Tag Archive | "Jyske"

Leveraged Asset Allocation


Leveraged Asset Allocation can increase asset protection, enhance profits and income production in savings and investment portfolios.

Low interest rates in many currencies offer perfect Multi Currency Sandwich opportunities.

gary and thomas studio2

Gary Scott & Thomas Fischer discussing leveraged asset allocation on Danish TV.

For example this creates a way to invest smaller amounts with greater profit potential through Jyske Global Asset Management.

A basic part of JGAM’s service is to offer three main platforms of asset allocation.  The platforms are low risk, medium risk and high risk.

JGAM also offers low interest multi currency loans and over the past several years have noticed that leveraged low and medium risk portfolio outperformed non leveraged high risk portfolios.

Based on this fact JGAM added an interesting new way to attain asset allocation positions using leverage that increases performance potential and reduces the minimum amounts required.

The basis of a platform is normally the balance between fixed income and equity positions.  For example currently JGAM’s low risk portfolio has 53.19%  of the investments in fixed income and only 24.92% in equities.  The medium risk portfolio has 25.56% in fixed income and 42.88% in equities.

Bumping Up Platform Performance

In JGAM’s leveraged asset allocation, investors can keep a low risk portfolio but bump up the potential profit (and risk) by doubling the portfolio wth a low cost loan.  The loan by the way is automatic if requested. The portfolio IS the collateral so credit ratings are not a consideration.

Here is the JGAM Low Risk Portfolio bumped up to Medium Risk with higher profit potential by doubling the size of the portfolio with a one time low cost loan.

Jgam medium risk

Click on photo to enlarge.

You can then enhance the profit potential (with additional risk) by leveraging the medium portfolio one time with low cost loans.

JGAM LOW-High Risk

Click on photos to enlarge.

JGAM LOW-High Risk

The JGAM medium risk portfolio with one time leverage.

If you prefer equities to income producing investments you can tweak the performance by bumping up a low cost portfolio with a two times loan.

Jyske Portfolio 2 times leverage

This portfolio has the highest risk and greatest profit potential with two times leverage.

Reduced Minimums

These leveraged portfolios are classic Borrow Low – Invest High multi currency sandwich positions that reduce the original amount needed to invest.

$200,000 is required as a minimum investment so it requires only $100,000 original investment plus a $100,000 loan to attain the $200,000 portfolio.

If one leverages the assets twice then only about $70,000 original investment is needed with a $130,000 loan to reach $200,000.

This leverage means that a $70,000 has similar earning capacity to a $200,000 portfolio.  All that is lost is the loan cost… currently very low and minimal loan fees.

Multi currency loans provide investors suffering from low interest rates to take advantage of this trend and borrow low to invest high.

You can get more details on current interest rate and loan costs for US Investors from Thomas Fischer at fischer@jgam.com

Non US investors have slightly different services and details are available from René Mathys at mathys@jbpb.dk

Our report Borrow Low – Deposit High shows how to use Multi currency loans to manage risk and enhance profits.

Order Borrow Low – Deposit High, Multi Currency Report here $79.

Learn more about “Borrow Low – Deposit High”.

I would like to do a Question and Answer on using low costs loans to allocate assets so if you have questions, please send them.

Gary

Join us for our Super Thinking + Investing & Business Seminar, February 1-2-3 in Mt. Dora, Florida.  Meet Thomas Fischer with Jyske who discuses to to leverage asset allocation with low cost loans.

Equity Roller Coaster


We can expect an equity roller coaster in the months ahead.    For those who can ride through… there is great potential.

See why Jyske has changed its portfolio mix now below.

First, may I remind you this is the last day to order Thanksgiving roses until midnight EST.

ecuador-roses

Ecuador roses at our home.  Get details on how to order Ecuador roses here.

gary-scott-seminar

Thomas Fischer Senior VP of Jyske Global Asset Management speaking…

gary-scott-seminar

at our most recent Super Thinking + Investing & Business seminar.

As mentioned in an earlier post entitled Free Mercedes?, this is the time I have been waiting for… the darkest hour.

Boomers should feel truly blessed by this retirement age joy ride.

Like many boomers, I began my career in 1968.  The US economy was hot and American equities were in their bright hour.

Then they crashed…. both US equities and the American stock market.

Those starting years taught me a lot about recessions and the downside.  There was a recession in the early 1970s… an even worse downturn (the worst since the 1930s) in the 1980s and again a burst stock bubble in the 2000s.

Each crash was followed by an even stronger boom.

There are never guarantees, but history strongly suggests that the next major incoming tide of prosperity will help boomers (as well as the rest of the world) to enjoy many of our maturing years riding an equity market boom that could rise into the 2030s.

That would take me to age 85.

If I am still monitoring and writing about cycles then… maybe we’ll have one more big bear warning then.

For now the big tide ahead is good news.

It’s hard to image a strong equity bull market now.  This is the point.  The best time to get into equities is always when it is hardest to imagine a recovery.  Few investors grabbed the best opportunity at the worst moments in the early 1980s when the US market started its greatest bull rise… ever.

This post outlines why Jyske Global Asset Management is viewing this major economic shift and how they have altered their portfolios and leverage to the following:

Fixed income – underweight – No change.

Equities. Change from neutral/moderate overweight to underweight/neutral position.

Alternatives. Change from overweight to  neutral position.

Cash. Change from neutral to overweight position.

Many investment analysts and managers that I respect are agreeing that better stock market opportunities are forthcoming.

Thomas Fischer Senior VP at Jyske Global Asset Management (JGAM) just sent this note:  Gary,  I agree – equities seems like a better investment than bonds these days (especially dividend paying stocks).  We have our Investment Committee meeting on Thursday and shortly thereafter we will probably produce Advisory recs with some equities.  As soon as ready I will forward this list to you. 

When we receive this list I’ll be passing it onto our Multi Currency subscribers.

Thomas will join us at our February 1-2-3, 2013 Super Thinking + Investing & Business seminar.  See details here.

However… even during the boom… there will be ups and downs.   These economic tidal shifts are not exact.  Maybe the bear trend will last 13 years.  Maybe 15 years. Maybe 17?   Plus the bull cycle do not just rise.  The 15 year cycle is a long cycle with short term fluctuations as this chart of the last major bull market from 1982 to 2000 shows.

tockcharts.com dow

JGAM outlines one current risk in its recent Market Update that said: This was a post-election week that ended in concern about the fiscal cliff in the U.S. and another “cliff” in Greece.

The event of the past week was indisputably the U.S. presidential election. The initial reaction in Europe and Asia to the re-election of Barack Obama was rising stock prices. Apparently, investors were relieved that there will be no change of leadership at the Federal Reserve (Fed), something Mitt Romney had said he would have done. With Ben Bernanke still in the front seat at the Fed, a continuation of a very loose monetary policy should be almost certain. To investors this “guarantee” of liquidity puts a “safety net” – a Fed put – under stock prices. However, the question is what will happen in the long run when growth picks up and excess liquidity finds its way into the real economy, creating inflation and possibly a weak US dollar (USD). But that’s not something most investors worry much about for now.

After the initial positive reaction, markets turned to the near term risk of falling off the so called “fiscal cliff”, i.e. the automatic tax rises and spending cuts hitting the U.S. economy in the beginning of next year if an agreement is not reached between the White House and the Congress. If an agreement is not reached in time, then the U.S. economy faces a significant negative shock equivalent to 5% of GDP. Such a hit will push the U.S. into recession.

In Europe, Greece faces another “cliff”. Greece and the troika – the IMF, the European Central Bank (ECB) and the EU Commission – are again having difficulties reaching another bailout agreement. If not reached very soon, Greece risks defaulting on a 5bn euro (EUR) debt payment next week. All this uncertainty – both the fiscal cliff in the U.S. and the Greek problem – has put the EUR under pressure. Investors are seeking shelter in USD and government bonds in the U.S. and Germany.

One positive news this week was better economic data from China. Data showed industrial output in the world’s second-largest economy to expand by more than expected in October. Maybe, it’s time for investors to turn to this part of the world to escape the looming cliffs in Europe and the U.S.

JGAM is also being cautious in its portfolio structuring.   They wrote more about this in their latest portfolio update:  On 8 November, the Investment Committee conducted its monthly meeting, reviewing all managed portfolios and investment recommendations.

In order to protect the good profit we have had so far this year, we have decided to reduce risk exposure. There are a number of near-term risks that we want to avoid. The fiscal cliff in the U.S. is one challenge and a possible debt default in Greece is another. We have sold the stocks Target and Visa and the oil ETF plus cut by half the gold position.

Changes to portfolios in October

In October we did not make changes to the portfolios except changing the funding on leveraged portfolios from 100% US dollar (USD) to a loan mix of 80% USD and 20% euro (EUR). This mix reflects the currency mix of the investments in the portfolios.

EU’s austerity obsession and ongoing deleveraging

Recently, JGAM (Lars Stouge) attended a conference in Brussels, arranged by the Center for European Policy Studies (CEPS) – one of the 10 most influential think tanks in the world. With Commissioner and Vice-President Olli Rehn as the key-note speaker it was an opportunity to get inside the “machine room” of the EU Commission to see and learn how this influential institution thinks and acts.

Mr. Rehn was optimistic on the development in the eurozone. He claimed that convergence in unbalances and competitiveness to some extend has already taken place and was convinced that the process would continue, as long as policymakers stick to the strategy of creating and maintaining credibility by pursuing an austerity path.

This approach was indeed challenged by other participants at the conference. Especially, professor Paul De Grauwe from London School of Economics was doubtful and accused the Commission of being obsessed by austerity and creating a “homemade recession” in Europe. In his opinion the members of the eurozone should follow an asymmetric macroeconomic policy, allowing surplus (read: Germany) and low debt countries to run debt sustainable fiscal deficits and thereby, helping the heavily indebted members by creating the much needed growth.

JGAM’s take-home-conclusion from this top-level discussion is that the eurozone is still in the dark on how to tackle the crisis. The latest development in Greece – where the sovereign debt level is now predicted to go above 190% of GDP – and the sprouting concern on the French economy – one of the core members of the eurozone – does question the austerity path taken by the Commission. Maybe, its critics have a valid argument by claiming the European recession to be homemade and a new type of policy mix should be considered soon, otherwise, the euro itself could be at stake.

Another interesting key speaker was Senior Economist Manmohan Singh from the IMF. He presented an eye- opening and brilliant analysis of bank’s balance sheets and monetary policies on a global scale. Since the collapse of Lehman Brothers in 2008 the total volume of collateral pledged among banks has been reduced from 10tn (trillion with a “t”) to 6tr USD, globally. Furthermore, the velocity of collateral – i.e. the number of times a collateral is re-pledged – has dropped significantly because of increased counterparty risk. This means that a substantial deleveraging has taken place outside of the balance sheets of banks, causing a credit squeeze on the real economy and hence, a drag on growth potential.

Mr. Singh also convincingly claimed that expansive and unconventional monetary policies (i.e. substantial quantitative easing) has only barely compensated for the shrinking of bank’s off-balance sheets. JGAM’s take-home-conclusion from this insightful analysis is that expansive monetary policies has not been expansive at all, as it has barely compensated for an even larger contracting effect from shrinking volume of available collateral between banks. This leads to the conclusion that deleveraging will take a long time to be completed, as there is no excess liquidity in the system.

A Deloitte survey, presented at the conference, confirmed this conclusion, as it unveiled that banks expect deleveraging to extend another 5 to 7 years. This is not good news to those who hope for and rely on growth, i.e. debt oppressed countries – which by the way includes the U.S. with its own version of the eurozone struggle, namely the “fiscal cliff”.

Economics and financial markets

Near-term there are several reasons to follow a more cautious tactical investment strategy, protecting the good performance we have had so far this year:

The U.S. fiscal cliff is approaching. The eurozone crisis is re-emerging with the risk of (i) another Greek default, (ii) Spain postponing its application for help and (iii) France entering the stage of questionable economies. China changing its leadership and the subsequent uncertainty about policy and growth.

We expect the White House and the Congress to come to an agreement on the fiscal cliff threat of automatic tax rises and spending cuts. If an agreement is not made, then running over the edge of the cliff will spark a 5% fiscal contraction next year, pushing the U.S. economy into recession. A more likely scenario is that some tax increases and spending cuts will be postponed leading to a more modest drag on the economy. However, bottom line is that next year the U.S. is going to have a policy mix of easing monetary and tightening fiscal stance. This type of policy mix will result in a continuing low level of interest rates and bond yields, which should be supportive of the stock market.

The near term outlook for Europe is not favorable. Even Germany is beginning to feel the consequences of depressed demand. The absence of growth in Europe only amplifies the debt problem among the Southern- European members of the eurozone. As we write this memo it’s up for question whether Greece will default on a 5bn EUR payment this week. It will probably not happen, but we continue to ride on the edge of default, not dealing with the root causes of the crisis.

Japan is not offering a better outlook. The latest GDP number shows that the economy is shrinking by 3.5%.

The only bright spot seems to be China. However, the government has been somewhat paralyzed ahead of the political handover and therefore, policy easing has been slow. But China has enough fiscal power to make a difference and it has the incentive to use its economic power to create the domestic demand needed to make up for the lack of growth in its export markets. China is definitely an investment area we are going to focus more on in 2013.

Asset allocation

Based on the near-term risks we have decided to reduce risk exposure and protect some of the good performance we have had so far this year.

