Tag Archive | "London Stock Exchange"

Are We 52 Days From Disaster?


Are most investors 52 days from disaster?

Fed charts

The peak in this chart… shows a risk that could come this year… by March 20, 2012… 52 days from now.

This chart shows how in May 2009 global banking liquidity provisions rose to such a high level that they created an unintended consequence that has the potential to wipe out many investors while it enriches just a few.  The next time of great risk will be October 2012. See why below.

This note explains why this chart represents a financial overhang that like a rock trap will ravage the finances of millions who are caught when it falls… but it will also also be a bellwether of fortunes for investors in the know.

That chart by the way is totally accurate…  pulled directly and unaltered from an article entitled “International Liquidity Provision During the Financial Crisis: A View from Switzerland” in the recently issued December 2011 Federal Reserve Review.  This is the Fed’s warning of potential upcoming economic disaster.  This is a warning which is hidden in plain sight.

There is a link below so you can read the entire Fed’s report yourself… but you may find the Federalese daunting and obscured in obtuse language (I spent two days studying just two pages to try and unravel all the implications), so let me outline here why these liquidity provisions could rip the guts out of many safe investment portfolios who follow tradition.

This outline will also unveil why huge returns will come to just the contrarians who see the risk and bet again the norm.

The fact that this danger is openly outlined is unusual but the extra quirk is that this chart was published by the US Federal Reserve Bank yet shows liquidity provisions provided not by the Fed, but by the Swiss National Bank in Swiss Francs!

To understand how this creates a problem and the investing risks that may affect us all,  let’s look first to the past.

Then we’ll see where and how the future hides the risk.

In a small way I was partly responsible for starting the problem… clear back in 1986.  Having spotted how my bankers in Europe would lend me one currency at a low rate so I could deposit it in another currency at a higher rate, we published our first version of our report “Borrow Low – Deposit High”.  The report mainly featured how to borrow low interest rate Swiss francs and Japanese yen to invest in high yielding currencies like the US dollar, British pound. French franc (this was pre-euro) Mexican peso, Brazilian real.

Before this time there were certainly big banks and institutional investors already using the tactic… later called the “Carry Trade.”   I did not invent it, not even close… but I spotted its potential early on and our reports were among the first to reach tens of thousands of investors and open this idea for the little guy… smaller, individual investors  like myself.

Investors caught on and this trend of borrowing Swiss francs to invest in higher yielding deals grew so much so that in June 1999 a mechanism was created called the Swiss Repo Market to expand the ability for banks to borrow Swiss francs so they could lend them on.

The Federal Reserve acknowledges this fact in the report “International Liquidity Provision During the Financial Crisis: A View from Switzerland” and points to the problem when it says:  The authors document the provision of liquidity in Swiss francs (CHF) by the Swiss National Bank (SNB) to banks located outside Switzerland during the recent financial crisis. What makes the Swiss case special is the size of this liquidity provision—at times, 80 percent of all short-term CHF liquidity provided by the SNB—and the measures adopted to distribute this liquidity.

In the years leading up to 2007, banks across the globe dramatically increased their balance sheet exposure to foreign currencies. This led to increased trading between banks with a need to refinance in the foreign currency and domestic banks with deposits and consequently sufficient funds to lend in that currency (i.e., extensive cross-border trading).

This idea described in the report worked well for almost a decade. Investors would come to their bank and borrow Swiss Francs.  The bank would lend the low interest francs… even if it did not have them to lend… knowing that it could cover its loan in the Swiss Repo Market.

Then came the crunch.  The Fed describes it in its report like this: With the onset of the financial crisis and the successive drying-up of the repurchase agreement (repo) market and especially the unsecured interbank money market, the private sector no longer provided this liquidity, thus requiring a coordinated action by the world’s major central banks.

This was the easy part… describing the problem.  This demand to get Swiss francs to cover loan positions was a huge financial crack that made all the other complicated economic issues worse as financial systems structures and banks crashed around the world.

