Tag Archive | "Money"

Three Trillion and Rising!


The June, 2020 US Budget Deficit was the highest monthly gap ever.   The deficit for the month was $864 billion.  To put that into perspective the 2019 deficit for the year was $984 billion.

The Wall Street Journal article “Coronavirus Spending Pushes U.S. Budget Deficit to $3 Trillion for 12 Months Through June” states that as a share of GDP, the deficit is on pace to be the largest since World War II.

The U.S. budget deficit reached $3 trillion in the 12 months through June as stimulus spending soared and tax revenue plunged, putting the federal government on pace to register the largest annual deficit as a share of the economy since World War II.

As a share of gross domestic product, the 12-month deficit came to 14% last month, compared with 10.1% in February 2010, when the U.S. was still recovering from the last recession.

The Congressional Budget Office has projected the annual deficit could total $3.7 trillion in the fiscal year that ends Sept. 30. But the gap could widen even further if Congress and the White House agree later this month on another round of emergency spending, which economists argue is vital to keep households and businesses afloat until the economy begins to recover.

I modified (in red) this Federal Reserve chart that shows US annual deficits for the past 120 years.  The off the chart projection of  $3.7 trillion deficit for 2020 is almost triple either of the worst previous deficits of 2009 (1.4 trillion ) and 2010 (1.2 trillion).

deficit

Federal deficits typically widen in times of recession and narrow when the economy grows. This time, the deficit was already rising even though the US economy was in the final years of the decade long expansion that ended in February 2020 following the Trump administration’s sponsored tax cuts of 2017.

That was bad enough but then the pandemic sent federal spending on a downwards spiral.

My fear is that the worst part of this problem is that even the idea of taming deficits has faded in Washington.   Politicians have decided that as long as global demand for U.S. Treasury assets keeps borrowing costs at historic lows, that its better to avoid austerity now and let the future worry about the debt.

Despite the surge in government borrowing, the net interest costs fell 11% in the first nine months of the 2020 fiscal year.  The low interest rates are all that stand between the world’s financial structure and inflationary disaster.

The Fed chart above also shows how the government stared getting hooked on deficits in the late 1960s and the idea accelerated in the early 1970s after the US dollar was unhinged from the gold standard.

The borrowing has gone on so long that the global economy has come to depend on US deficits.  Yet the repetition of an error does not make it a reality.

Yuval Noah Harari, wrote in his book, “Sapiens: A Brief History of Humankind”: “Biology enables, Culture forbids.”

Part of our biology is that for every action there is an opposite and equal reaction.  Balance of supply and demand is essential and crucial in all of nature. The balance of nature keeps all system in a stable equilibrium. Even a small change (the size of a particular population, for example or monetary supply) will be corrected by some negative feedback that bring the system back to its original “point of balance”.

Money is one of humanity’s greatest achievements.  We have trust that our work and sacrifice now can be stored  in money so we can be repaid in the future. 

The key to this global balance is trust.  The question of how much debt the world can shoulder requires a complicated answer, and no sane investor should ignore the risk potential that comes with the ever growing US (and global) government debt.

Gary

Add Safety & Get Paid 154% More

Get paid more now!

Current markets have turned economic history upside down.  Normally bonds pay the highest interest rates and add safety to a portfolio.  Not right now.

This chart from the New York Times article “The Mystery of High Stock Prices” (1) shows that equities pay a higher yield than bonds.

wsj.com

Most Important, Get Paid the Most Now!

Just because US stocks pay more than dollar denominated bonds, does not mean they offer the best income deal.  In fact the chart below shows that US shares pay one of the lousiest yields of the 46 stock markets we monitor around the world.

The US MSCI Index pays a modest 1.91%.  That’s a terrible yield, but better than the 1.6% you can get in AA rated corporate bonds.

Nine solid, top value stock markets (shown below) not only add diversification and the best long term profit potential, they pay 71% higher yield, 3.27% compared to the US yield of 1.91%.

This is why my core stock portfolio consists of a handful of top value share ETFs and this position has hardly changed in five years. 

Let me explain why this strategy adds safety, increases long term appreciation potential and pays almost double short term income right now.

In a moment, I’ll show how to push that yield to 4.07% per annum without adding additional risk.

keppler62020

During the past five years, I have been steadily accumulating the same good value ETFs.  I have traded only three times, so my trading costs, my fuss, fiddle and time spent have been kept to an absolute minimum.

I have been investing in iShare country ETFs.  Each one invests in the MSCI Index of one of the top (or neutral in the case of Canada and Australia) value markets above.

My strategy protects against stock market volatility and yet has potential for the best gains long term from rising share prices by holding an equally weighted portfolio of the best value based country ETFs.

The Purposeful Investing Course tracks 46 stock markets around the world into determine which markets offer the best value.