Fixed income:  We keep an underweight position, favoring corporate bonds with a short or moderate duration.

Equities:   We move from a neutral/moderate overweight position to an underweight/neutral position, still favoring large dividend paying companies. We have sold Target and Visa as these stocks are relatively more dependent on domestic demand compared to the rest of our portfolio.

Alternatives:  We go from an overweight to a neutral position. We have reduced our gold position by approximately half. Our large gold position was initially taken as a hedge against an unexpected large third quantitative easing by the Fed (i.e. excess liquidity flowing into gold). However, now that we have got the “QE Infinity”, the hedge against the unexpected is not needed. Also, we have sold our oil position. This position was initially taken as a hedge against a Middle East crisis between Israel and Iran. However, after the re-election of Obama we assess the risk to have been reduced. Further, weak global growth outlook puts a damper on the demand for energy.

Cash: We move from a neutral to an overweight position.

We expect this non-earning cash position in USD to be only temporary, as we expect to enter the Chinese market in the near term and possibly selected undervalued and solid European export stocks.

Loan mix: The loan mix is unchanged 80% USD and 20% EUR.  Leverage:  The gearing level is still below maximum.

For more details on Jyske’s  portfolio mix and its services, Americans contact Thomas Fischer at fischer@jgam.com

Non Americans should get in touch with René Mathys at mathys@jbpb.dk

History suggests that a major, long term bull market is about to begin.  For those who see this and act… the rewards could be truly outstanding.

Gary


Free Mercedes?


What if I offered you a free Mercedes Benz?

You would probably say YES… but would be thinking… “What’s the catch?”  That’s good because we all know there is no such thing as a free lunch… much less a free new car.

Would an answer be harder if instead there was a choice… a FREE Mercedes or $4 million bucks (as in US dollars)?

Most would choose the cash.  Yet of course we would still be expecting a catch.  There is a penny to drop… some risk and the need to ignore the thundering herd and an absolute requirement of discipline.

The US election is over… but not in the minds of almost half the American voters… who lost.    The US as the economic engine that has been pulling the world is a nation divided and the administration for the next four years… good or bad… has huge challenges and pitfalls ahead.

The view of the election results in markets around the world was dim.  US Stocks plunged and the Dow had its worst day of the year.  Other north and South American markets finished sharply lower.

Euro markets dropped because the German economy is slowing and tens of thousands at Greek rallies against austerity turned violent.  Protesters in Athens threw Molotov cocktails at the Parliament and police fought back with tear gas outside.  World markets slid on a weak growth outlook.

Optimism

However, all this bad news can be good for those who are prepared! Let me share a true story about how and why an investor in similar circumstances got the Mercedes and had the $4 million… but then lost it.

The story contains three valuable tips… explaining the FREE car plus how the millions were gained and lost.

Here is the true story… a tale of politics, economics and US debt.

Once upon a time 1981 to be exact… similar circumstances to the current economic and political mess arose across the land.    The story began with unemployment.   In 1981… the US Presidential election was over,  the US economy was crashing and the a new government and president were turning on a money printing machine.

This was a dark and gloomy time… those early 1980s.  Really.   That was the worst recession since the great depression.

You often hear we are living now through the worst recession since the great depression.  This is statistically wrong.

The U.S. economy may seem in bad shape now, but 1982 was worse.

The economy is not as bad as it was after the 1980 election.  It’s not even that close to being as bad. The ranks of unemployed and underemployed were much larger in 1982 than today.

The first big blow to the economy back then was the 1979 revolution in Iran. That glitch sent oil prices skyrocketing.   The bigger blow was a series of sharp interest-rate increases by the Federal Reserve, meant to snap inflation.  Home sales plummeted.  At their worst, they were 30 percent lower than they were when the real estate market bottomed in 2011.  The industrial Midwest was hardest hit, and the term “Rust Belt” became ubiquitous.  Many families fled south and west, helping to create the modern Sun Belt.

Nationwide, the unemployment rate rose above 10% in 1982, compared with 7.9% now.

The times were much darker.  In October 2012 another 6.7 percent of the labor force can be added to the current 7.9%. This group has given up trying to find a job or are involuntarily working part time.  These groups bring the combined underutilized employment rate to 14.6%.

As bad as this number is, it is still not that close to the 1982 peak of 16.32%  (or anywhere near Depression levels, which were probably above 30 percent). The early ’80s really were that bad.

This story begins at the end of the 1980 Presidential election when the US economy was at its worst in 50 years and getting worse.

Debt Growing

There is another similarity in the 1980 story to the here and now… a runaway US debt.

As this chart below shows, the US debt debacle really began after that 1980 election.

zfacts-national-debt-graph

Click on photo to enlarge.  Debt by President graph at zfacts.com

Now the story begins.  The stock market began a 17 year bull cycle that led to the greatest US and global affluence known to the recorded history of mankind.

The chart below says it all.    From that darkest hour, the Dow Jones Industrial average rose 1,410%.

Dow Charts

These stock market bull and bear cycles are based on cycles of human interaction, war,  technology and productivity.

Our hero in the story saw the coming stock market boom… despite the fact that everyone thought everything was bleak and black.   He approached Jyske Bank and said he wanted to invest in the stock market and wanted to leverage his bets.

His goal was to make enough to buy a brand new Mercedes Benz.

He opened the account and bought shares. He used those shares as collateral to leverage these investments with borrowed Japanese yen.

His timing was lucky.  The stock market rose quickly.   The Japanese yen collapsed.  His profits shot past his goal to buy the car.

The Fever

Bubble fever had set in so when the hero’s investment manager called with that great news… “You have enough for your new Mercedes“, the investor changed his mind.   “Let it roll,“… the investor said.  “I want to make a million instead”.

The investment manager left the portfolio alone and soon the investor’s profit rocketed past 1 million dollars.

The investment manger called.  “You have made a million bucks… perhaps we should take some profits.

Let it roll,“… the investor said. “I have decided to make two million instead.”

The investment manager left the portfolio alone and soon the investor’s profit rocketed past 2 million dollars.

The investment manger called.  “You have made two million bucks… perhaps we should take some profits.

Let it roll,“… the investor said. “I have decided to make three million instead.”

The investment manager left the portfolio alone and soon the investor’s profit rocketed past 3 million dollars.

The investment manger called.  “You have made three million bucks… really we should take some profits.

Let it roll,“… the investor said. “I have decided to make four million.”

As the portfolio was nearing four million in value the investment manger called.  “You have made almost four million bucks… perhaps we should take some profits.

Let it roll,“… the investor said. “I have decided to make four million and enough for a Mercedes.”

Shortly after the stock market corrected and the yen strengthened.   Profits fell so quickly the investor lost a million almost overnight.

The investment manager called.  “You have lost  a million bucks… we had better take the profits.

Hold,“… the investor said. “The market will come back”.

The stock market fell more and the yen grew stronger.  The profits fell even faster and the investor lost another million.

The investment manager called again.  “You have lost  another  million bucks… it’s time to take your profits.

Hold,“… the investor said. “The market will come back”.

The stock market continued to plummet and the yen rose more.  The investor lost another million.

The investment manger called.  “You have lost  three million bucks now…  You really should take the profits left.

Hold,“… the investor said. “The market will come back”.

Finally as the market plunged more and profits faded away… the investor, having lost more than 3.5 million, closed his positions and had just enough profit left to buy his new car.

The Mercedez was black and shiny… a big 500 SEL model… king of the road.   The hero never enjoyed it much.

The morals of the story

#1: If you get into the market at the beginning of a long term bull… you can make a lot of money… quickly.

#2: When you leverage the investments with low interest leverage the profits come even faster.

#3:  When you leverage investments… you need a plan AND a discipline.

This is why I want to introduce you to our Multi Currency Portfolios Report entitled “Borrow Low Deposit High – How to Use the Multi Currency Investment Sandwich”.

This is a report that can help anyone with even a few thousand dollars to invest (or millions) diversify globally for safety and long term success.

The economic explanation below follows global multi currency and market positions from 2006 through to the earthquake and tsunami in Japan so you can see how multi currency investing should flow.

This will help you learn how to protect and enhance your savings and wealth as the US dollar and stock markets rise and fall.

The US dollar has fallen… badly against major currencies like the yen, euro and Swiss franc for 41 years.

For example here is the long term, steady appreciation of the Japanese yen versus the US dollar.

yen-chart

Click on photo to enlarge.

Three Opportunities of  Which We Can be Sure.

First, The US dollar will fall more…much more as stock markets in the USA and globally enter their next bull phase.

Second, there will be confusion. Many…in fact most uninformed investors will lose…a lot.

Third,  there will be inflation…worldwide due to the excessive spending in the current global financial bailout.

Smart investors who know how to spot value in multi currency portfolios at some of the world’s safest banks have already earned 57%…120% …263% so even with the doom and gloom, they are still ahead.

Borrow Low-Deposit High helps you learn how to find good value and develop multi currency portfolios that suit specific circumstances.

Before I explain how you can use this report, let’s look at both the up and down side of these high performing portfolios.

The report provides an extensive beginner’s guide to developing multi currency portfolios backed up by our decades of experience working with Jyske Bank and its investment management subsidiaries to create and track multi currency portfolios real time.  The report data comes from dissecting and discussing the portfolio results.  This is a totally novel way to learn…real time from real portfolios created by some of the best investment managers in the world as these portfolios rise or fall in the market place…in the here and now.

Jyske Bank assists by providing portfolio details.   Our symbiotic relationship allows me to combine my experience with this bank’s incredible knowledge, real time capability and expertise so reader of my report can learn in a most practical way from some of the greatest multi currency experts in the world.

Here is our educational performance over the past six years.

We created five portfolios for educational purposes beginning in 2006.  One of the five multi currency portfolios was the Asian Emerging Multi Currency Portfolio. The portfolio started with a $100,000 investment and a $200,000 loan in Japanese yen (more on the loans in a moment).

This gave us $300,000 to invest in this portfolio.

AmountCurrencyInvestment
75,000RupeeJyske Invest Indian Equity Mutual Fund
75,000YuanJyske Invest Chinese Equity Mutual Fund
75,000YenJyske Invest Japanese Equity Mutual Fund
75,000MultipleJyske Invest Emerging Market Bond Fund

Investments Total Value $300,000.

Invested $100,000

Loan $200,000 100.00% JPY at 1.63%

Loan cost for one year $3,260.

This portfolio diversified into bonds and equities throughout Asia ..very multi currency.

Chinese yuan, Indian rupee, Japanese yen and more.

Twelve months later the portfolio was worth $417,420. Paying off the loan cost $203,260 leaving $214,160 or $114,160 (114.16% profit) on the $100,000 originally invested.

On November 1, 2006 we made the five changes mentioned above.  We dropped the Japanese equities and emerging market bond mutual funds and added an Eastern European, Far Eastern and Turkey equity mutual funds. This is how the rearranged portfolio stood.

AmountCurrencyInvestment
75,000RupeeJyske Invest Indian Equity Mutual Fund
75,000YuanJyske Invest Chinese Equity Mutual Fund
75,000EURJyske Invest Eastern European Equities
50,000AsianJyske Invest Far Eastern Equities
25,000LiraJyske Invest Turkish Equities

Investments Total Value $300,000.

Invested $100,000.

Loan $200,000 100.00% Czech Koruna at 3.875%

Loan cost for one year $7,750.

As promised this portfolio only had five changes. We swapped the Japanese equity fund for a Eastern European equity fund and dropped the bond fund replacing it with a Far Eastern and Turkey equity fund.

May I, at this point, interject a note about Jyske Invest fund managers. They are a Danish firm and are the investment management affiliate of Jyske Bank. This rock solid organization uses a good value system and have been rated #1 by Morningstar. They use this value system to select shares in their mutual funds.  We place these funds in our multi currency portfolios because they are strictly regulated by the Danish government and have such an excellent record…because they focus on finding value, not market timing.

So how did this new updated portfolio do? From November 1, 2006 to October 31, 2007 the fund rose in value from $300,000 to $430,370. The loan payoff of $207,750 leaves a profit of $222,620 or a rise of 122.62%.

There you have it, a portfolio created at and held in one of the world’s safest banks. With only three trades in two years the performance has been up 114.16% in year one and up 122.62% in year two.

I am sure that when looking at performance like that you are thinking “How did the other portfolios do?” Good question and your suspicions are correct…some of the other portfolios did not rise this much.

Yet believe it or not some portfolios did even better.

For example, the 2007 Green Portfolio consisted of six shares and rose 266.30%!

Here is the exact performance of all five portfolios for the last two years.

2006 Portfolio
US Dollar Long9.04%
US Dollar Short10.43%
US Dollar Hedge11.46%
Emerging Market42.93%
Asia Emerging Market114.16%
2007 Portfolios
Dollar Neutral38.67%
Dollar Short48.19%
Swiss Samba53.32%
Asia Emerging Market122.62%
Green266.30%

You can imagine with performances like this,  quite a bit of attention was attracted.  However these high returns are not the important benefit you gain with our multi currency report.

The report Borrow Low-Deposit High does not recommend specific portfolios.   The portfolios in the report are educational and designed to help readers work with their own investment manager to create their own multi currency portfolio that suits their own special, individual needs.

Our multi currency investment report helps readers learn how to manage their manager… nothing more.

Yet this is incredibly valuable because Jyske Bank can provide a stable and safe institution for those who wish to employ a multi currency strategy.