The Feds report: CHF-denominated loans obtained by non – banks outside Switzerland are typically granted by non-Swiss banks that, in turn, finance themselves by borrowing from financial institutions in Switzerland.  As in all bank business, these non- Swiss banks provide long-term loans yet finance themselves on a short-term basis. Their ability to roll over maturing CHF positions became stressed when the interbank money market progressively dried up following the onset of the financial crisis in August 2007, particularly after the collapse of Lehman Brothers in September 2008.  The CHF-specific spike in the cost of obtaining unsecured funds was caused by a combination of the need by banks outside Switzerland to continuously roll over maturing interbank loans and the shrinking supply for these funds. Most Swiss banks and a considerable number of non-Swiss banks have access to the Swiss repo system—the prevailing secured money market in Swiss francs. In a calm market environment, these banks would  have immediately exploited this profit opportunity and provided unsecured funds to banks without access to the Swiss repo system.

A key ingredient of the crunch was that… most borrowers borrowed short and invested long… exactly the opposite of what they should have done.  Now they had to repay Swiss francs and the non franc assets they held were crashing.  Losses were enormous and growing.

The Fed report continues (bolds are mine): In international currency markets, any bank can potentially obtain financing in any foreign currency either by going directly to the interbank money market or by obtaining funds from its central bank and swapping the received funds into the desired foreign currency. In principle, these two methods should ensure the rate at which a currency is funded is the same.  

During the recent financial crisis, however, interbank money markets temporarily faltered.

Without access to the Swiss repo system, even banks with ample collateral could not obtain secured funding from the SNB or the secured interbank market.

There you have the crux of the problem.  The system that gave access to Swiss francs melted down. This created huge additional potential losses that could have destroyed the already weakened European (with threads back to the USA) banking system. This could have added to the downwards crush in the global economy.

Here is the Fed’s explanation in the report: The lower cross-border trading could have posed a substantial danger to the stability of the financial sector at large.  If banks across the euro zone and CEE were unable to obtain CHF in the money market, then non-Swiss banks, in turn, could try to reduce their exposure by liquidating CHF loans they had made to their clients.  Given the banking tensions at the time, this move would have driven many debtors into default and could have started a disorderly winding-down of CHF loans, with increasing default rates implying the need for additional loan-loss provisions, thereby increasing pressure to liquidate CHF exposure.  This vicious cycle could have had dire consequences for the banking system and the real economy.

The Fed and other central banks had to find a stopgap for this problem which was a bigger problem for every country because of the Swiss Franc angle.  This is also explained in the Federal Reserve report:  The drying-up of liquidity distribution in foreign currency posed a problem more challenging than the breakdown of the domestic interbank money market: No central bank, on its own, can provide a large amount of liquidity in a foreign currency in a timely manner.

So what could the central banks do?

They hung it all on the Swiss.

Here is how the Fed describes the resolution in its report:  To overcome this market friction, the SNB jointly announced with the ECB and subsequently with the Narodowy Bank Polski (the National Bank of Poland) and the Magyar Nemzeti Bank (the central bank of the Republic of Hungary) that all these central banks would directly distribute CHF-denominated funds to their counterparties.

That is what the chart above and this chart (also take unaltered from the Fed report) explain.

Fed charts

In essence the world let the Swiss National Bank become a second central bank for the European Central Bank (ECB),  National Bank of Poland (NBP),  as well as the Central Bank of the Republic of Hungary (MNB).

This worked for that moment but created a huge financial rift for the times ahead.

So let’s speed ahead into the future… now and onto May 2012.  May I first add the fact that if we get past May… we might breathe a little sigh of relief but the problem will not end there.  The next large window of risk will come in October 2012.

Anything can happen at any time but now until May is when the risks are the highest until October 2012 when risk will rise again.

This future problem is described also in the Fed’s report which says: While the exchange rate interventions were part of the SNB’s unconventional measures to avert deflation risks in Switzerland, an unintended side effect of the interventions was the resolution of the international CHF liquidity shortage:

The supply of the additional CHF 150 billion is available to the banking system on a permanent basis and, consequently, the majority of banks are awash with CHF liquidity.

Our excerpts here of this Fed report ends with: The size of the exposure has raised many concerns about the financial stability of the banking sector, given the possibility of continued CHF strength or even appreciation.

There you have it.  The problem in 2009 was the banks did not have any Swiss francs. When they lent the Swiss Francs which they did not have, this created a potential liability if the Swiss Franc rose…which it did.  The problem now is that non Swiss banks are awash with 150 billion Swiss francs and no place to invest them.

This creates an overhang that could crush traditional investors like a rock trap who follow the investing norm and pull the stick.

rock

This is why I have just created a report “The Swiss Trap” for my Multi Currency subscribers and would like to offer this report to you.

