briefly about deciding that I wanted the web course instead of mult-currency.  Thank you for sending me that instead of the multi-currency.  It may be two weeks, but I am starting to work on that site.  I know from life experience that it is always better to focus on what you want to create instead of what you don’t want. So thank you for the buzz of creativity that you, David, and others from the  group inspired.  I am also interested in featuring the dulcamaras product on my site, along with testimonials.  You mentioned a contact for that product.  I would appreciate that information also. Smiles.

Here is some Ecuador art that evolved from drum making.

international-investing-seminar

Delegates came up with many marketing and…

international-investment-seminar

Business ideas.

international-investment-seminar

plus we had fun.

international-investment-seminar

Next time this course will be in October.  This view…

international-investing-seminar

will look like…

international-investment-seminar

this!

international-investment-seminar

As the guests leave… in the dusk… there is always a moment of sadness.  New friends made.  Interesting ideas shared and now we are moving apart.

international-investment-seminar

Yet we’ll be back together again next seminar.

This delegate expressed it well when she wrote:

Thank you again for a truly life changing and life enhancing weekend. And we also wish your loved ones a speedy recovery and good health. Best regards.

We hope you will join us for our International Investing and Business Course in North Carolina this October or in Ecuador in November like this delegate who wrote:

Hi Gary,  It was wonderful to meet you and Merri at the IBEZ Conference this past weekend!  You both are so warm and caring and have a genuine desire to help the people of Ecuador and others to build a successful business.

The classes were very insightful and jam packed with information and suggestions on how to start your very own web based business. You and David, your webmaster, presented the information in an easy to understand format that even computer dummies like me could understand.

The multi currency investing portion of the class presented by you and Thomas Fischer from Jyske Global Asset Management were very interesting and educational.  It opened our eyes to new avenues of investing that we didn’t have a clue about before.

We also very much enjoyed the Import and Export portion of the class.  The items from Ecuador that you and Merri shared with us were very beautiful.  I especially loved the bird art and would be very interested in importing some of these to sell.  I am also interested in jewelry, leather goods, and the shawls like Fran was wearing in class (they were enhanced with the leather collar and leather applique).  I think that custom made leather goods that are stamped, as you and Merri suggested, have good income potentials. We would like to thank you and Merri for opening up your beautiful home to the class on Sunday afternoon and feeding us such a delicious lunch.  This was the perfect ending to three days of fun and sharing of ideals and suggestions on how to make money from investing in property and multi currency to building a successful web site business and Importing/Exporting from Ecuador for profit.  Thank you and Merri so much for everything.  We look forward to attending additional conferences.  Take care and hope to see you again soon.

Gary

Join Merri me and Thomas Fischer of JGAM and our webmaster David Cross in North Carolina this October and enroll in our emailed course on how to have a web business free. Save $299.

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

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.

Another delegate wrote:

Hi Gary, Just looked at your website for the first time and couldn’t hardly stop reading all the fantastic topics and the wealth of information you provide.  One of the best website’s I’ve experienced.  Don’t know why I haven’t looked at it sooner but am very happy I finally got to it.  I read as many articles as I could in one sitting with limited time this morning and am anxious to get back to read more.  Your life experiences and expertise is fascinating.  It’s amazing how close your philosophy about life, work, investing, family, etc. parallels my own.  I suppose international living, broad experiences with other cultures, diverse business experiences, etc., culminate in a certain way we view the world.  Anyway, thanks for sharing so much excellent philosophy and expertise.

Multi Currency Strategy Emerging


Multi currency strategy emerging markets are worth review now. Recent multi currency messages entitled Multi Currency USA and Multi Currency Global looked at the importance of multi currency investments in Europe, Japan and the US.

We continue the multi currency review in this message looking at Jyske Bank’s multi currency strategic review of the biggest emerging market, China. Jyske says:

Seen in the light of a major slowdown in economic growth, Chinese exports will come under heavy fire in the coming months. Given a weaker export sector, and presumably also weaker investments in the private sector as well as slower activity in domestic property-related activities, we anticipate a moderate slowdown in economic growth. By Chinese standards, moderate still means economic growth above 8%, and for the rest of the year, the growth rate will presumably be around 9%, i.e. a growth rate just below 10% for 2008.