The report helps guide readers so they can direct any investment adviser or investment manager who understands how to invest in more than one currency.

The report also helps you learn why and when to invest in shares, how to leverage, how to create discipline and manage risk. The incredible portfolio performance above was achieved because the portfolios were leveraged using a tactic we call a multi currency sandwich.  Investors borrow low and invest in yielding or growth portfolios. The portfolios used loans in Japanese yen and Swiss francs to magnify profits in good times.

The report teaches how these loans can magnify losses in bad times as well.

For example look at the performance of the leveraged portfolios we created to study from November 2007 through September 2008.

2008 Portfolios
Infrastructure Portfolio-112%
Blue Chip Portfolio-79%
Danish Health Portfolio-92%
Asia Emerging Market-73%
Green-56%

Leverage in 2008 caused the portfolios to lose badly… in one instance the total portfolio was lost!

The report  Borrow Low – Deposit High is useful because it helps investors not to expect rising markets all the time.

The course helps subscribers learn how to look ahead and act rather than react (after the fact when it is too late).

The sad fact is… we all have to become multi currency investors.  Trusting your fate to any one currency now can destroy your purchasing power.    Every investor needs to know what to do!

The report helps learn how to look for times when to leverage and for times when to retract.  The idea is to cash in when the going is good and then withdraw.

Plus the report combined with our regular personal portfolio updates helps you to stay on top of currency and investment markets.

For example in 2007…  we began warning readers to exit the markets well before the crash.  Our first of many early warnings said:  “We have enjoyed two years of enormous growth.  Periods of high growth are normally followed by periods of low growth.”

In 2012 we became bullish on equity markets again and history suggests that despite the doom and gloom so many preach… we are at the threshold of the next big global economic acceleration.

This is why I invite you to read my current update of Borrow Low Deposit High…  in the beginning of this wave when profit potential is greatest.
This nine chapter report has been read and studied by tens of thousands of investors over the years.  This report has been sold for decades as a survivor’s hand guide to currency turmoil for $79 and we are not raising the price now just because the next bull market is beginning.

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

“Borrow Low Deposit High – How to Use the Multi Currency Investment Sandwich” $79.

Here is what a few others from around the world have said about our services and reports on international investing.

Gary , I am a long time subscriber in various media, and while cleaning out my files today I found some old ‘Gary A. Scotts World Reports’. In particular, the April 1988 issue provided the info that made me over a million dollars. Just wanted to say a belated ‘thank you’ and please continue the excellent work. Warm regards,”

From an Unknown Reader

Dear Gary, I would like to give thanks to you for introducing me to Jyske Bank two years ago.

“I have been a long-time client of Merrill Lynch, but am in the process of re-evaluating my relationship with the largest brokerage company in the world. My problem is that when I compare Merrill to Jyske, Jyske outshines Merrill (or other major U.S. brokerage firms) in most categories as follows:

“1) Even though Jyske is much smaller, it has a much more global perspective which is critical in an evermore global investment environment.

“2) In order to maximize their own individual revenue, the brokers at Merrill prefer to outsource the day-to-day management of their accounts to various fund managers and hence, ‘manage the managers’. In contrast, I can call my Account Manager at Jyske and he can discuss every aspect of my account in detail with me.

“3) I attribute this difference in #2 to the fact that Jyske’s employees are not compensation driven, but instead are focused on satisfying their customers. That is why Jyske’s clients stay with the Bank on average for 12 years, which is phenomenal by Wall Street standards.

“4) Jyske’s security is far more stringent than that of Merrill’s. In addition to the standard account code and password, to pass through Jyske’s security one has to enter a Key Card number and also a randomly-generated 4-digit number from said Key Card.

“5) Having an account offshore allows me to sleep better given the anxious times we live in. Since I report the existence of the account and pay all taxes due, I am fully compliant with the law. However, such an account gives me and my family a ‘financial life boat’ should events in our own country ever get out of hand.

“As Dorothy Parker once said, ‘You can lead a horse to water, but you can’t make them THINK’. Jyske is a thinking person’s bank. My only complaint is the time zone difference since I live in California . However, since I am an early riser and my Account Manager is very responsive to my emails, this problem is very small relative to the HUGE benefits.

“Again, many thanks for introducing me to Jyske Bank. Given the ‘dumbing down’ that occurs in the popular media today, your ezine and its recommendations are ever more important. Please continue your good work to enlighten your readership.

“Warm regards,”

C.M. CALIFORNIA Businessman

“I was so overwhelmed with information I received I had to spend several days reading, sorting and filing it! I have decided to move my modest investment capital overseas.”

B.W. MONTREAL CANADA Professor

“Send me your report on safe banks lending at 7% for redeposit at 13% or more.”

B.V. ADDIS ABADA ETHIOPIA Economic Commission United Nations\

A number of new and significant contacts were made. It would be extremely helpful if you could supply us with WORLD REPORTS.” 

I.M. TORONTO , CANADA Banker

“You are as good as your word which is rare these days. I look forward to attending one of your seminars.”

C.K. GENEVA , SWITZERLAND Banker

“In spite of my marketing experience, your information really got me going!” M. C. LONDON, ENGLAND Marketing Consultant

Thanks for the three reports. They are very interesting and should find many readers here in Japan .”

M.A. Tokyo , JAPAN Computer Programmer

“I would like to say how much I enjoyed the information I received.” A.B. Providenciales TURKS & CAICOS Accountant

“First let me say how much we enjoyed the investment seminar.” W.J. SAUDI ARABIA Oil Engineer

Once again thanks for all the great information.” G.K. PERTH , AUSTRALIA Insurance Executive

“Your letter of November 8th warned me to beware of the market just a week before the 120 point crash on November 15th!”

T.G. NORTH CAROLINA Pilot”

This report is guaranteed.  Satisfaction or your money back.

Borrow Low Deposit High – How to Use the Multi Currency Investment Sandwich” $79.

Gary

Meet Thomas Fischer of JGAM… a Danish bank that makes multi currency loans at our February 1-2-3, 2013 Super Thinking + Investing & Business course.

See yen chart at businessinsider.com

See yen chart at chartrus.com

See more on the National Debt Graph here

The Best Opportunity Since 1990


1990 saw one of the greatest investing opportunities in history.

In the USA, a 15 year bear cycle had ended in 1982 and the Dow had quietly risen from below 1,000 to just under 3,000 by 1990. However investors sentiment takes about seven year to adjust so the US boom really began and the down rocketed from appx. 3,000 to over 11,000 by 2000 and added increase of nearly four times.

The huge opportunity from 1990 however was in Europe… mainly Germany.

The reunification boom of 1990 to 1992 had turned sour and the US economy was in recession.

German management cut 14% of the German industrial  workforce which resulted in a mild profit improvement.   However German shares were trading at ridiculously low asset valuations with improving returns that led the German stock index up 60% by the end of 1993. The following 3 years proved to be very uninteresting for anyone who missed this classic trade.

The Dax (Germany’s stock market index) rose seven times in the same period as the chart below from finance.yahoo.com shows!

dax-chart

Dax historical price chart.

(click on photos to enlarge)

This could seem confusing… that the biggest growth periods began during times of recession, but this is a simple historical fact.   Most investors buy shares at exactly the wrong time.

This is why when Europe was plunged into some of its deepest economic woes, I began accumulating European shares.   When the banking industry seemed worse I purchased Italian and Danish bank shares and when the Italian shares crashed invested in more.

Recent messages, one Aug 16, August 20 and Aug 25, (see links below) looked at my European share portfolio.

Now we are seeing some new confidence in Europe and this speculation is paying off.

Thomas Fischer at Jyske Global Asset Management (JGAM) sent this update. 

OMT, the new ingredient in the Eurozone alphabet soup

The past 5 days were another week with central banks in the limelight. Draghi of the European Central bank (ECB) played the lead role, pushing aside all negative economic data and boosting stock prices.

Turning to central banks, this week was a continuation of the story of the past many weeks and months. Central banks are either expanding monetary policy or promising to expand in the near future. The Bank of England left interest rates unchanged, but is still committed to its asset purchase program. More surprisingly, Sweden’s Riksbank cut its repo rate by 25 basis points to 1.25%, as a response to a recent appreciation of the Swedish kroner (SEK).

Finally, the long-awaited ECB plan for sovereign bond purchase was released on Thursday and was named “Outright Monetary Transactions” or in short, OMT. The ECB president, Mario Draghi, confirmed that the ECB is willing to purchase unlimited quantities of short-dated bonds to ease funding pressure on governments in trouble. However, the bond-purchase program requires governments seeking bailout to obey to fiscal restrictions set by the EU and monitored by the IMF. It remains to be seen, whether Spain and Italy are ready and willing to accept the “Greek troika” of EU, ECB and IMF to intervene in their economic affairs.

The weak economic data and the central bank’s intervention had the effect that both the euro and gold reached new heights during the week. Today, the euro went above 127 USD and during the week gold rose to a six-month high above 1,700 USD an ounce. At JGAM we assess the dual rise of euro and gold to reflect both a temporary relief in the eurozone and a continuing fear of aggressive central bank expansion eventually leading to inflation if not rolled back in time.

Already this shift has brought me profits with the unicredit shares.

financial chart

Long term Unicredit chart

Unicredit shares were 3.16 euro at the time of our August 25 message.  They are now 3.66 euro per share.

financial chart

Unicredit rebounding sine our August articles.

Plus the Euro has added strength.

financial chart

Euro rebounding versus the US dollar since the August articles.

This means that on August 20, 2012… 10,000 shares of Unicredit sold 31,600 euro.  Those euro at 1.23 were worth about $39,000.  Today…  the same 10,000 shares are worth $36,000 euro worth at 1.28 about $46,000.  That is a 17% rise in just three weeks.   Had one leveraged the speculation two to one the profit would have been over 30%…. in three weeks.

Nice.   Yes short term profits like this are nice but really meaningless and this is not the opportunity.   The opportunity is in a shift of perspective  that heralds the beginning of the next 15 year bull market.

There are three upwards forces working in the European bank sector now.

The director of European Investments at another of my investment advisers sent a note on why he felt that European banks were in his opinion the best investment proposition since 1990.

He sent graphs that explain all we really need to know about equity investing.  He said: “If you and I had been shown these slides at the beginning of our equity investing careers they would have allowed us to ignore the large part of top down data that is simply noise, would have allowed us to focus on the only 2 equity valuation parameters that drive returns and would have turned us into Warren Buffett clones – albeit without his exceptional talent.”

financial chart

This graph shows the return on equity in both the US and Europe over the past forty years.  They show a clear pattern that economic cycles should be expected and how these cycles create opportunity.  Opportunity grows in recessions because regardless of what corporations face, plague, war, recession, political or energy crises… managements adjust and rebuild profits by cutting costs, reducing working capital and increasing margins through consolidation.

The important point is that investors pay premium prices at the worst times when at the upper peaks of cycles when business is easy,  there are bloated cost bases, over-priced acquisitions and high cash flows are being invested in increased capacity that will not be required when the cycle turns.

These cycles seen in terms of return on equity rise and fall between 10% and 18%.  Investors should value those profits streams differently.   When the Return on Equity (ROE) is at an 18% peak investors should pay less because at the peak profits are unsustainably high.

When ROE is at a low 10%  investors should pay more because during the troughs profits understate true earning power.

In other words investors should pay a higher multiple for lower returns and a lower multiple for peak profits because those profits will rebalance.

Most investors do exactly the opposite!  (See chart below which shows the price to book rising and falling as profits rise and fall, not the other way round).

Value investors such as Warren Buffett do not make this mistake.

For 40 years Buffet has been buying when asset values are cheap and avoiding over-extending when profit cycles are at peaks.

Most investors err because they are overly influenced by optimistic and pessimistic newsflows and they ignore value.

This basic creates a remarkable investment proposition based on the Return On Equity (ROE) and price to book of the European banking sector.

Equity investors have continued to price this sector’s profit stream in a completely consistent way based on headline grabbing newsflow.

Because this type of investing is totally flawed we can make Buffet-like returns.

The chart below shows that return on earnings on European banks is at almost an all time low.

financial chart

This chart and economic logic shows that ROE of the European banking sector should move from 6% to 9% over the next three years so price to book can be expected to rise 50%.  This improvement would require 20% earnings and dividend growth over the 3 year period so that your total return would be comfortably over 60%.

There are three  business reasons behind this rise.   Lending volumes drive the quantity of the banking sector’s returns whereas net interest margins… cost/income ratios… and loan loss provisions drive the quality of returns.

Loan volumes will grow modestly but the 50% rise comes from improved net interest margins,  cost/income ratios and loan loss provisions.

First, cost/income ratios are falling in almost all banks in Europe. This is totally under the control of management and they want to reduce costs.  All the European banks are reducing staff, rationalizing branches and this cost cutting will continue through at least 2014.

Second, net interest margins will improve at almost all European banks.   Interest rates are almost at zero and aren’t likely to rise any time soon. However loan costs are rising.   This began in Denmark. All the major banks have hiked loan costs on three occasions in the last eight months.  Italy, and Eastern Europe hiked their costs next.

I was happy to see this since my shareholdings and those I have been recommending are in Jyske (Danish and Unicredit (Italy and Eastern Europe).

This is why I also added Skipton Building Society bonds paying almost 10% because investors have also underpriced British Building Societies.