The Swiss Trap describes the problem above… includes the total Federal Reserve Report and describes what could happen in the next euro crunch…. most likely to start around March 20, (54 days from now) when Greece defaults on the 18.5 billion dollars it owes bondholders that day.

Bloomberg Businessweek described the problem in a recent report “A Greek Default: You Can Mark It on Your Calendar” that says:  Negotiations over how to shrink the Greece’s unaffordable government debt make the brinkmanship over the U.S. debt last summer look simple.

A Bloomberg report also says: ‘Disorderly Default’.   Talks between Greece’s Prime Minister Lucas Papademos, Finance Minister Evangelos Venizelos and Charles Dallara, the managing director of the Institute of International Finance, which represents private creditors, will resume Jan. 18, according to a Greek Finance Ministry official who declined to be identified.

Greece’s creditor banks last week broke off talks after failing to agree with the government about how much money investors will lose by swapping their bonds.

“We remain concerned that Greece may suffer a disorderly default in March,” Mansoor Mohi-uddin, chief foreign-exchange strategist at UBS AG in Singapore, wrote in a Jan. 14 note. “A Greek default would have a major impact on the euro as it would spread contagion to other bond markets in the euro zone.”

Contagion is the euro zone is the problem.  Greece’s default is a forgone conclusion but the worry is how far has the rot spread?  Will Portugal and then Spain also falter… perhaps even Italy and now France’s debt has been downgraded!   All these concerns could cause the euro to fall.

The Trap is Set

The falling euro will set the trap which is described in our report,  “The Swiss Trap”. This report descibes why the problem exists… the trap and  how it can destroy the savings, investment and speculations of millions of investors.

Avoid the Trap and Profit Instead

The report also describes how to avoid the Swiss Trap and earn profits with a little known investing vehicle called an ETP…not to be mistaken with the ETF.

ETPs are shares traded on the London Stock Exchange (LSE) available to all investors large and small.  Investors can invest millions or as little as $1,000.

ETPs are similar to ETFs.  The “Swiss Trap” describes the differences… and how these alternate features allow investors to profit from the 150 billion dollar Swiss Franc Overhang.  Plus this report names brokers in London and the US who can purchase these ETPs for you.

If you are a Multi Currency Portfolio subscriber, read the Swiss Trap at your password protected site here.

Not a Multi Currency Portfolio subscriber?

Subscribe to our multi currency portfolio service and get the password, Swiss Trap, free.

Gary

Here is one more way to read the Swiss Trap free now.

Enroll in our February 10-11-12, Super Thinking + Investing and Business seminars and I’ll enroll you as a Multi Currency Portfolio subscriber for a year FREE.

 

International Gold Review


This international gold review is a followup to yesterday’s message about maintaining control over your wealth.

Jyske Global Asset Management just changed its gold position so we should take a new look at gold.

Most major governments have deficits in their budget.  This forces them to borrow or print money that is not backed by productivity.  When this happens long term, the purchasing power of  money created in this way, loses purchasing power.

Any form of exchange must possess five qualities to be considered real money that will store value and purchasing power.  These five values that money must be are durable, divisible, portable, desirable and rare.

When a government creates a currency with no production to back it, then that currency loses its rarity and its purchasing power falls.

Gold is one long term way to combat the risk of a falling currency.

Gold is real money because it has all five qualities of real money.

Make no mistake… when it is rare… paper money is better money than gold… because it is more divisible and portable.   Electronic money available in a credit card is even better… the most portable and divisible of all… IF THE CURRENCY MAINTAINS ITS RARITY.

Regretfully for the dollar, euro, yen and many other major currencies, this has not been the case…  so gold still has a place in our portfolios.  Gold as a commodity fits the five standards best of all and for thousands of years has been used as a form of money.

In a moment we’ll look at what might happen to the price of gold in the months ahead.

First, because many readers have asked about bringing gold into Ecuador, I checked with out attorney Andres Cordova in Quito.  Here is his reply: Dear Gary:  After reviewing applicable legislation, we’ve found that there is no restriction on the introduction of gold or coins to Ecuador.

The introduction of such, however, does carry a tariff that is to be charged in accordance to weight or monetary amount. Furthermore, there’d need to be a customs filing in which the gold presentation is to be declared, such as ingots, jewelry, dust, etc. Furthermore, an explanation of where does such gold / coins come from needs to be consigned in such form. If gold is brought with the traveler, then such must be specified in the customs form that each passenger gets before landing in Ecuador.

