Tag Archive | "Ireland"

International Investing Trick


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

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

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

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

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

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

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

But which shares… in which markets?

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

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

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

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

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

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

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

MSCI Indices performances.  Total per annum return over:

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

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

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

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

2006     7.40%          18.23%

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

This history suggests that emerging markets deserve a substantial ranking.

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

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

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

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

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

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

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

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

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

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

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Mt. Imbabura to the east.

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The valley is surrounded by mountains like these twin peaks…

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creating wonderful, mystic  sunrises.

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

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

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

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

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filled with fruits…

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vegetables…

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flowers and …

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herbs.

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

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

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

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

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

Gary

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

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Sunrise from Meson de las Flores.

July 24-26 IBEZ North Carolina

Oct. 9-11 IBEZ North Carolina

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

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

Oct. 21-24 Ecuador Import Export Tour

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

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

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

Power Distance Index Profits


Power can bring profits in many ways… the first via the Power Distance Index.

I recently wrote in Ecuador shamans and truth how Merri and I have been drawn more and more back to the USA.   We have enjoyed phenomenal success in Ecuador but we are pioneers… Our investments and business are early in and early out. Ecuador is now really well on its way and for us this is not so fun.

We’ll look at how the Power Distance Index makes Ecuador living better.  First more on PDI.

We’ll still enjoy time in Cotacachi and on the Pacific, but we are arranging for others to take over the day to day so we can  head off on a new adventure.

Part of our next horizon is to make our North Carolina farm much more self sustainable and to share what we learn in the process.

Thinking about this leads me to share some other thoughts on power and the Power Distance Index.

One powerful investing and business idea is to invest in countries with a low Power Distance Index (PDI).

Malcom Gladwell explains this in his newest book “Outliers” a book about what makes  success.

One part of the book looks at the importance of the Power Distance Index in each nation.  This is vital information because it explains how countries differ in their approach to dealing with risk and uncertainty.  The ability to handle risk and uncertainty  in changing times is vital.

Here is how the website www.kwintessential.co.uk describes PDI.

The Power Distance Index (PDI) is one of the five intercultural dimensions developed by Hofstede. In short this cultural dimension looks at how much a culture does or does not value hierarchical relationships and respect for authority.

Examples of cultures with high PDI scores include Arabic speaking countries, Russia, India and China. Those with low scores include Japan, Australia and Canada. See a world map of power distance index scores.

So how does this manifest in a culture or country?

In a high power distance cultures the following may be observed:

. Those in authority openly demonstrate their rank.
. Subordinates are not given important work and expect clear guidance from above.
. Subordinates are expected to take the blame for things going wrong.
. The relationship between boss and subordinate is rarely close/personal.
. Politics is prone to totalitarianism.
. Class divisions within society are accepted.

In a low power distance culture:

. Superiors treat subordinates with respect and do not pull rank.
. Subordinates are entrusted with important assignments.
. Blame is either shared or very often accepted by the superior due to it being their responsibility to manage.
. Managers may often socialize with subordinates.
. Liberal democracies are the norm.
. Societies lean more towards egalitarianism.

The Power Distance Index is a measure of the attitude toward hierarchy.  In short the PDI shows how much people overall, in a country, respect authority.

This index is really important in this rapid changing world because authority almost always lags behind reality.  Authority resists required change to adapt in altering conditions.  Countries with a high PDI suffer from change.

For example the US has a low PDI. Russia has a very high PDI.  Thus during the changing 1980s the Soviet Union disintegrated while the US rebounded and thrived.  PDI differences were not the only reasons for this but when a nation’s leadership cannot communicate with its people…  it cannot sense reality as times shift.

On the subject of the 1980s. Many readers are worried about the current economic downturn.  Current conditions are not as poor as during the twin recessions of the 1980s, when unemployment exceeded 10 percent.  This downturn is on track to be worse… but not yet.

Gladwell writes in “Outliers::  In low power index countries, power is something is something in which power holders are almost ashamed and will try to underplay.  In Austria (a low PDI country)  Prime Minister Bruno Kreiskt was known to sometimes take a streetcar to work.

Here are six countries with high PDIs:
Brazil
South Korea
Russia
Mexico
Philippines
Uruguay

Six Countries with low PDIs:
Austria
Denmark
United States
Ireland
Australia
New Zealand

A low PDI can help a country adapt faster and better to change, so look for investments in countries with low PDIs. 