Third, loan provisions are set to fall pretty aggressively from now onwards.  The emergency provisions associated with the 2011 chaos have caused the current lending practices to be much safer and conservative than those from 2005 to mid-2008.

Portuguese banks for example only grant individual mortgages to those who put down a 40% deposit and to export oriented businesses.

European loan books are being massively derisked.  Loan books at end 2014 will have no semblance to anything that was created by the easy credit conditions in 2006 & 2007.

Here are the three big moves that can bring such great opportunity.

#1: End of the the 15 year bear and a rising stock market while investor sentiment remains bearish.

#2: The return to a falling US dollar.

#3: Low interest rates so investors can borrow low and invest high at almost no cost.

The time of greatest investing opportunity are the first seven years or so of a 15 year bull market when investor sentiment remains low. Big smart money pours in and takes profits in the later years as a bubble forms on positive investor sentiment and news.

The last great opportunity began around 1982 through 1990.  This new bull form has an added advantage of much lower interest rates than in the early 1980s and we will focus on the opportunity now and the advantages (and pitfalls) of Borrow Low-Deposit High speculations at our upcoming Super Thinking + International Investing and Business Seminar October 5-6-7.

This October Course is special because we’ll conduct it at New River State Park near West Jefferson, North Carolina.

park

New River State Park

Our Super Thinking courses each have a focus… in this upcoming course we feature Super Thinking + International Investing and Business.

The key that makes these courses unique… like nothing else available are the Super Thinking sessions that have been created from Merri’s and my experience with ancient wisdom from Europe, Asia and the Andes.  Part of this wisdom is aimed at getting our minds into a state of relaxed concentration so we can think clearly despite the bombarding of noise in the news, over the net and on TV.

Super Thinking returns us to our natural though patterns and there is no better place to do this like in nature… in deep woods surrounded by forests… away from the maddening crowds.

The park is only seven miles from West Jefferson. The drive is sublime especially in October during the leaf change when the forest looks like this.

new-river-state-park

The park’s website describes the park:  Rugged hillsides, pastoral meadows and farmlands surround what is believed to be one of the oldest rivers in North America the New River. Its waters are slow and placid. Its banks are fertile and covered with wildflowers. Dedicated as a National Scenic River in 1976, this gentle river is the centerpiece of New River State Park.

park

The New River area still maintains an old-fashioned charm. Mountain roads are narrow and winding, dotted with small farms, churches and country stores. The river itself is tranquil, offering good bass fishing, trout streams, excellent birding and inspiring mountain scenery. But perhaps the best way to absorb and appreciate the river’s peacefulness is from the seat of a canoe as it glides across the slow-moving waters. Four areas with access to this waterway make up more than 2,200 acres of New River State Park and provide spots for camping, canoeing, picnicking and fishing.

park

You’ll enjoy a nice seven mile drive through glorious autumn woods to the park entrance.

new-river-state-park

The park has a wonderful meeting facility… a community room… huge fireplace… large windows in nature surrounded by peace and tranquility of the woods… a great place to learn!

new-river-state-park

Aerial view of facilities at New River State Park.

 

 

 

Multi Currency Portfolio Up 18.4%


One multi currency portfolio is up 18.4%.

Long term readers at this site know that Jyske Bank has been my main investment banker for around 25 years.  I study their portfolios regularly to learn ideas on where to invest and their recent updates show how today’s global economic environment forces us into taking greater risk.

Long term readers also know that I do not recommend holding more than needed for day to day spending in Ecuador banks.  If you are a new reader see my Ecuador bank warning here.

Thomas Fischer Sr. VP at Jyske Global Asset Management, the division that serves American investors, sent this note last week.

Hi Gary, Attached our latest performance update. We are pleased with the performance and all portfolios (except the FX but hopefully we will still make a profit by the end of the year) are beating the benchmark. We have no exposure to the euro and in our leveraged portfolios we use a 100% euro funding. As you can see this has also led to a return of 18.4% in a speculative performance (medium risk with 2X).

Here is JGAM’s record.

jyske-multi-currency-investments

Click on this photo to enlarge.

There is an important multi currency lessons to be learned here.

JGAM wrote in their latest (August 1, 2012) portfolio update that they were reducing risk in their strategy

Risk exposure reduced

July 31, JGAM held an ad hoc Investment Committee meeting. We decided to reduce risk exposure in all our managed portfolios for the following reasons:

·         During the second quarter financial reporting season a surprisingly large number of companies have reduced their earnings forecasts.

·         Financial markets are very optimistic that both the Fed and the ECB will and can boost economic growth and solve the euro crisis – we are however less confident.

·         So far this year we have a satisfactory performance on all our asset allocation portfolios which we want to protect to some extent in case the Fed and the ECB disappoint market expectations.

Therefore, we have sold the following stocks in medium and high risk portfolios: Cisco, Siemens, Novo Nordisk and China Mobile. In the low risk portfolios we have sold Vodafone, Nissan and a portion of Apple. All chosen stocks are considered to be of the more risky type.

Further, we have bought more gold and hence, increased the position we already have. In case the Fed and/or the ECB engage in another round of monetary easing we expect some of the excess liquidity to flow into gold.

Finally, we have put a protective stop-loss on our euro loan in the leveraged portfolios, in case the ECB manage to live up to the market’s high expectations, relieving the euro crisis and hence, cause a euro appreciation.

Bottom line is that we are still invested, but now with a less aggressive investment strategy, thereby protecting your investments with us to a larger extent. And again, we emphasize that we are NOT exposed directly to the euro or any euro stocks and bonds.

This lowered risk approach appears to be in line with events and JGAM wrote on  Aug 10, 2012:

Shifting sentiments

Global stocks started the week in a mood of optimism, drawing strength from Friday’s solid US jobs report and signs from Spain that the government could request a bailout, opening the possibility for support from the ECB in the form of a bond purchasing program, announced by ECB’s president Draghi last week.
Tuesday, the Reserve Bank of Australia kept interest rates on hold at 3.5% which caused the Australian dollar (AUD) to reach its strongest level in more than four months.

However, mid-week the market sentiment changed and stocks struggled to sustain recent gains. The reasons were bad news from Germany, the UK and Greece. Germany reported industrial output and exports that fell more than markets had expected. Further, the Bank of England cut its economic growth forecast sharply. Also, Standard & Poor’s lowered the outlook on Greece’s credit rating to “negative” from “stable”.

Then, Thursday the sentiment changed again and global stocks moved higher on hopes for additional monetary stimulus to struggling economies, especially in China. Both factory output and inflation in China slowed. These bad economic news were turned into positive financial market news as they spurred new hopes for central bank intervention.

Friday – as we write – the sentiment has changed once again. Growth-focused assets, especially stocks, are being sold after disappointing Chinese trade data. It seems as if the market has decided to end the week on a downbeat note using the Chinese trade data as an excuse for some profit-taking.

At JGAM, we conclude that the positive impulse from last week’s US job data and ECB’s promise on a bond purchasing program didn’t last for long. Financial markets are again nervous and volatile, faced with sluggish economies and an unresolved situation in the eurozone.

However  the best performing portfolio at JGAM, up 18.4% is their most speculative… the medium risk portfolio leveraged two times.

This repeats an interesting multi currency investing phenomenon  that we have seen numerous times in the past several years.

This phenomenon is that a lower risk portfolio using leverage brings the highest returns.

This is one reason why I have used Jyske for so many years… they provide multi currency lending.  When a currency like the dollar, euro or yen is weak…  you can borrow at a really low interest rate to invest for a higher return.

For example in the example above,  instance JGAM’s medium risk portfolio is up 7.87%.  However because the portfolio is leveraged with a low cost loan in euro in the 3% range,  the leveraged portion earns about 4.5% plus has the potential of a forex profit.

Leverage can also work against a portfolio in the downside… but in this era when bond yields are really low. commodity prices are very high and volatile… good value shares offer the best long term potential.  That potential can be enhanced with these really low interest rate loans and this creates a very powerful long term strategy.

Warren Buffet exemplified this fact at his 2012 annual meeting when he described investments in bonds as: “bonds are more like “return-free risk” than risk-free return”.

He also had a word about gold:  “Gold is a great thing to sew into your garments if you’re a Jewish family in Vienna in 1939,” said Munger, Warren Buffett’s long-serving No.2 at the $204 billion insurance and investment company, “but I think civilized people don’t Buy Gold. They invest in productive businesses.”

“A productive asset of any kind, a decent productive asset, is going to kill a non-productive asset over time.

“I will guarantee you that farmland, over a hundred years, is going to beat gold, and so are equities,” said Buffett – now 81, and recently diagnosed with early-stage cancer – adding the caveat that “in any given one-year period, five-year period, any asset can outperform another asset.”

Good value equities have always offered the best long term value and when leveraged with low costs loans they can provide enhanced returns.

Gary

Join me with Thomas Fischer to look at how you can borrow weak currencies to invest into 2013 at our upcoming Super Thinking + International Investing and Business this October 4-5-6.

Bank Downgrades


Jyske Bank Private Bank just announced a down grade.

jyske-bank

Steen Nygaard Head of Treasury at Jyske about the downgrade on Jyske TV. See link below.

Jyske’s website says:

Standard & Poor’s downgrades rating of Jyske Bank due to weak economic trends in Denmark

In mid-November, Standard & Poor’s revised its view of the banking sector in Denmark, including Jyske Bank; this revision took place according to Standard & Poor’s updated BICRA method (Banking Industry Country Risk Assessments Method). Due to the continued economic uncertainty and the expectations of low economic growth, Standard & Poor’s lowered its general rating of the Danish banking sector.

In line with this, Standard & Poor’s has now downgraded Jyske Bank’s long-term rating from A to A- and the short-term rating from A-1 to A-2. At the same time, Standard & Poor’s changes its outlook for Jyske Bank from negative to stable.

In connection with Standard & Poor’s assessment, Anders Dam, Jyske Bank’s CEO and Managing Director states:

“‘I understand the change in Standard & Poor’s view of the prospects of the Danish banking sector and hence also its rating of Jyske Bank. Jyske Bank cannot expect to maintain a rating at the same level as in 2006 when Standard & Poor’s rated the Bank for the first time. At that time, economic prospects were brighter and the earnings level of Jyske Bank higher. The most important thing is, however, that Standard & Poor’s still recognizes Jyske Bank’s strong position in respect of funding conditions and capital structure.

Considering the economic prospects, it is now entirely up to ourselves to bring about the basis for a higher rating of Jyske Bank. This is a target to which we give high priority. The various initiatives taken this autumn in the form of cost reductions, an increased interest-rate margin as well as acquisition of business volume will contribute to improving our earnings capacity. To this must be added our most recent initiative – buying back hybrid core capital, which will strengthen our equity and hence the quality of our capital base.”

Yours sincerely,

Anders Dam Managing Director and CEO

There are several positive factors to keep in mind.

First Denmark remains ranked AAA and Scandinavian currencies remain a safe place to be. See more on this here.

Second, deposits are guaranteed by the danish government up to 100,000 Euro or $135,000 US dollars.

Third, securities… ie stocks and bonds are not affected by this downgrade.   Your investments at Jyske are kept separate in a nominee account, In other words  client holdings are separated from the banks own holdings so are protected by their own financial stability.

See more on the Jyske downgrade at Jyske TV here.

Believe in Value


Now is the time when value is most accessible but also when it is hardest to believe in value.

equity charts

One year Morgan Stanley Capital Index European Financial Index chart from www.finance.yahoo.com

Can you believe that performance like this is good?   See below why I am smiling over this.

Belief is one of the most important assets you can have when it comes to investing… unless you are a trader.

On September 23, 2011 Jyske Global Asset Managers wrote: Dear client, On 22 September, JGAM’s Investment Committee held an ad hoc meeting deciding to sell bonds denominated in Australian dollar (AUD) and Brazilian real (BRL). These trades have now been carried out. We sold the AUD bond with a nice profit and the BRL bond only gave us a small loss.

We took the decision to sell the bonds because of the increasing nervousness in the financial markets sparking a flight to safety in US dollar denominated Treasury bonds. We know from past experience in 2008 and 2009 that when investors run for safety then AUD and BRL can take a severe hit. Therefore, we decided to cash in and protect the funds you have entrusted with us.

This was a good decision and we passed it on in our message entitled Multi Currency Tip: Sell Australia and Brazil.

Then outlined why I was not selling my Australian and Brazilian positions.

Yesterday my portfolio accountant (I make my own decisions) wrote: Gary,  Please find an update of your portfolio attached.  Even with your conservative strategy, you have lost 7.1% in one month.  This last month have been the most negative since October 2008, mostly because the US Dollar has appreciated against all emerging market currencies, especially Brazil.  This growth is mostly because of problems in Greece and the outlook for a lower world wide growth.

A quick look at The US dollar versus the Australian dollar and Brazilian real versus the US dollar shows how both currencies collapsed to the greenback.

currency charts

3 month Australian dollar to US dollar from www.finance.yahoo.com

currency charts

3 month Brazilian real to US dollar from www.finance.yahoo.com

I had a long talk with Thomas Fischer who is head of the currency team at Jyske Global Asset Management.  They currently have 40% of their portfolio in US dollar cash… hating this but seeing nowhere else to go and knowing that incredible deals will be coming up… because the US dollar strength is not likely to last.

Here is the point about belief.  JGAM and I have almost identical beliefs in the market.  We simply have different ways of responding to these beliefs.  As managers of wealth for many investors, JGAM has to to perform in the medium term because JGAM customers may require funds at any time.  JGAM are not traders… but they can be when required.