Gold and coins would pay a tariff of 0.5% and 12% VAT.  However, if we could know exactly what the person intends on bringing to Ecuador we can better review applicable taxes and tariffs. Best regards,  Andres

For those that want physical gold in Ecuador, there is gold mining in Ecuador and are gold dealers. I do not know any  personally. But there are many places with signs that they buy gold. I am researching this and will post a password protected message for our Ecuador Living subscribers.  You can subscribe to Ecuador Living so you’ll receive this report when it is published.

There are three other ways to hold gold than in bullion and coins. These alternatives are less expensive than bullion and avoid the hassle and dangers of carry heavy, valuable precious metals on your person and across borders.  Plus they avoid this Ecuador tax.  We’ll review these options after we examine what might happen to gold’s price in the days ahead.

This article is from the Asset Strategies Alert:

When gold breached the $1,000/oz mark in February of 2008, the mass media were full of reports of unprecedented coin demand and long wait times for bullion buyers. You couldn’t open the paper without seeing a piece about the gold rush.

Although the press has now set gold aside for hotter stories, I can tell you demand for gold coins continues at unprecedented levels worldwide, and production is still struggling to keep up. Take a look at these recent reports:

Sales of the Austrian Philharmonic gold coin soared 544% in the first two months of 2009 (vs. the same period the year before), with production at the country’s mint running quadruple its usual volume.

The demand for Krugerrands is at its highest level since 1986. The South African refinery recently doubled production of blank gold coins to 20,000 ounces per week.

China, now the fastest-growing market for gold, saw 2008 sales (measured in dollars) rise by 50% over the year before – and total sales in January 2009 were one billion yuan (US$146 million), 30% more than all of last year.

The U.S. Mint sold 193,500 one-ounce gold Eagles in the first seven weeks of 2009 – equaling the number shipped in all of 2007 and about matching the first half of 2008.
Russia’s Sberbank says it has “never seen such strong demand for investment coins.”

Swiss banks just reported they are running out of secure storage space for gold bullion held by investors and institutions in their vaults.

I have worked with Michael Checkan at Asset Strategies International, Inc. for many decades and any time I think of gold, I think of him.

Michael’s firm offers one of the the three gold alternatives… Precious Metals Certificate Programs.

Precious metals can be purchased and stored on your behalf through the Perth Mint Certificate Program.  This program offers storage for gold, silver, and platinum at the Perth Mint in Western Australia. This is the only government guaranteed precious metals program in the world… fully backed by the government of Western Australia, and has operated continuously from the same location for over 100 years.

This is an easy and low cost way to hold metals overseas.  You can learn more about these certificates from Asset Strategies with a toll-free call 1-800-831-0007 or 301-881-8600 or visit their website www.assetstrategies.com.

See an interview with Thomas Fischer of Jyske Global Asset Management and Rich Checkan of Asset Strategies here.

Jyske Global Asset Management (JGAM) agrees that gold is a good asset now.  All of JGAM’s portfolios  were overweight in gold last time I reviewed them. . The low risk portfolio had about 5% in gold…. medium risk about 9% and the high risk portfolios were holding about 15% gold.

However JGAM does not invest in physical gold or even undivided bullion. They invest in the ETFS Physical Gold shares.  This is a share traded mainly on the London Stock Exchange  (code PHAU) but also trades on Deutsche Borse (Xetra), NYSE-Euronext, and Borsa Italiana.

The ETFS Physical Gold provides an easy, simple, cost-efficient and secure way to access the
precious metals market.  This share provides a return equivalent to movements in the
gold spot price less fees because the shares are backed by physical allocated metal held by the
Custodian (HSBC Bank USA N.A.).  All the gold held are good delivery bars.

This is a very practical way to own gold, because you can buy the shares direct from any stock broker.   The shares are transferable or sold in the market.  These shares trade on the stock markets just like an equity and their pricing and tracking operate similar to an Exchange Traded Fund except the share tracks the price of physical gold, not a portfolio of equities.

Here is the five year simulated price of these shares from the fund’s fact sheet.

gold-chart

Other ETfs that invest in physical gold are SPDR Gold Shares (GLD) listed on the New York Stock Exchange  in November of 2004, and traded on NYSE Arca since December 13, 2007, as well as  Singapore Stock Exchange, Tokyo Stock Exchange and the Stock Exchange of Hong Kong.