This message is an excerpt from our latest multi currency lesson.  You can read what to do now as a multi currency subscriber. Learn how to subscribe here.

However countries with high PDIs are often better for living.

I was thinking about this one recent morning while visiting Quito.  This is one of the world’s beautiful cities so I rose to watch the dawn.  The day broke in glorious rose patina.

power-distance-index

Like the days ahead…  the view was obscured until the light began…

power-distance-index

to reveal Quito’s beauty.

Ecuador’s Power Distance Index in Ecuador is a bit high. This does not stop a great city from growing. I loked out and saw that there was plenty here.  Riches enough.  All the …

power-distance-index

creature comforts…

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glowing in the daybreak.  Every material thing a person could want…

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As the light spread, i dressed and rode up to the hotel restaurant.

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I’ll looked out at Quito again in the light of day.

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There is amazing wealth here. The hotel restaurant is opulent.

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With amazing views around the city.  yet the prices here are low in part because…

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poor government is created with the help of a high Power distance Index. This  keeps most of the people in Ecuador poor.  This means that we can help bring and spending our money here.   This who do, help Ecuador’s poor and are rewarded with good living at a low price.

This reinforces what I wrote in “Multi Currency Bank Safety

Live in one country
Bank in a second country
Invest in many countries
Earn in two or more countries
Use a company incorporated in a fifth country
Take a second residence

On the subject of banking abroad Denmark has the second lowest PDI in the world (Austria is number one) so it is not surprising that for the last 20 years my major bankers have been in Copenhagen and Vienna.  I like the autonomy that investment advisers have in low PDI countries.

This is in my estimation one reason why Jyske Bank (Denmark’s second largest bank) was not caught in the sub prime or Madoff scandals.

Bank’s in countries with a low PDI are more likely to use the wisdom of their entire organization to head off trouble at the pass.

Organizations have enormous wisdom.

The book, “The Wisdom of Crowds, Why the Many are Smarter than the Few and How Collective Wisdom Shapes Business, Economies and Societies and Nations” by James Surowiecki tells how potent the wisdom of a group can be.

The book begins by telling how at the annual West of England Fat Stock and Poultry Exhibition in the fall of 1906, a British scientist became interested in a weight judging competition. 800 people, smart, dumb, old, young in all types of professions guessed the weight of two dressed oxen. The correct answer was 1,197 pounds. The scientist’s research found that the collective estimate was incredibly close, 1,198 pounds.

The book suggests that there is an uncanny and generally unconscious collective intelligence at work. The book shows how clouds of birds seem to move in one mind but actually are each acting on their own following four simple rules:

#1) Stay as close to the center as possible.

#2) Stay two body lengths away from your neighbor.

#3) Do not bump into another bird.

#4) If a predator dives at you get out of the way.

The book suggests that rather than crowds being mindless mobs that the many are weirdly smart and effective even when many of the group are average or below in intelligence or experience.

A key point that the article makes is that there is incredible effectiveness in a diversity of individual intelligences and this is why we are sharing ideas about trends at this site. There are thousands of us reading these messages so perhaps our problem solving ability grows to the 4000th power.

However if a high PDI disconnects its leaders from this wisdom… the organization’s wisdom is wasted.

Bank safety is vital now and PDI can count. Here is a wonderful shot taken by our friend Dennis Goff.  Placid… yet most travel accidents… in air and by oat are caused by a high PDI. The Captain does not listen to his crew!

When you travel… wen you bank… when you invest look for low PDI!

High Energy Sunrise

This is why you may want to join me with the staff of Jyske Global Asset Management in Naples Florida to learn more about where in the world to invest now.  Learn how to attend this course free and save $499 to $750.

Until next message good global investing!

Gary

One of the best ways to prosper in this downturn is with your own internet business. You can enroll in our email internet course here for $299. However if you sign up for all three courses in June or later in 2009, I’ll send it free. You save $299. Learn more here

Get our web based course FREE if you join us in Ecuador. Learn more here.