As manager of my own funds I know when I’ll need liquidity and I can manage my own account with a longer view.

Events Not Likely To Get Better Soon

JGAM also wrote last week:   Europe is waiting for the result of the European summit over the coming weekend and the markets are prepared to react. This week, we had a market reaction every time rumors appeared or statements were given by officials. The result has been volatility in all markets. The EURUSD has traded between 136.50 and 139.17. Reactions like these are massive compared to the actual news value of the statements.

The size of the European Financial Stability Facility (EFSF) has been subject to much discussion this week. During the week, there have been several more or less serious estimates on the size of EFSF, which have only added to the uncertainty. Monday, the English newspaper The Guardian disclosed that the rescue package would be increased to 2,000 billion euro’s, which was received very positively by the markets and resulted in a positive day. As no official confirmation was given, once again the positive sentiment disappeared resulting in falling markets.

The latest news is that we will see a postponement till Wednesday next week. The reason for the new summit, according to several newspapers, could be the fact that Moody’s, have indicated that France might lose their AAA rating – a serious problem for the entire solution. Angela Merkel also needs the additional time to clear the negotiated solution with the reluctant Bundestag. Once again, this indicates that the European problem is very difficult to solve and that a solution could drag on. In the meantime, the rest of the world is just waiting – for Godot?

This week, 24 Italian financial institutions were downgraded by Standard & Poor’s. Last week, a great number of Spanish and English banks suffered a similar fate, which certainly doesn’t contribute positively to the general sentiment in the market.

China has published the GDP (YoY) and the figures came out at 9.1%, down from 9.5% last quarter. The Chinese economy is slowing down, but is not in for a hard landing. It also indicates, not surprisingly, that the crisis in Europe has had a negative effect on the global economies and hence it is of great importance that a sustainable solution is found. The stopgap measures we have had so far will not satisfy the markets today.

There seem to be so many problems.  Problems create value!

If the big problems are in Europe right now.

Sure enough a message next week reviews Keppler Asset Mangemet’s Global Major Market Value analysis and we’ll see how four of the six top value markets are in Europe.

This means that one way to cash in on value now is with a European Value Fund.

One new such fund the Evermore European Value Fund started last year in New Jersey.  There’s a yearly 0.25 percent 12b-1 fee for marketing expenses for the A shares if you buy shares through one of the platforms like Fidelity, Schwab, or TDAmeritrade.  The minimum first investment is only $5,000.

The manager is David Marcus, co-portfolio manager is Jae Chung.

Marcus is well known as a deep-value investor, one who rushes in when blood is running in the streets.  He’ll find plenty of blood now.

Value funds are not for the feint of heart during such difficult economic times. They typically look and perform the worst during the downward slide as managers pick up lopsided falling shares.

During recovery is when value investors and value funds really smile.

Marcus worked with Michael Price, who learned the ropes from another legendary deep-value investor, Max Heine, who launched the Mutual Series funds in the 1940s. These funds have a winning reputation and Marcus worked there for almost 14 years.

He was the sole manager of the European fund at Mutual and co-managed many others so was  managing over $14 billion in funds.

Evermore funds unlike regular ETFs can sell short, buy bonds of companies in trouble and  a lot of things that hedge funds do.  Yet as closed end funds they are liquid at all times… though you would want to buy for the long and medium term now.

When I show you a chart of the performance of this fund in its first year, you may think I have gone nuts.

equity charts

Evermore European Value Fund Chart from www.finance.yahoo.com

The return looks really lousy as any value fund or value oriented portfolio will look right now. Value funds perform worst in bad times because  the mangers are busy gobbling up good value equities BEFORE they rise in cost.  Value investors smile on the recovery side… not during the crash.  In times like this almost everyone loses except professional traders and short sellers. Almost everyone becomes happy when equity markets recover… but those who are the happiest and who do best are value investors.

If you believe in investing value… and you should… this is a time to be happy.  Some great bargains have developed and more are developing now.

Gary

Learn more about Multi Currency investing here.

Belong to the International Club

The Huge 2019 Risk

Here is a huge risk that could explode in 2019.

I hope I am wrong… but the numbers are clear.

According to Treasurydirect.com, (1) as of December 27, 2018 the cost of interest on the total US public debt of $21,845,329,154,412.01.  Tht’s 23 trillion and 845 billion dollars.

This is not a theoretical problem for the future.  This is not something that our children and grandchildren will have to deal with.  This is a problem in the here and now for you and me.

Rising interest rates create a massive problem for every American.

US debt

The good news is I sent a note like this last year ad I was wrong.

Last year when I sent that note the debt was $20,467,375,664,755.32 (20 trillion+).  The debt has increased almost 1.4 trillion dollars in 2018.

This is good news and bad… the rock and the hard spot.  The bad news is that the rock (US federal debt) is getting bigger….harder to miss.  The Congressional Budget Office (CBO) projected in 2010 (the debt then was a bit over 14 trillion then) that, under law at that time, debt held by the public would exceed $16 trillion by 2020, reaching nearly 70 percent of GDP.

The $5 Trillion Error.

They sure goofed on that.  Here we are… only in 2019 and debt has shot past 21 trillion.

How could the CBO be so wrong? 

The CBO screwed up because they could never imagine that the Fed would push interest rates so low… and keep them there.  The interest rates are so low that the government has been able to borrow more than imagined and still afford the interest.

For example, US Federal government interest last year amounted to around $483 billion on the 20 trillion of debt.  Yet in 2008 on debt of only $9,229,172,659,218.31 (9 trillion +) the interest that year was $451,154,049,950.63 (451 billion +).

Interest payments in 2017 were 7% higher than they were in 2008.  Yet the debt is over 100% higher.  

Very low interest rates have helped the government borrow.  Low interest has also helped the US stocks reach all time high prices.

Now US dollar interest rates are rising.  In 2018 the interest costs were 8.2% higher than in 2017.   Yet the debt increase was only 6.7%.

The government will resist raising rates because it will ruin their budget, cause a collapse of the stock markets and destroy the US dollar.

Here is the very hard spot.  

Rising interest rates, will create an almost unimaginable debt crisis.  If government interest goes to 6% it is like the $20+ trillion national debt  rising to 40 trillion!  Unless there are some huge tax increase the interest payments are not sustainable.

A tax increase?  Last year’s tax act reduced, not increased, revenue.

Learn how to have more freedom and time, less stress, better health care, extra income, greater safety and profit in your savings despite America’s deficits, debt and currency risk.

Fortunately there are secrets that will allow a few to live much better, free of debt and worry despite the decline in the dollar’s purchasing power.   My wife, Merri and I, have traveled, lived, worked and invested around the world for nearly 50 years to gain this information.

Let me share the basics of this data and how we can be of help through 2018.

The first fact behind this secret is that things are really good in the western world.  Despite many problems, we are surrounded by more abundance and greater opportunity than almost anyone has ever enjoyed, anywhere, ever.   To enjoy a fair share of this wealth, all we have to do is understand human nature and learn how to invest in the new economy, as it changes and becomes new, again and again.

Merri and I have made seven huge transitions in the 50 years.  Each has allowed us to always stay ahead of losses that the majority of Americans suffer.  We are in another transition right now and want to share why and what to do so you can stay ahead and live a richer, independent life through 2019 and beyond.

A falling US dollar is one of the greatest risks we have to our independence, safety, health, and wealth, but also brings a window of huge profit as I explain below.   Though the greenback has been strong for a number of years, its strength is in serious jeopardy.  The growing federal deficits increase the national debt and this with rising interest rates propels a growing debt service.

While the Dow Jones Industrial Average passed 25,000, the U.S. national debt passed the $20 trillion mark.

The problem is that the Dow will come back down.  National debt will not fall.

The double shock of money fleeing Wall Street and US debt skyrocketing, will destroy the purchasing power of the greenback.

Go to the store even now.  Statistics say inflation is low, but buy some bread or, heaven forbid, some fresh vegetables like peppers or fruit.   Look at the cost of your prescription or hospital bills.  Do something simple like have your car serviced at an auto dealer.  Look at the dollars you spend and you’ll see what I mean.

The loss of the dollar’s purchasing power erodes our independence, our freedom and our savings and wealth as well. 

At the same time, low interest rates by big banks and higher health care costs soak up the ever diminishing income and savings we have left.  According to a Gallup poll, the most unpopular three institutions in America are big corporations & Wall Street banks, HMOs and Congress.

Yet there is little we can do because these institutions are in control.

Over the last 50 years the average income for 90 percent of the American population fell.  Our health system is restricted by a Kafka-esque maze of legislation and insurance regulations that delay, frustrate, and thwart attempts by patients and doctors from proper medical care.  Big banks and corporations restrict our freedom of choice.  The business customer relationships are no longer transactions between free equals.

Banks can trap us in indebtedness at every age from student loans to mortgages to health care costs.  They pay almost nothing on our savings.  They hide unexpected fees and payments in complex and unreadable documents.  Banks and big corporations routinely conceal vital information in small print and then cheat.  Weak regulations and lax enforcement leave consumers with few ways to fight back.  Many of these businesses ranging from cable TV to phone and internet service to health insurance have virtual monopolies that along with deceptive marketing destroys any form of free market.

These same companies control the credit-scoring agencies so if  we don’t pay unfair fees, our credit scores will plunge and we could lose the ability to borrow money, rent an apartment, even to get a job.  Many consumers are forced to accept “arbitration clauses” in lieu of  legal rights.  The alternative is to lose banking, power, and communication services.

Big business has also usurped our privacy.  Internet companies sell our personal data.  Personal information is pulled from WiFi and iPhones track and store our movements.  The government can access this information, sometimes without subpoenas.  There’s a lot that we don’t know, often withheld under the guise of “National Security.”

The glow on Western democratic capitalism has dimmed… or so it seems.  The US, leading the way, is still a superpower with economic, innovation and military might, but the institutions that should serve the people have become flawed or broken.

America’s infrastructure is in shambles.  The nation’s bridges are crumbling, many water systems are filled with toxins, yet instead of spending more to fix this, we build more prisons.  The 2.2 million people currently in  jail is a 500 percent increase over the past thirty years.  60% of the inmates belong to ethnic groups.  Not just non-white ethnic groups are suffering.  Annual death rates are falling for every group except for middle-aged white Americans.  Death rates are rising among this group driven by an epidemic of suicides and afflictions stemming from substance abuse, alcoholic liver disease and overdoses of heroin and prescription opioids.

America’s middle class is shrinking.  Nearly  half of America’s income goes to upper-income households now.  In 1970 only 29 percent went to this group.  How can we regain our freedom, our happiness and our well being in such a world?

What can we do?

Gain a better, freer life is to combine better health, higher income and greater savings for a happier, more resilient lifestyle. 

Merri and I will celebrate our 50th year of global living, working, investing and researching to find and share ideas on how to have simpler, low stress, healthier, more affluent lifestyles.  Our courses, reports and email messages look at ways to gain:

#1:  Global micro business income.

#2:  Low cost, natural health.

#3:  Safer, more profitable, investments that take little time or cost to buy and hold… so you can focus on earning more instead

Many readers use our services for just one of these three benefits.  They focus only on health or on earning more or on better, easier investing.

28 years ago Merri and I created the International Club as a way for readers to join us and be immersed in all three of these benefits.   The International Club is a year long learning program aimed at helping members earn worry free income, have better affordable good health and gain extra safety and profits with value investments.

Join us for all of 2019 NOW.

The three disciplines, earning, health and investing, work best when coordinated together.  Regretfully the attacks on our freedom are realities of life.  There is little we can do to change this big picture.  However we can change how we care for our health, how we earn and how we save so that we are among the few who live better despite the dollar’s fall.

We start with better lower cost health care.

Club membership begins by sharing ways to be free of the “Secret Hospital Charge Master”.   Just as governments hide truth behind “National Security”, big health care businesses hide medical truths behind “Charge masters”.  Most hospital charge masters are secret because big business does not want us to know how much hospital costs have risen.  Motivations beyond our good health, like corporate greed, want to keep us in the dark about health care cost.

Despite rising health care costs, a report from the Centers for Disease Control & Prevention shows that hospitals are the last place we want to be for good health.  One report shows that hospital-acquired infections alone kills 57% more Americans every year than all car accidents and falls put together.

Often, what patients catch in the hospital can be worse than what sent them there.  Governments and health care agencies agree  – antibiotic resistance is a “nightmare.”  An antibiotic-resistant bacteria may be spreading in more hospitals than patients know.  About one in every 25 hospitalized patients gets an infection and a report from the Journal of Patient Safety showed that medical errors are the third-leading cause of death in the country.

Along with the risk of hospital acquired illness and medical errors, the second huge threat to our well being… is health care costs, especially at hospitals.  This is why charge masters are so often secret.  There are few risks to our wealth that are greater than a hospital stay.

I have created three natural health reports are about:

#1: Nutrition

#2: Purification

#3: Exercise

Each report is available for $19.95.  However you’ll receive this free as club member and save $59.85.