Here is a chart of the SPDR five year performance.

gold-shares

Another ETF that invests in gold is iShares Comex Trust (IAU).

I have just competed a full gold report for our multi currency subscribers that provides a  third alternative to gold bullion and coins.

In the multi currency gold report, I describe the recent change in JGAMs gold position, the profit they made and how Jyske Bank Private Bank and Jyske Global Asset Management can buy gold alternatives.

You can subscribe to our multi currency service and get this report here.

Deficit spending by the major governments around the world has reduced the integrity of the world’s currency system. All currencies risk losing purchasing power.  Gold long term is one way to combat this risk.

Gary

The greatest asset of all is the ability to earn wherever you live, which brings everlasting wealth.

This is why we offer our course Tangled Web… How to Have an Internet Business.

A clear mind and healthy body are also a vital assets… plus a second language is a powerful diversification tool.

This is why I am giving everyone who enrolls in our North Carolina or Ecuador International Business & Investing seminar in October or November our “Tangled Web… How to Have an Internet Business Course” (offered at $299) free.

Here are comments from a reader about the way we help:  Thank you for your inspiration and information outlining foreign banking and retirement.  Your comments and suggestions are welcome for planning the steps to evaluate the early stages of living abroad.

Sept. 17-21 Ecuador Super Thinking + Spanish Course

Sept. 23-24 Imbabura Real Estate Tour

Sept. 25-28 Ecuador Coastal Real Estate Tour

Join us with Jyske. Learn more about global investing, how to have an international business and diversification in Ecuador at the seminar.

Oct. 9-11 IBEZ North Carolina with our webmaster  David Cross & Thomas Fischer of JGAM

October 16-18 Ecuador Southern coastal tour (early sign up before Sept. 1, $499 per person).

Oct. 21-24 Ecuador Import Export Tour

Oct. 25-26 Imbabura Real Estate Tour

Nov. 6-8 IBEZ Ecuador Seminar

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

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

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

Otavalo & Cotacachi Ecuador Food & Pie


Otavalo & Cotacachi Ecuador food is great.

Otavalo pie is magnificent!  This is Torte de Fresa or Strawberry Pie.

Otavalo-cotacachi-ecuador-food

More on Otavalo & Cotacahi Ecuador food… plus a vitally important Spanish lesson (so you will never starve in Ecuador) in a moment.

When Merri and I moved from South Florida about a dozen years ago, one of our great regrets was the distance this added between us and Flora & Ella restaurant in LaBelle, Florida.   This restaurant was started in 1933, by two sisters, Flora & Ella.   The developed a simple place…soda fountain style  where families would congregate and eat good food… and unbelievable pie.  Merri and I used to drive the hour from our home just for a slice.

Though the sisters are no longer there and the establishment as moved to a new building. It still is still a great restaurant…  nothing fancy  except the pie.

Last time we were there, a slice was $2.50. I don’t know the price now. I mourn few things… but missing that pie… sigh.

Some things in America, especially in small town America, have not changed like Flora and Ella.

However much has changed in the US and has been changing since 1969 as evidenced by Don McLean’s  1972 song  “Bye-bye, Miss American pie. Drove my Chevy to the levee, But the levee was dry. And them good old boys were drinkin’ whiskey and rye .”

Prophetic words written long ago but applying to American economics today.

Regrettably the Chevy should have been left on the levy rather than rescued by the government to the tune of billions and rising.

The levy may have been dry then but now it is awash with dollars printed by the Fed without any productivity or backing behind.  However, this creates opportunity in medium and long term gold investments.

There are others ways to have your pie and eat it too.

This growing flood of dollars has reduced its purchasing power. Those of you who remember the 25 cent piece of pie and 10 cent cup of coffee have seen what this means.

Yet I am pleased to announce that you can still have American pie (and at bargain prices) even when you are in Ecuador in Otavalo at…

Otavalo-cotacachi-ecuador-food

Shanandoa Pie Shop on the Plaza des los Ponchos market.

There is a story here… like Flora and Ella. I do not know it… but what I do know is that the pie is almost exactly the same as in La Belle… and delicious at a buck for a huge slice.  Here is the owner and her helper.