International investors have been concerned that the Chinese government would react too slowly to growth risks and that this would send up the risk of a serious setback (i.e. GDP growth rates much lower than 8%). Such fear seems to be out of place, based on the demand figures for July. Foreign trade, retail trade and fixed investments beat expectations although industrial activity is gearing down marginally.

The Chinese authorities have traditionally introduced macro-economic policies supporting economic growth, including an expansionary fiscal policy, monetary-policy easing etc. to avoid a hard landing. We also expect that this will happen this time if growth seems to be too slow. The authorities have recently raised the tax benefit on exports and eased up the tight management of corporate loans in the financial sector.

On the domestic front, the trend in consumer demand is still impressive: July’s 23.3% growth in retail sales was higher than expected. This happened although consumers are squeezed by higher food prices, the solid correction in the Chinese equity market and a slowdown in the real-estate market (although the impact from the two last-mentioned factors was reflected in lower sales figures for cars, furniture and building materials).

With prospects of a moderate slowdown in industrial activity in the coming quarters, the growth in Chinese demand for many important commodities will presumably slow down. Recent data indicate that this trend has already set in: for instance crude-oil imports dropped back by 2.1% m/m in July and by 8.7% in June whereas iron ore imports dropped by 4.2% and 3.5% in these two months.

This suggests that investors are more worried about China than they should be. Chinese growth looks dimmed, but by most financial measures even this dimmer light is bright compared to economics in most countries. The fundamental economic fact is that China is the most populated nation on earth racing into middle class capitalism.

Equity investors may have over reacted and oversold the Chinese market.

In August, the LA Times wrote:

SHANGHAI — Many Chinese investors had hoped the Olympics would give a boost to their nation’s sagging stock market. So far, just the opposite has happened. The benchmark Shanghai composite index tumbled 5.3% on Monday, falling for the sixth time in seven trading sessions. The index has plunged 15% since the Beijing Games opened Aug. 8, and it now stands at 2,320 — down 56% since the start of the year, making it one of the worst performers in the world.

Since then the market has not rallied.

The Guardian wrote yesterday (Sept. 8, 2008): The main Shanghai index <.SSEC> shed 2 percent on Monday, touching a fresh 20-month low, despite a rally elsewhere in Asia triggered by the takeover of the two firms.

The U.S. Treasury’s takeover of Fannie Mae and Freddie Mac is good news in the short term for China, the biggest holder of the giant mortgage lenders’ debt, but Beijing’s huge U.S. exposure still poses a serious risk, a prominent government researcher said on Monday.

The Shanghai stock market is down 67% in less than a year. Yet as Jyske noted above, foreign trade, retail trade and fixed investments are beating expectations.

This is the type of multi currency distortion we look for as value investors.

This does not mean we should jump headlong into Chinese shares.

China according to the analysis of Michael Keppler remains one of the low value markets. Keppler’s sell candidates are China , Egypt , India , Indonesia, Jordan, Morocco.

Market timing rarely works. Value investing is far more effective and based on value alone, it apears to be too soon to jump in the Chinese market in a broad way.

However we can start reviewing Chinese opportunities looking for specific values.

One share to check is Hyflux Water. Hyflux is a Singapote company that provides water services in China. Keppler ranks Singapore as a low value major market along with Austria , Canada, Denmark, Hong Kong, Singapore, Switzerland and the U.S.A, but Hyflux may offer good value now.

I first wrote about Hyflux in 2004.

We invested $51,000 in our Model Green Portfolio last November. This investment has dropped to $40,193.

We are reviewing Hyflux now in our Multi Currency Portfolio Course.

Gary

Join me and Thomas Fischer from Jyske Global Asset Management in North Carolina to learn more about economic trends.

International Investing and Business Made EZ North Carolina

We’ll have lunch at the farm and enjoy the leaf change.

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Thomas Fisher speaking to our  delegates at the farm.

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Delegates enjoying a private conversation with Thomas Fischer during a coffee break at the farm.

This is the most beautiful time of the year on the Blue Ridge.

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