Club members also receive seven workshops and courses on how earn everywhere with at home micro businesses.  We call this our “Live Well and Free Anywhere Program”.   The program contains a series of courses and reports that show ways to earn and be free. These courses and reports are:

  • “International Business Made EZ”
  • “Self Fulfilled – How to Write to Sell”
  • Video Workshop by our webmaster David Cross,
  • The entire weekend “Writer’s Camp” in MP3
  • The report “How to Raise Money Abroad”
  • Report and MP3 Workshop “How to Gain Added Success With Relaxed Concentration”
  • The course “Event-Full – How to Earn Conducting Seminars and Tours”

This program is offered at $299, but is available to you as a club member free.  You save $299 more.

Next, club members participate in an intensive program called the Purposeful investing Course (Pi).  The purpose of Pi is finding value investments that increase safety and profit.  Learn Slow, Worry Free, Good Value Investing.

Stress, worry and fear are three of an investor’s worst enemies.  These destroyers of wealth can create a Behavior Gap, that causes investors to underperform in any market good or bad.  The behavior gap is created by natural human responses to fear.  Pi helps create profitable strategies that avoid losses from this gap.

Lessons from Pi are based on the creation and management of a Primary Pi Model Portfolio, called the Pifolio.  There are no secrets about this portfolio except that it ignores the stories from economic news (often created by someone with vested interests) and is based mainly on good math that reveals the truth through financial news.

The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets using my 50 years of global experience and my study of the analysis of four mathematical investing geniuses (and friends).

There are seven layers of tactics in the Pi strategy.

Pi Tactic #1: Determine purpose and good value.

Pi Tactic #2: Diversify 70% to 80% of portfolio equally in good value developed markets.

Pi Tactic #3: Invest 20% to 30% equally in good value emerging markets.

Pi Tactic  #4:  Use trending algorithms to buy sell or hold these markets.

Pi Tactic  #5:  Add spice speculating with ideal conditions.

Pi Tactic  #6: Add spice speculating with leverage.

Pi Tactic  #7:  Add spice speculating with forex potential.

The Pifolio analysis begins with a continual research of international major stock markets that compares their value based on:

#1:  Current book to price

#2:  Cash flow to price

#3:  Earnings to price

#4:  Average dividend yield

#5:  Return on equity

#6:  Cash flow return

#7:  Market history

We combine the research of several brilliant mathematicians and money managers with my years of investing experience.

This is a complete and continual study of what to do about the movement of international major and emerging stock markets.  I want to share this study throughout the next year with you.

This analysis forms the basis of a Good Value Stock Market Strategy.  The analysis is rational, mathematical and does not worry about short term ups and downs.  This strategy is easy for anyone to follow and use.  Pi reveals the best value markets and provides contacts to managers and analysts and Country Index ETFs so almost anyone can create and follow their own strategy.

The costs are low and this type of ETF is one of the hardest for institutions to cheat.  Expense ratios for most ETFs are lower than those of the average mutual fund.  Little knowledge, time, management or guesswork are required.  The investment is simply a diversified portfolio of good value indices.  Investments in an index are like investments in all the shares of a good value market.

Pi opens insights to numerous long term cycles that most investors miss because they have not been investing long enough to see them.

The Pi subscription is normally $99 per annum but as a club member you receive Pi at no charge and save an additional $99.

Profit from the US dollar’s fall.

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

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

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

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

This report sells for $29.95 but when you become a club member you receive the report, “Three Currency Patterns For 50% Profits or More” FREE.

Plus get the $39.99 report, “The Platinum Dip 2019” free.

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

Now there is a new distortion ready to ripen in the year ahead.

These two events are a strong sign to invest in precious metals.

I prepared a special report “Platinum Dip 2019”.   The report explains the exact conditions you need to make leveraged precious metal speculations that can increase the returns in a safe portfolio by as much as eight times.  The purpose of the report is to share long term lessons about speculating in precious metals gained through 30 years of speculating and investing in gold and silver.

The low price of silver offers special value now so I want to send you this report because the “Platinum Dip 2018” offers enormous profit potential in 2018.

The report “Platinum Dip 2019” sells for $39.95 but club members receive it free as well.

The $39.95 new “Live Anywhere – Earn Everywhere Report” is also free.

There is an incredible new economy that’s opening for those who know what to do.  There are great new opportunities and many of them offer enormous income potential but also work well in disaster scenarios.

There are are specific places where you can reduce your living expenses and easily increase your income.  Scientific research has shown that being in such places actually make you smarter and healthier.  Top this off with the fact that they provide tax benefits as well and you have to ask, “Where are these places?”.

Learn about these specific places.  More important learn what makes them special.  Discover seven freedom producing steps that you can use to find other similar places of opportunity.

The report includes a tax and career plan broken into four age groups, before you finish school, from age 25 to 50 – age 50-to 65 and what to do when you reach the age where tradition wants you to re-tire.  (Another clue-you do not need to retire and probably should not!)

The report is very specific because it describes what Merri and I, our children and even my sister and thousands of our readers have done and are doing, right now.

Live Anywhere – Earn Everywhere focuses on a system that takes advantage of living in Smalltown USA, but earning locally and globally.

This report is available online for $39.99 but International Club members receive it free.

Save $418.78… “plus more” when you become a club member.

Join the International Club and receive:

#1: The $99 Personal investing Course (Pi).   Free.

#2: The $299 “Live Well and Free Anywhere Program”. Free.

#3: The $29.95 report “Three Currency Patterns For 50% Profits or More”. Free.

#4: The $39.99 report “Platinum Dip 2018”. Free

#5: The three $19.99 reports “Shamanic Natural Health”.  All three free.

#6: The $39.99 “Live Anywhere – Earn Everywhere” report. Free.

#7: A year’s follow up subscription to the Purposeful investing course… Plus more.

These reports, courses and programs would cost $527.92 so the 2018 membership saves $117.92.

Join the International Club for $349 and receive all the above online now, plus all reports, course updates and Pi lessons 2019 at no additional fee.

Click here to become a member at the discounted rate of $349

Gary 

(1) www.treasurydirect.gov/NP/debt/current

 

Multi Currency Tip: Sell Australia & Brazil


JGAM has advised me to sell Australian dollars and Brazilian real.

I have four logical investment advisers and three who give me out of the box information.   Two of the four logical advisers (Thomas Fischer and Anders Neilsen) work at Jyske Global Asset Management (JGAM), so when JGAM sends me advice… I doubly listen.

Thomas-Fischer

Gary Scott with Thomas Fischer and Anders Neilsen

See a warning they sent me Friday and an excerpt from the Multi Currency Report I’ll send our Personal Portfolio readers this week…. outlining when to follow such advice…  explaining why I won’t now… but that many reader should.

JGAM sent me this note on Friday:  On 22 September, JGAM’s Investment Committee held an ad hoc meeting deciding to sell bonds denominated in Australian dollar (AUD) and Brazilian real (BRL). These trades have now been carried out. We sold the AUD bond with a nice profit and the BRL bond only gave us a small loss.

We took the decision to sell the bonds because of the increasing nervousness in the financial markets sparking a flight to safety in US dollar denominated Treasury bonds. We know from past experience in 2008 and 2009 that when investors run for safety then AUD and BRL can take a severe hit. Therefore, we decided to cash in and protect the funds you have entrusted with us.

Learn more from Thoams Fischer at JGAM

Here is an excerpt from the password Multi Currency Portfolio Update I’ll be sending out to our Multi Currency Portfolio subscribers.

Learn how to subscribe to our multi currency portfolio service.

The excerpt begins here.

The editor of a successful investment publication recently sent me this note:

Hi Gary, I hope all is well. We miss you guys and hope to see you soon but we know you have lots of irons in the fire..and new grandkids, etc. — so congrats!!

Just a quick question if you don’t mind — you’re always the guy I turn to with worries and I apologize for that –but how do you feel about Jyske Bank and its program in light of what’s happening in the currency markets?

My reply can provide a quick update of how I am diversifying right now.

We hope you two are well also.  All’s good here.  Busy but enjoying the Blue Ridge autumn.

We have our holdings at Jyske and our broker in London and feel comfortable with that.  Keep in mind all bonds and shares are held for your acct. so are your assets not the bank’s, plus accts are guaranteed by Danish and British Gvts. who are still both AAA.

We have greatly reduced the leverage (we were short US dollars) down to a very small amount. This reduces profit but also reduces risk.

We also are using cash in accounts to buy more real estate… currently have a four bedroom house in Lakeland, Florida under offer we’ll use as a rental.

Plus we have rentals here in the Blue Ridge as well as Cotacachi and San Clemente.

Here is our portfolio at JYSKE this time so you can see how we have spread out.

    Type          Int.    Rate    % of portfolio

Savings US  $  0.125%    5%    Currency
Savings EUR    0.125%    1%     Euro
Savings Pounds          2%     GBP

Equities

Jyske Invest Turkey     2%     Lira
JI European Equity    5%     Euro
Suntec Reit           2%     SGD
Hyflux Water            2%     SGD
Jyske Bank shares       4%     DKK
KGHM Polska Miedz (Copper Silver) 5%   PLN
Brookfield Renewable Power  5% CAD
Unicredit Itakian Bank  3%     Euro
Axel Springer AG German Publisher  Euro 2%
Sky Deutschland AG German TV   Euro 2%
Silver Wheaton Corporation Silver  5% US$

Bonds
Ishares Maci Latin Amer 5%     Mixed Latin
JI Emerging Local Bonds 4%     Mixed
JI Emergin Market Bonds    3%     Mixed
Mexican Bonos    MxnGvt  2%     MXN    Rate 8.000%   Mature 19.12.2013
Bond    Bombardier Inc.    2%     Can$        7.250%      15.11.2016
Bond    Rabobank, Nederland 4% NOK         4.000%      29.05.2013
Bond European Investment 5%    AUD         6.000%          14.08.2013
Bond Kreditanstalt Für     5%    CAD         4.950%      14.10.2014
Bond European Ivtment BK 5%    NZD         6.500%          10.09.2014
Euro Invment BK Turkey   3%    TRY        10.000%      28.01.2011
Euro Investment BK Brazil3%    BRL        11.125%          14.02.2013
Bond Brazil GVT            3%    BRL        12.500%      05.01.2016
Bond Brazil GVT            3%    BRL        12.500%      05.01.2016
Bond Euro Invment BK    3%    AUD         6.000%      14.08.2013
Bond Kreditanstalt Für   2%    NZD         6.250%      15.04.2013
Bond Euro Invment BK    3%    PLN         6.500%      12.08.2014
Bond Mexican Fixed Rate    3%    MXN         8.000%      17.12.2015

Loan                    -3%    USD     Interest rate 2.5%

End of excerpt.

Timing and strategy are the keys to long term multi currency investing so selling Australian dollars and Brazilian real will depend on  your timing, your strategy and when you bought and what you paid.. plus your current economic and investing position.

Take this advice and fit the data into your picture and consider the benefits of selling Australian dollars and Brazilian real.  Review this and your position with a financial planner because there is an added risk that for some time the Australian dollar and Brazilian real will fall.

Gary

 

Why Be a Multi Currency Investor Abroad?


Three reasons why we should all be multi currency investors abroad and can help us create an international micro business opportunity.

jgam advisors

Gary Scott meeting with his JGAM advisers Anders Nielsen and Thomas Fischer.   See how this can help you begin a business.

Listen to an interview with Thomas Fischer about the JGAM Introducer program here.

More Americans are starting their own businesses than ever before.  Necessities created by global economic evolution and the chance created by modern technology to get out of the rat race to really pursue one’s dreams have developed this huge evolutionary flow.

Readers can gain enhanced success from our online courses on how to develop any type of micro business.

If you have an idea or have started your own business, our courses can help… but if you don’t have a business idea, our turnkey business program can assist you even more.

One idea is to be an introducer to Jyske Global Asset Management.  Why bank abroad? Because there are three good reasons why one should hold assets abroad.

First, European banks have more experience in multi currency investing.

Second, European banks provide more service in multi currency investing.  Can your US banker offer you accounts in three, four even a dozen currencies and provide you loans in euro and yen?  Most overseas banks can.

Third, European banks offer asset protection.  Loss of assets through litigation and liability are major concerns on the USA.  Now there is a growing concern… government seizure of the assets of totally innocent people.

This is already a problem and as local governments have tighter budgets during the economic downturn this trend may grow.

The excerpts below from an August 22, 2011 Wall Street Journal article entitled “Federal Asset Seizures Rise, Netting Innocent With Guilty” by John R. Emshwiller and Gary Fields explains why. There is a link to the full article below and bolds are mine:

New York businessman James Lieto was an innocent bystander in a fraud investigation last year. Federal agents seized $392,000 of his cash anyway.

James Leito, far right, fought to recoup $392,000 seized in a fraud case in which his small business was an innocent bystander.

An armored-car firm hired by Mr. Lieto to carry money for his check-cashing company got ensnared in the FBI probe. Agents seized about $19 million—including Mr. Lieto’s money—from vaults belonging to the armored-car firm’s parent company.
He is one among thousands of Americans in recent decades who have had a jarring introduction to the federal system of asset seizure. Some 400 federal statutes—a near-doubling, by one count, since the 1990s—empower the government to take assets from convicted criminals as well as people never charged with a crime.

Last year, forfeiture programs confiscated homes, cars, boats and cash in more than 15,000 cases. The total take topped $2.5 billion, more than doubling in five years, Justice Department statistics show.

The expansion of forfeiture powers is part of a broader growth in recent decades of the federal justice system that has seen hundreds of new criminal laws passed. Some critics have dubbed the pattern as the overcriminalization of American life. The forfeiture system has opponents across the political spectrum, including representatives of groups such as the American Civil Liberties Union on the left and the Heritage Foundation on the right. They argue it represents a widening threat to innocent people.