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

Future 2009 courses

May 29-31  JGAM Florida Investment Course

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

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

July 24-26 IBEZ North Carolina

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

Oct. 9-11 IBEZ North Carolina

Oct. 21-24 Ecuador Import Export Expedition

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

Cotacachi Mayor’s House


Recent messages looked at how Merri and I search for Cotacachi real estate.

The road paving we have been tracking is now done.

cotacachi-real-estate

In two directions…

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in less than two weeks.

We keep our eyes open every day and the search pays off.

Today, near Primavera II condos…

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Around the corner from Cotacachi’s Mayor’s house (which is for sale) …

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we spotted two old houses for sale.  This one is $25,000.

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and this, $36,000.

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These fixer uppers have huge lots, in the center of the village. They may be real sleepers.  We’ll see as we’ll inspect them on our Imbaburra real estate tour that begins tomorrow.

You can gain Cotacachi real estate information and Ecuador real estate contacts as an Ecuador Living subscriber. See details here.

Speaking of sleepers, this excerpt from today’s password protected multi currency course shows why European shares may be sleepers as well.

Here is the excerpt:

This multi currency update has three portions. First we see anther inflation indicator. Second we update our search for value. Third we end with some answers to questions from lesson one of our new updated primer course.

Recent inflationary events include the support by US authorities of Bank of America with a guarantee of liquidity and capital. B of A faces losses of up to $118 billion dollars.

The government gets shares in the bank worth $20 billion.  In other words the government stumps up about $88 billion (that it does not have).  This is inflation.

Citibank in trouble as well.

Jyske Global Asset Management wrote in its last market update three days ago:

Fears of further credit losses and rumours of another large US bank being nationalized dragged the international stock market down this week. The New Year rally last week is already forgotten, and investors are anticipating new lows in 2009.

Citigroup Inc. posted an $8.29 billion loss, only a few days after the announcement of their plans to sell the control of Smith Barney to rival Morgan Stanley.

Sales at U.S. retailers dropped in December for the sixth consecutive month (first time since 1992) and the most in three years.

S&P cut Greece’s long-term credit rating to A- with a stable outlook, due to its public and private debt and the budget deficit. The downgrade makes Greece the lowest rated country in the Euro zone.

Market participators are now speculating whether a Euro exit may become an option for some members of the Euro-bloc, analysts view Greece as the weakest economy within the Euro zone.

The European Central Bank (ECB) Thursday cut the Euro zone interest rate to the lowest level in more than 3 years.

As expected the main policy rate was cut by a half percentage point to 2%. The Danish Central bank followed the ECB with an even bigger cut of 75 basis pts to 3%.

#1: Falling interest rates are indicators for increased activity in share markets.

#2: Combine this with the fact that stock funds saw huge redemptions in 2008.

#3: Add in the next fact that international equity funds were among the most redeemed losing about a fourth of their total assets in 2008.

U.S. stock funds only had redemptions of about 10% of their assets.  Bond funds on the other hand experienced positive flows in 2008.

This increases my enthusiasm for international shares…especially in Europe.

Low interest rates plus markets that are oversold plus inflation all bode well for shares.

There are four ways to fight inflation; real estate, your own business, commodities and equities.   So depressed international equities in an atmosphere of low interest rates spells opportunity.

These three factors are the elements that create value because value investors are generally bucking the trend.

This is why last year my biggest equity position was in the Jyske Invest European Equity fund.  I picked a fund that was invested mostly in markets that Michael Keppler of Keppler Asset Mangement viewed as having the best value.

Keppler has changed some of his rankings this month so let’s review the change and see if my position still makes sense.

Let’s look at the geographical breakdown of the Jyske Invest European Equities fund I hold now.

This fund has departed quite a lot from the synchronicity it enjoyed with Keppler’s top values when I invested two years ago.  The fund’s portfolio is spread here now:

UK  24%
Germany 16%
Switzerland 13%
France 12%
Spain 7%
Netherlands 4.5%
Sweden 4%
Spain 4%
Finland 3%
Italy      2%
Greece 2%
Denmark 1.5%
Norway 1.5%
Luxembourg .5%
Ireland  0.5%
Austria 0.5%

The fund’s managers report says:

There are prospects of uncertainty in 2009. The world economy is struggling
and the optimism has turned into pessimism. Central banks and  governments have been busy introducing rescue packages and  interest-rate cuts. The help has been offered, but is it sufficient and when will it begin to show an effect? We
expect that 2009 will bring wide swings in the equity market. A lasting upturn is not likely to be just around  the corner. We are still looking at a longer period characterised by uncertainty before the optimists outnumber the pessimists.