Otavalo-cotacachi-ecuador-food

Here is the vital Spanish lesson.  Torte = Cake or Pie.  Or you can also just say “pie”.

I took some shots at The Shanandoa to help with the lesson.

Torte de Manzanilla = Apple Pie.

Otavalo-cotacachi-ecuador-food

Torte de Moira = Blackberry Pie.

Otavalo-cotacachi-ecuador-food

Torte de Naranjilla = Naranjilla Pie  (like lemon meringue).

Otavalo-cotacachi-ecuador-food

Torte de Chocolate = Chocolate Pie.

Otavalo-cotacachi-ecuador-food

Torte de Banana = Banana Creme Pie.

Otavalo-cotacachi-ecuador-food

Now to my way of thinking you know most of  the important Spanish words required to survive. I have discovered that enthusiastic finger pointing works as well.

You also know why it might make sense to buy gold when it is below $900 an ounce.

Until next message, may all you investments and pie be golden!

Gary

How We Can Serve You

How to Have Real Safety

garyheadshot

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

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

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

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

motif

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

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

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

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

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

Fwd: keppler

Michael Kepler CEO Keppler Asset Management.

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

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

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

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

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

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

Here is the Pifolio I personally use.

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

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

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

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

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

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

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

dr richard smith

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

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

The SSI tells you one of five things:

Screen Shot 2017-08-08 at 6.51.59 AM

Screen Shot 2017-08-08 at 6.52.12 AM

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

How SSI Alerts Are Triggered

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

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

tradestops

Equal Weight Good Value Developed Market Pifolio.

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

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

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

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

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

tradestops

iShares MSCI United Kingdom ETF (Symbol EWU)

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

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

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

No  one knows the answer to this question.

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

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

What you get when you subscribe to Pi.

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

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

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

You also receive two special reports.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

seminars

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

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

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

stock-Charts

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

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

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

Details in the online seminar include:

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

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

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

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

keppler asset management chart

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

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

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

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

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

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

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

Save $468.90 If You Act Now

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

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Triple Guarantee

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

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

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

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

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

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

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

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

Gary

Multi Currency Paths of Opportunity


Multi currency paths of opportunity come in totally unique ways.

For example I have been looking for multi currency investments in Asian currencies.

The path that has led me to a Malaysian share has included a combination of experience, alertness, intuition, our own specific knowledge and contacts and good luck.

A circuitous multi currency route led me to shares in PureCircle a Malaysian company traded on the London Stock Exchange.

Pure Circle sells Stevia to Pepsi Cola and Coca Cola.

Let’s look at how I came to see potential in these shares in the hopes that studying my approach will help yu understand the process better so you can adapt the process to better fit your individual circumstances.

First, this path (to PureCircle) began because I have known about for Stevia for quite some time.

I wrote about it at this site in an article entitled Three Foundations of Health in the Fall in September 2002.

Second I know that blood sugar problems and diabetes are huge Western problems. Problems create opportunity. This is why we looked at the Danish pharmaceutical company Novo Nordisk that specializes in insulin in June (2008). Plus again in another June article Multi Currency Equity Investments.

I also know that the natural health industry is growing. I wrote about this as early as July 2003 at Healthy Investing=Wealth #7

That is the past me…some ideas I believe in. Ideas that create convictions…that could help me invest

Then there is chance…in this case an article I wrote two weeks ago that mentions stevia. The article is entitled Protein Blackberry Pie Recipe

Plus there are my unique contacts…in this case my friend and London stock broker Barrie Martin. He wrote:

“Gary, Your cobbler recipe prompts me to send you details of a new war in the soft drinks industry over Stevia. Kind Regards Barrie”

Barrie included an August 6, 2008 article by Sarah Hills entitled “PureCircle could be winner in Pepsi v Coca-Cola stevia wars”

The article says:

“As both PepsiCo and Coca-Cola gear up to launch beverages sweetened with stevia, it could be that their common supplier, PureCircle, is the real winner in the race to be first to market.

PureCircle, a Malaysian company has just signed long-term contracts to supply PepsiCo and its partner the Whole Earth Sweetener Company with its all-natural, zero-calorie sweetener, Reb-A, under the PureVia brand. In addition, it has been granted an exclusive license to market Reb-A as PureVia as long as there is no conflict of interest, according to Peter Milsted, sales and marketing director at PureCircle.