“We are paying assistant U.S. attorneys to carry out the theft of property from often the most defenseless citizens,” given that people sometimes have limited resources to fight a seizure after their assets are taken, says David Smith, a former Justice Department forfeiture official and now a forfeiture lawyer in Alexandria, Va.

Forfeiture law has its roots in the Colonial days, when it was used to battle pirates and smugglers. In the 1970s and 1980s, Congress began giving law-enforcement officials power to go after the assets of other criminals, such as organized-crime figures.
The more than 400 federal statutes allowing for forfeiture range from racketeering and drug-dealing to violations of the Northern Pacific Halibut Act, according to a December 2009 Congressional Research Service report. The report shows that seizure powers were extended to about 200 of those laws in 2000 in a major congressional overhaul of the forfeiture system.

Top federal officials are also pushing for greater use of civil-forfeiture proceedings, in which assets can be taken without criminal charges being filed against the owner. In a civil forfeiture, the asset itself—not the owner of the asset—is technically the defendant. In such a case, the government must show by a preponderance of evidence that the property was connected to illegal activity. In a criminal forfeiture, the government must first win a conviction against an individual, where the burden of proof is higher.

Raul Stio, a New Jersey businessman, is caught up in the civil-forfeiture world. Last October, the Internal Revenue Service, suspicious of Mr. Stio’s bank deposits, seized more than $157,000 from his account. Mr. Stio hasn’t been charged with a crime.

In a court filing in his pending civil case, the Justice Department alleges that Mr. Stio’s deposits were structured to illegally avoid an anti-money-laundering rule that requires a cash transaction of more than $10,000 to be reported to federal authorities. Mr. Stio made 21 deposits over a four-month period, each $10,000 or less, the filing said.

Steven L. Kessler, Mr. Stio’s attorney, says there was no attempt to evade the law and that the deposits merely reflected the amount of cash his client’s businesses, a security firm and bar, had produced. Mr. Stio was saving to buy a house, he says.

It’s tough to know how many innocent parties may be improperly pulled into the forfeiture system. Last year, claimants challenged more than 1,800 civil-forfeiture actions in federal court, Justice Department figures show.

Part of the debate over seizures involves a potential conflict of interest: Under a 1984 federal law, state and local law-enforcement agencies that work with Uncle Sam on seizures get to keep up to 80% of the proceeds.

Last year, under this “equitable-sharing” program, the federal government paid out more than $500 million, up about 75% from a decade ago.
The payments give authorities an “improper profit incentive” to seize assets, says Scott Bullock of the Institute for Justice, a libertarian public-interest law firm in Arlington, Va. It’s a particular concern amid current state and local government budget problems, he contends.

Justice Department officials say the 8,000 state and local agencies in the equitable-sharing program have greatly expanded the federal government’s ability to go after criminal activities, particularly the movement of drugs and drug cash along the nation’s highways. The program is monitored to ensure seizures are handled properly, they add.

Seeming abuses occasionally emerge. In 2008, federal Judge Joseph Bataillon ordered the return of $20,000 taken from a man during a traffic stop in Douglas County, Neb. Judge Battaillon quoted from a recording of the seizure, in which a sheriff’s deputy complained about the man’s attitude and suggested “we take his money and, um, count it as a drug seizure.”

The judge’s order said the case produced “overwhelming evidence” that the funds were clean.

Jorge Jaramillo, a construction worker, says he couldn’t afford a lawyer after more than $16,000 was seized from him last year in a traffic stop. “I had all of $20 left,” he says.

In a Delaware federal-court filing, the Justice Department argued the money was related to drug dealing. It pointed to air fresheners in the car, which could mask the smell of drugs, and a fast-food bag containing cigar tobacco, which the filing said was often a sign that the cigar wrapper had been used to smoke marijuana.

The filing also said a police dog had signaled that the cash carried residue of illegal drugs. Such “dog sniffs” are a common but controversial feature in forfeitures.

Mr. Smith, the Virginia attorney, represented Mr. Jaramillo at no upfront cost. In court documents, Mr. Jaramillo, who wasn’t charged with a crime, said he was carrying the money because he was traveling to buy a car from a seller who wanted cash.

The government in May agreed to return Mr. Jaramillo’s money, with interest. Mr. Smith was also awarded $6,000 in attorney’s fees. Under Cafra, attorneys’ fees in civil-forfeiture cases are at least partially payable if the claimant wins.

Mr. Lieto, the New York businessman, discovered the frustrations an innocent party can face as he worked for months to keep open his check-cashing business after federal agents seized his firm’s working capital.

Under the law, an innocent third party generally can’t seek an asset’s return until the underlying criminal case is resolved, which can take time.

This problem that has been around for some time.  In the mid 1990s, Reason Magazine told incredible tales of seizures across the USA, from California to New Hampshire, Florida to Idaho.

An excerpt from that article (which is linked below) shows how anyone with over $100 cash was targeted for seizure:   Daytona Beach. In June 1992, the Orlando Sentinel revealed that Volusia County Sheriff Bob Vogel had created a special police drug squad which preyed upon thousands of innocent motorists driving on U.S. Interstate 95. Operating under a broadly written Florida law allowing police seizure of cash and property based on probable cause without arrests in suspected felony cases, the police engaged in pure highway robbery.

Police conduct was guided by no written rules and reviewed only by the sheriff, who controlled all funds confiscated. Any motorists stopped who had $100 or more in cash were assumed to be a drug trafficker, and their money was taken. From 1989 until the bad publicity in 1992, the squad seized more than $8 million in cash from motorists, mostly blacks and Latinos, and in only four cases did the innocent owners get all their money back.

Yet the concerns about unfair seizures may grow.  As the economy works its way through a low ebb, counties and states desperate for additional finance are encouraged to grab more.

Holding assets outside the US makes it almost impossible for assets to be confiscated without due process.   There are other benefits to holding assets in more than one banking system… added safety… increased broader and more multi currency services… but asset protection is a major reason to bank in more than one country.

This fact also creates a business opportunity wherever you live.

Gary

Our online business courses about can help anyone who has a business idea.

We provide three e-courses that can help you develop your own micro business that we designed to help you earn anywhere you live in the world.

International Business Made EZ ($299)

Self Fulfilled – How to be a Self Publisher ($499)

Event – Full How to Earn With  Your Own Seminars ($349)

For those who want a turnkey start up, we have started a program to help our readers create their own micro business working with these businesses we have used and like ourselves.   You can become an introducer, referrer, dealer or distributor to a number of businesses we recommend.

This creates really unique global business potential tied together with our communication system… training… communicating and networking.

We are starting with these five businesses first.

#1: Jyske Global Asset Management  (JGAM)
#2: Bio Wash
#3: Candace Newman Essential Oils
#4: Roses
#5: Ecuador Imbabura Export Products

After attending our International Business and investing seminar on October 7-8-9, you will be qualified to enroll for referrer, distributor and dealer programs above and any others we develop. 

Enrolling in any of our online business development courses and attending one seminar provides full qualification to apply for all programs we provide for a year.

Early enrollment for our October 7-9 North Carolina Course click here for details.

We have started the beta program, and the good news is that we are not charging a penny more more.  Our International Business Made EZ online course and our International Business Made EZ seminars remain the same price though we’ll now offer subscribers an entrance to doing business with many turnkey businesses.

The overall service can bring you the following benefits:

#1: Connect you via our our online course “International Business Made EZ” to here and now specific business opportunities.

#2: Keep you in touch with other readers in the program, share business tips, ideas contacts and even website support in some instances.

Our first turnkey business program is Jyske global Asset Management because our activities as publishers has a synchronicity with Jyske and JGAM.   We have been able to combine our training, communications and lead generation abilities with their financial organization.

An introducer does not have to be a registered as an investment adviser but JGAM does have a due diligence requirement. JGAM will also expect a certain amount of referrals per year though this amount has not been determined… hence this beta offer.

JGAM pays a percentage of their fee to the introducer up to a maximum 25% of their fee. This not only offers an excellent income generating opportunity but creates a potential long term income stream because JGAM keeps paying the fee as long as the client remains a client. Fees are paid on a quarterly basis.

There is also potential for growing long term income because JGAM pays the introducer based on the total assets under management.  If a referred client makes additional payments, the referrer will be paid on the total amount.

For example if an introducer refers a client who invests a minimum $100,000 and the annual fee is 2%, the referrer earns $500 per annum basic fee (as long as the customer remains with JGAM)… plus if the assets grow either through portfolio growth or added deposits… so too does the referrer’s fee.

We have set our first training JGAM training session for October 10, 2012.

This program will allow subscribers to any of our  online courses who have attended an International Business Made EZ seminar to become introducer for JGAM.

We have been working with Jyske Bank for over 20 years and Jyske Global Asset Management, a Jyske Bank wholly owned subsidiary. We started talking to Thomas Fischer Senior VP about an referral program for some time.  Finally,we introduced this opportunity for the first time at our June 2011 seminar.  The response was overwhelming.

Jyske Bank employs a staff of about 4,000 and operates 116 Danish branches, which makes it the second largest independent Danish bank. They offer a full range of financial solutions to retail as well as small and medium-sized corporate clients.

We have always liked Jyske because they are one of Europe’s largest currency traders and offer very simple but sophisticated multi currency investing services.  They are one of Europe’s largest currency traders and dealers.

We have especially enjoyed our business relation with Jyske because being open and honest is one of the core values of the bank group. Traditionally, Jyske formulates and communicates its values – and the way they understand and live by them – to the surrounding world. They work hard offering shareholders, customers and employees balanced opportunity.

We especially like the fact that Jyske employees are not paid bonuses.  No multi million pay outs are in the system that might temp staff to distort earnings or take undue risks.

Here is how you can apply for this program.

To start as a introducer,  there is first the compliance process with Jyske Bank.

Once that process is complete, our IBEZ system helps educate and assist the introducer.

First… once a introducer has been approved by JGAM, and the introducer has completed our online course International Business Made EZ course and attended one of our  international investing and business seminars they can attend an exclusive training seminar at our farm.

We have a…

little-horse-creek

creekside…

little-horse-creek

seminar hall where…

little-horse-creek

unless the group grows too large, we’ll meet.   We’ll have lunch  on the deck looking over Little Horse Creek.

JGAM and our company conduct this one day intensive training for introducers the day after each International Investing and Business seminar.

The first such seminar will be conducted Monday, October 10, 2011 immediately after our October 7-8-9 International Investing and Business Seminar in West Jefferson, North Carolina.

Part of the JGAM program is designed so we can assist referrers by referring readers in their locale to them.  So for example if an introducer is in Miami, we will send special emails to our readers in that area, help organize mini seminars… etc.

We can zero in as close as 20 miles to a location so for example we can send a separate email to every reader within 20 miles of the address of a referrer.  And although we won’t release the names in that area, we can send them a note of the opportunity.

We will also provide an introducer communication forum and update training as well as portfolio and investing ideas.  We have general plans at this stage but find the best way to develop systems is to refine through action. We expect our beta program this year to clarify how we can best help our readers become introducer and how we can help them succeed.

Step one is to start the compliance process with JGAM.  Thomas Fischer  can send you the Introducer Questionnaire and Terms of Business.

thomas-fischer

Thomas Fischer senior VP JGAM.

Listen to an interview with Thomas Fischer about the JGAM Introducer program here

Thomas Fischer’s email is fischer@jgam.com

This will begin the process of establishing a relationship with JGAM.  Once this relation is approved and verified, then you will be able to enroll in the introducer training.

You must complete one of the online business development courses above and attend an International Business and Investing Seminar to be eligible for the October training.

All of our readers are invited to enroll in our International Business Made EZ Online Course and our International Business and Investing Seminar at any time.

Satisfaction Guaranteed.  Three Guarantees.

There is no guarantee that JGAM will approve your application as a introducer just because you enroll in the seminar or take the online course so we make two special guarantees.

First Guarantee. Regarding the online course International Business Made EZ.  Enroll in this course. Take it and if you are not satisfied for any reason within 30 days… let us know and we’ll give you a full refund.

Second Guarantee. Enroll in our October 7-8-9 International Business & Investing Seminar.  I’ll send you a recording of the June seminar now so you better understand what these seminars are and how they help you.  If you are not happy with what you hear, let us know within 30 days and we’ll give you a full refund. You keep the recorded seminar as our thanks.

Third Guarantee.  Your earnings potential has this guarantee.  First, any time between now and October… before you attend the International Business and Investing seminar if you fail to qualify as a JGAM introducer or change your mind before attending the International Business and Investing seminar you can ask for a full refund.

Join us for our October 7-9 North Carolina Course click here for details.

Read the entire Wall Street Journal article  Federal Asset Seizures Rise, Netting Innocent With Guilty

Read Wall Street Journal article County Sheriff Enjoys Fruits of Forfeitures

Read Reason article Exclusive Justice  Good faith breeds bad cops

 

Storing Wealth Made EZ


Storing Wealth Made EZ

mcsi indices

These charts from Bloomberg.com of the Morgan Stanley World Index and

mcsi indices

and the MSCI ALL World Index shows how risky the economic world has become.

The MSCI World is a stock market index of over 6,000 ‘world’ stocks. It is maintained by MSCI Inc., formerly Morgan Stanley Capital International, and is often used as a common benchmark for ‘world’ or ‘global’ stock funds.