For the fund we prefer cheap shares with prospects of earnings growth. That type of shares has historically yielded the best returns.

Though this fund no longer has the same value synchronicity with Keppler that it previously had, I’ll continue to hold this as I plan to increase my equity position. I can balance this fund’s holdings to better match Keppler’s rankings by adding Hong Kong, Singapore, Italian and other funds or ETFs.

You can learn more about Keppler’s market updates and the ETFs we use in our multi currency portfolio as a multi currency susbcriber.

Until next update, good global investing

Gary

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

Gary

Your own business is a  good way to secure purchasing power. This is why Merri, our webmaster and I decided to create a new course on how to build a web business with a webmaster.  There is a special offer on this new course that expired to the general public last Tuesday…but is still available to you.  See the offer here.

Get this course FREE if you join us in Ecuador this February.

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

Feb. 13-15 International Business & Investing Made EZ

Feb. 16-17 Imbabura Real Estate Tour

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

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

Or join Merri, me and Thomas Fischer of Jyske Global Asset Management, July 24-26, 2009 in North Carolina for International Investing and Business Made EZ

International Investing and Business Made EZ & Fun Part II


International investing and business have proven themselves over the past 40 years to be profitable. And even more than the profits are the broadened horizons, fulfillment and fun!

Yesterday’s message International Investing and Business Made EZ & Fun looked at why International investing and business should be a fun filled process…not a dull boring set of numbers.

One reason for this is that those who live a fulfilled, involved fun existence are likely to be healthier…with less need for expensive pharmaceuticals and medical treatment.

This makes life better plus can save huge amounts of cash.

This is likely to become even more important in the years ahead for those who live in much of the Western world.   Existing medical systems are already filled with problems.  Inflation and aging populations will make the problems even worse.

At the turn of the decade, The World Health Organization analyzed the world’s health systems. The WHO used five performance indicators to measure health systems in 191 member states.

The five performance indicators were:

* Fairness of financial contribution.  While private health expenses in industrial countries now average only some 25 percent because of universal health coverage (except in the United States, where it is 56%), in India, families typically pay 80 percent of their health care costs as “out-of- pocket” expenses when they receive health care.

* Overall Level of Health.

* Distribution of Health in the Populations:  the average level – goodness – and the smallest feasible differences among individuals and groups – fairness.

* Responsiveness: respect for persons including dignity, confidentiality and autonomy of individuals and families to decide about their own health as well as prompt attention and access to social support networks during care, quality of basic amenities and choice of provider.

* Distribution of Financing.

The study revealed that U. S. health system spends a higher portion of its gross domestic product than any other country but ranks 37 out of 191 countries.  The United Kingdom, which spends just six percent of gross domestic product (GDP) on health services, ranks 18th.  Several small countries – San Marino, Andorra, Malta and Singapore are rated close behind second- placed Italy.

Here is the WHO ranking.

1         France
2         Italy
3         San Marino
4         Andorra
5         Malta
6         Singapore
7         Spain
8         Oman
9         Austria
10       Japan
11       Norway
12       Portugal
13       Monaco
14       Greece
15       Iceland
16       Luxembourg
17       Netherlands
18       United  Kingdom
19       Ireland
20       Switzerland
21       Belgium
22       Colombia
23       Sweden
24       Cyprus
25       Germany
26       Saudi Arabia
27       United  Arab  Emirates
28       Israel
29       Morocco
30       Canada
31       Finland
32       Australia
33       Chile
34       Denmark
35       Dominica
36       Costa Rica
37       United  States  of  America
38       Slovenia
39       Cuba

Most of the readership of this site live in countries where the medical system is not even in the top 15 countries!

This means that many of us, (especially us boomers now in our 60s), may want to rely on a good lifestyle to keep our health…not the medical system.

The cost of this medical system is another reason we want to have independence
rather than reliance on government funded programs.  We’ll see why next message.

Until then, may your international investing and business be good…and fun!

Gary

Learn about our next International Investing and Business Course in North Carolina

Ecuador Ecuador Import Export Course

International Investing and Business Made EZ Ecuador