This is on top of PureCircle’s contract to supply Cargill, which teamed up with Coca-Cola to develop their own stevia-derived product called Truvia in response to strong consumer demand for low-calorie products.
The beverage giants are preparing to launch drinks sweetened with stevia, which is permitted for sale in the US as a dietary supplement on the basis of its low glycemic index, but is yet to be generally recognized as safe (GRAS) by the US Food and Drug Administration (FDA) for use in beverages.

However, Milsted told FoodNavigator-USA.com: “We are absolutely assuming that this product will be free to use in the USA from here on in.

“We supply high purity Reb-A both to Cargill and to PepsiCo. We started off with an exclusive contact with Cargill. That ended a few weeks ago. We have extended the contract for a further length of time on a non-exclusive basis.

He explained that it had been the company’s strategy initial to be a “market maker as oppose to being part of somebody’s supply chain”.

Milsted said that Cargill was happy to accept the change in contract as long as it was assured of continued supply, which reflected PureCircle’s ability to “supply consistently and at serious volumes”.

Likewise, he claimed that PepsiCo was happy for PureVia to be exploited as widely as it can, as long as it wasn’t used in areas of competition, such as similar drinks.

And he predicts that other companies will follow their lead and use Reb-A as a sweetener.

Milsted said: “We aim to carry on and make the investments that we have made already in our supply chain and are continuing to make, and that they lead to large contracts with large suppliers.

“We are talking pretty much with every food and beverage manufacturer that anybody has every heard of and the interest is strong and genuine.”

Supply volumes

In November PureCircle said it would float on London’s AIM in a bid to raise $50m to expand Reb-A (Rebaudioside-A) sweetener production and secure an advantage in anticipation of an explosion in demand.
The company said at the time that global annual consumption of sugar and all other sweeteners was an estimated 150m tonnes. PureCircle’s Reb-A accounted for just 0.2 per cent of this volume (0.3m tonnes).

The company owned a 55 per cent stake in a subsidiary called Ganzhou Julong, which is involved in large-scale stevia plantation and production of crude extracts. PureCircle believed its capacity for crude stevia extraction was the largest in the world at 1000 tonnes of crude extract are produced per annum.

By the end of this year it predicted that it would increase this to 3000 tonnes per annum.

Stevia market

Reb-A is the sweetest, purest part of the leaf from the South American stevia plant, which is approximately 200 times as sweet as sugar.

The US market for stevia is estimated to be worth about $60m, a figure analysts say could triple if FDA GRAS is granted. Currently the biggest markets for stevia are Japan and Korea.

Whole Earth, a subsidiary of Merisant Company, has submitted a notification and supporting scientific data to the US Food and Drug Administration (FDA) that PureVia is generally recognized as safe (GRAS) for use in beverages, foods and tabletop sweeteners.

The US’s largest supplier of stevia, Wisdom Natural Brands, announced in June that it is launching the natural sweetener beyond the dietary supplements aisle for the first time, after having self-affirmed its version of stevia – Sweet Leaf – as GRAS. It said at the time that the ingredient will be available in a soda or food products by the year’s end.

Coca-Cola and Cargill also recently published science backing their ingredient, Truvia.

Last week PepsiCo told FoodNavigator-USA.com that it would prefer to wait for FDA approval before bringing PureVia to consumers in the United States. But it will debut in a new nutritionally enhanced PepsiCo beverage called SoBe Life, to be launched in Latin America, starting with Peru next month. It will then be rolled out globally.

There you have it…ideas about health…ideas about the future of health and natural health…a friend who is a stock broker and an article about blackberry pie. These ideas are all magnified by the marketing powers of Coke and Pepsi.

The entire natural health industry has failed to mae stevia a public name. These two soft drink manufacturers can.

This is not a formula you will find in any book on investing.

This is a unique path that has led me to consider a share.

We will all have unique paths that lead us to investments we can consider.

We cannot and should not buy them all. So at this stage we have the good value test to conduct.

Remember what we look for are shares of:

#1: Well managed companies.

#2: In growth industries.

#3: Available at a good value.

#4: With rising earnings.

#5: That have captured the attention of the market (ie price is already on the rise).

You can gain a good value evaluation of the PureCircle shares as a Multi Currency Portfolios Course subscriber.

Gary

Join me with Jyske Global Asset Management to learn more about value investing.

International Investing and Business Made EZ North Carolina

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