The index includes a collection of stocks of all the developed markets in the world, as defined by MSCI. The index includes securities from 24 countries but excludes stocks from emerging and frontier economies making it less worldwide than the name suggests.

A broader index, the MSCI All Country World Index (ACWI), incorporates both developed and emerging countries.

The volatility of these markets over the past five years shows how we have edged into an increasingly risky world.

Here are three ways to store wealth in this high risk world.

Over the past four decades global economic tensions in the USA and Europe have twisted like gigantic tectonic plates colliding at seismic faults.  Government and private debt, aging populations and huge, unfunded future obligations have slowly but relentlessly built and distorted fiscal reality while a younger emerging world grew bold and rich through low cost labor.

Finally this monetary stress unleashed an earthquake of financial reform that threatens every financial aspect of the modern world.  Banks, stocks, bonds, government debt and most currencies have all been thrown into stagflationary shock…where inflation rips purchasing power apart at the same time that wages and employment opportunities fall.

This shift has put almost every investment at risk and raises the question, “How can one store wealth in such an atmosphere?”

High Risk World

Most investments are now at risk because most savings and capital come in the form of a promise. Stocks are a promise of shared earnings and growth in business. Bonds are a promise of money used and returned with interest. Bank and savings accounts are a promise of money kept and cared for to be returned at the owners’ desire.

Currencies are promises of products and services delivered later from products and services given now.

We are in times when few promises… especially those made in terms of paper currency can be kept.

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.

Storing Wealth Made EZ

Today investors and businesses need a new mindset for storing wealth…a thought pattern that leads in new ways to  make a relentless search for diversification, necessity and value.

Here are some tips that lead to professional investing who can help you make it easy to zero in on three ways to store of wealth in the high risk years ahead.

Diversification  –  Non Correlated Investments

The first way to store value is to look beyond stocks, bonds and certificates of deposit .

Stocks, bonds and certificates of deposit are the traditional ways that most investors and savers store wealth.

These three asset classes usually offer non synchronized opportunity. Their movements are connected.  When cash investments make sense… shares and bonds may not be such good buys.  When shares are rising… bonds are falling and vice versa.

When economic and fiscal problems create systemic risk… as they are now,  the entire system is shaken and all three asset classes… stocks, bonds and cash may be at risk.

One non correlated type of investment is a managed currency or forex speculation investment.  Such investments are aimed at profiting on currency parity fluctuations which have little to do with stock or bonds so these fluctuations are not correlated to any of these asset classes.

An example is the Managed Forex Account offered by Jyske Global Asset Management in Copenhagen. These accounts offer a fundamentally managed forex service where every investor has a separate account.  This is a very low leverage service with a maximum of four times leverage depending on each individual’s risk profile.

Experienced JGAM currency traders borrow currencies they believe will fall in value and invest the loans in currencies they believe will rise versus the borrowed currency.  Then they use 24 -7 overview and stop losses to cut losses short and to let profitable positions ride.

Borrowed Currencies

Current JGAM is leveraging the account with one third US Dollar, one third Japanese yen and one third euro loans.

The dollar is weak in JGAM’s opinion because the Federal Reserve (Fed) is under no pressure to normalize policy any time soon and will keep the interest at the very low level until mid-2013.  This announcement makes the US dollar (USD) attractive as a funding currency, which should have a negative effect on the USD.

They have borrowed euro because on the other side of the Atlantic the eurozone has many unsolved debt challenges, which create a distrust of the euro. This distrust make investors sell euro (EUR).  The challenge is that both currencies cannot weaken at the same time (verus each other).

As of mid August 2011 Morgan Stanley’s (MS’s) EUR/USD target for Q3 is 1.40 and Bank Credit Analysts (BCA) predict 1.55. It is currently trading at 1.4240.

The Japanese yen (JPY) is a borrowed currency because it has strengthened so much due to the turmoil in the global economy. MS and BCA are both arguing that JPY inflows will remain substantial as long the uncertainty is intact.

However, Bank of Japan (BoJ) has intervened several times (sold JPY) in order to stem the JPY rally. BoJ has announced that it has increased the amount of its asset purchase program, which creates plenty of ammunition for further interventions. BCA is bullish on the JPY while MS is neutral to bearish.

Because of the current situation with financial uncertainty and divided expectations, JGAM decided to continue with the current loan mix, consisting of three equally weighted funding currencies.

Diversification is JGAM’s strategy and their existing currency positions (August 20, 2011) are:

The Singapore dollar (SGD) which has retracted upward lately (weaker SGD) and broke the 1.2100 resistance level against USD. However, JGAM remains confident of the SGD fundamentals and maintains their long SGD and short USD position. They are keeping their stop loss order at USD/SGD 1.2740.

The Canadian dollar (CAD) has suffered the past month and moved from 0.9433 to 0.9850 against the USD.  The sudden change in sentiment happened on the back of softening economic data and in generally weaker commodity currencies. However, the Canadian economy is outperforming its southern neighbor and Bank of Canada (BoC) should gradually normalize fiscal policy while odds of additionally Fed easing are rising. The diverging monetary policies should over time push USD/CAD lower (stronger CAD). Therefore, JGAM has kept this position.

Learn more about JGAM’s forex account for Americans from Thomas Fischer at fischer@jgam.com

Learn about Jyske for non Americans from René Mathys at mathys@jbpb.dk

 (GRV) Mars Hill Global Relative Value ETF

Another non correlated investment is the Mars Hill Global Relative Value ETF (GRV).   The goal of this ETF is to generate consistent positive returns in excess of the average annual return of the MSCI World Index using  a “Relative Value” approach to identify long positions within the major global regions that they expect will outperform the Index and an equal amount of short positions within the major global regions that they expect will underperform the Index.

This core long/short portfolio construction is designed to mitigate the directional influence of the global equity markets and instead seeks to profit from the spread between its long and short positions, which are prevalent throughout flat, rising and falling market environments.

This ETF reduces market exposure as its investments are fully hedged like a hedge fund, but as a New York Stock Exchange traded share has an open book so investors can see the high degree of risk management. The short positions offer a hedge against a decline in global equity markets, while concurrently offering an opportunity to even generate positive returns in such an environment.

The Fund employs an equal amount of long and short positions regardless of market direction so can profit whether the market is on a rise or fall.

The Fund’s Relative Value approach looks for attractive positions that bring added return and liquidity for the risk.

Because of the long/short strategy, the performance positions create a return stream that is expected to have a low correlation with both stocks and bonds.

This GRV ETF invests in many countries, sectors and industry groups to provide global diversification.

Necessity – Invest in Agriculture and Water

farm water

One reason Merri and I purchased our Blue Ridge farm is an abundance of…

farm water

spring fed water and dozens and dozens of artisian wells.

The second way to store wealth is in necessities.   No matter the state of the economy… basic necessities remain… food clothing and shelter.

Clothing perhaps can wait… but eating and drinking cannot.

Water is becoming a scarce resource yet investment in water treatment and infrastructure has been low due to artificially low prices.  This trend is changing as supply and demand realities  overwhelm political expediency.

Water is becoming a leading global commodity as the world population increases and increases the demand for clean water.  Global water demand has increased almost twice as fast as population growth in recent years.

Global population growth and water withdrawals that are already 275% higher now than 50 years ago add trillion dollar potential to this industry.

Modern farming creates the greatest demand on water for agricultural irrigation, so investments in water also are investments in food.

Investments in shares of water processing companies can provide multi currency diversification.

For example, holding just these three shares diversifies savings globally into dollars, euro and Singapore dollars!

American Water Works Co. – USA –US Dollar. This company  provides drinking water, wastewater and other water-related services in multiple states and Ontario, Canada. The Company’s primary business involves the ownership of regulated water and wastewater utilities that provide water and wastewater services to residential, commercial and industrial customers. Symbol NYSE: AWK.

 

Veolia Environnement S.A. – France – Euro.  This firm operates utility and public transportation businesses. The Company supplies drinking water, provides waste management services, manages and maintains heating and air conditioning systems, and operates rail and road passenger transportation systems.  Veolia ADRS symbol at NYSE:VE

Hyflux  – Singapore – Singapore Dollar. Hyflux is a leading provider of integrated water management and environmental solutions with operations and projects in Singapore, Southeast Asia, China India, Algeria, the Middle East and North Africa. Symbol OTC: HYFXF

water share chart

This finance.yahoo.com chart of the Water Shares Index shows that water shares are down… a short term fear based drop on a long term fundamentally sector.

For greater diversification several exchange traded funds are designed to give a diversified investment in water.

PowerShares Water Resources Portfolio (NYSEArca: PHO)

PowerShares Global Water Portfolio ETF (NYSEArca: PIO)

Guggenheim S&P Global Water Index (NYSEArca: CGW)

First Trust ISE Water Index Fund (NYSEArca: FIW)

Necessity – Shelter – Real Estate

The collapse of American real estate prices combined with rising construction costs and the fact that the USA is growing faster than any other industrialized country in the world creates an outstanding store of wealth.

Studies have shown that Americans today occupy almost 20% more developed land (housing, schools, stores, roads) than 20 years ago.  By the late 1990s, 1.7 acres — the equivalent of about 220 parking spaces or 16 basketball courts — were developed for every person added to the population.

As America’s population expands from 300 to 400 million people the next 100 million people will at present standards create 73 million new jobs, about 70 million new homes and 100 billion square feet of non-residential space.

The overhang from the overbuilding in the mid 2000s cannot supply this demand for long.

Extraordinarily low US property prices are already attracting increasing numbers of people from around the world.  For example, Visit Florida reported that visitor numbers for the second quarter of 2009 were up 6.9% over the same period as last year to about 21 million visitors.  Estimates show that US visitors increased 5.3%, overseas visitors increased 17.3% and Canadian visitors 18.4%.  About 82 million visitors spent 60 billion dollars in 2010.

One way to invest in US real estate is with a US real estate ETF.  An August 5, 2011  ETF Digest article entitled “Top 10 Real Estate ETFs” points out that: “There is currently an expanding list of nearly 20 ETFs oriented to primarily REITs (Real Estate Investment Trusts) with more on the way”.

Included in the list are:

Vanguard REIT ETF(VNQ_) follows the MSCI US REIT Index which covers about 2/3 of all REITs in the U.S. market.

iShares DJ U.S. Real Estate ETF(IYR_) follows the Dow Jones U.S. Real Estate Index which measures the real estate industry primarily through REITs.

SPDR DJ Wilshire REIT ETF(RWR_) follows the Dow Jones U.S. Select REIT Index consists primarily of REITs in commercial real estate.

Good Value Equities

The third way to store value is with good value equities. This is traditionally the best long term investment.

A long term multi currency research project by asset allocation expert, Ibbotson Associates, looked at various returns over 95 years of differing assets classes under varied conditions.

The asset classes we bonds, T-bills. Equities, Housing and Silver. Over the entire 95 years the return was:

Equities: 11.9% per annum

Housing: 6.7% per annum

Bonds: 4.8% per annum

T-Bills: 4.6% per annum

Silver: 4.2% per annum

However the results were very different when the economy was split and viewed in five different conditions, Stable. Moderate Inflation, Rapid Inflation and Deflation.  Equities outperformed all asset classes except during rapid inflation when silver performed better and deflation when bonds were the best bet.

If stagflationary trends continue (inflation and recession) the economic slowdown will add a drag to the industrial and demand side of metals making them suspect as a dependable store of value.

The easiest way to diversify in equities globally is via an ETF  that tracks one of MSCI (Morgan Stanley Capital Index) Indicies.

The MSCI World is a stock market index of over 6,000 ‘world’ stocks. It is maintained by MSCI Inc., formerly Morgan Stanley Capital International, and is often used as a common benchmark for ‘world’ or ‘global’ stock funds.

The index includes a collection of stocks of all the developed markets in the world, as defined by MSCI. The index includes securities from 24 countries but excludes stocks from emerging and frontier economies making it less worldwide than the name suggests.

A broader index, the MSCI All Country World Index (ACWI), incorporates both developed and emerging countries.

Here are two US traded ETFs that give various global equity diversification.

The iShares MSCI ACWI Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the MSCI All Country World Index.

The Rydex MSCI EAFE Equal Weight ETF seeks investment results generally corresponding to the price + yield performance of the MSCI EAFE Equal Weighted Index. The MSCI EAFE (Europe, Australasia, Far East) Equal Weighted Index equally weights the securities in the MSCI EAFE Index (MSCI EAFE Cap-Weighted Index), which is a free float-adjusted market cap index that is designed to measure the equity market performance of developed markets, excluding the USA & Canada.

Having enjoyed global financial stability for almost 60 years, the mindset of most investors has become used to stocks bonds and CDs.  These investments have been considered as safe as the Western governments in an expanding industrialized work.

Not since the 1930s, when all financial institutions were questioned, has so much of the global economic system been shaken. This puts all stocks, bonds and cash instruments at greater risk.   The three ideas above and many professional money managers can help make the process of storing wealth in this risky world safer and easy.

Gary

Learn how to get my full  Multi Currency report here.

You can learn more about ETFs from Morgan Hatfield at Ruggie Wealth. Her email is mhatfield@ruggiewealth.com

Tom Ruggie of Ruggie Wealth was featured on the Flashpoint Talk Show last week.

ruggie-wealth

See Tom Ruggie on Flash Point here.

Join Merri, me and Thomas Fischer from JGAM in North Carolina this October.