Since no one knows what the future will bring, investing in value makes the most long term sense.

Plus Value ETFs are Safer

The people who dominate stock markets include a pack of thieves.  This fact has always been true.  We were recently reminded of this fact when Wirecard AG, one of Europe’s most prestigious companies, listed on Germany’s premier stock-market index, the Dax 30 fooled everyone including its top grade, longtime auditor, Ernst & Young GMBH.

The shares in German fintech company Wirecard AG (symbol WDI fell 63.74% as it filed for insolvency proceedings, after revealing that more than $2 billion in cash missing from its balance sheet was all a fraud.  The company’s market value fell to less than €500 million from almost €13 billion in a week.

Investors have seen this type of rip off again and again, really big scams from Enron to Bernie Madoff and these are just the tip of the iceberg.

Shares in stock markets are manipulated all the time.  Stock markets (in fact almost all types of markets) are led by sharks plain and simple.  Count on this fact.  This is the nature of the beast and the number one goal of many big businesses is to take as much of your money as they can to line their pockets.

In the Wirecard AG example many  thousands of investors have seen their hard work, their thrift, their security and hopes for the future disappear, even though they seemingly did everything right by investing in a blue chip, new era, high tech company.

A study of 92 years of investment returns shows that, despite the fraud and cheating and deceit, stock markets are still a good way to make your money grow… if you invest long term and diversify.

keppler

Our Pi strategy makes it harder for cheaters to grab your wealth because it’s very hard to manipulate an entire stock market, much less a dozen or so stock markets around the world.

Manipulators have a hard time tricking an entire market, especially larger markets.  If you get the best value country ETFs, your chances of long term profits improve.

Our Purposeful Investing Course (Pi) teaches an 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.

Sticking to math based stock market value and country ETFs eliminates the need for hours of research aimed at picking specific shares.   Investing in an index is like investing in all the major shares of the market.  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 Pi portfolio consists of iShare Country Index ETFs managed by Black Rock, Inc.

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.

I am updating my plan to increase my average yield to as much as 4.07%.

My developed market portfolio has been diversified into nine developed markets: Austria, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

iShares Country ETFs make it easy to invest in each of the good value markets.

The average yield of these nine markets combined was 3.27% as of June 2020.  By replacing the three lowest yielding markets, Austria (.64%), Germany (1.83%)  and Japan (2.51%)  with two better yielding neutral markets Australia (4.57%) and Canada (3.54%) the average annual yield on the entire portfolio rises to 4.07%.

4.07% is 154% higher than the 1.6% you can currently earn on AA rated corporate bonds!

The ETFs provide higher income and incredible diversification for safety, plus the highest long term profit potential.

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

There is an iShares country ETF for almost every market.

Here’s how you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.  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.

You also receive a 100+ 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 of all 46 markets.

This year I will celebrate my 52nd anniversary of global investing and 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 the Pi course.

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.

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%.

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 $124.50 off the subscription.

Guarantee

Enroll in Pi.  Get the basic training, the 46 market value report and access to all the updates of the past two years, plus all new updates over the next year.

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 in the first two months for a full no fuss full refund.

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

Due to the COVID-19 pandemic we have cut the subscription to $174.50.  You save $124.50!

Then because this global recovery from the pandemic is going to take years, we’ll maintain your subscription at just $99 a year rather than $299.  Your subscription will be autorenewed in 2021 at $99, though you can cancel at any time.

Click here to subscribe to Pi at the discounted rate of $174.50

Subscribe to Pi today and you get a year’s subscription to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.

Gary

(1) www.nytimes.com: mystery of high stock market prices

(1) www.wsj.com: Coronavirus spending pushed- US June budget gap to 864 billion

Inflation or Deflation


The very large and sudden drop in global commercial activity has dramatically reduced government revenues.

This has created fiscal shortages… everywhere… city, county, state, national… globally.

The New York Times article “Poor Countries Face a Debt Crisis ‘Unlike Anything We Have Seen” (1) points out that  emerging countries are especially troubled.

The article says: Dozens of countries that borrowed from private investors have debt payments coming due as their economies have crashed because of the coronavirus.

The president of Tanzania has called on “our rich brothers” to cancel his country’s debt. Belarus veered toward a default when a promised $600 million loan from Russia fell through. Russia couldn’t spare the money because the ruble had taken a nose-dive, along with oil and gas prices. Lebanon, troubled even before the pandemic, has embarked on its first debt restructuring. And Argentina has defaulted again — for the ninth time in its history.

inflation

Developing country debt is a global problem because the economy is global.

Developing countries owe record amounts of money to investors, governments and others outside their borders.

The pandemic is making it difficult, if not impossible, for that debt to be repaid or even serviced.  Governments are indebted for billions of dollars in interest and principal repayments.  These payments have actually risen due to weakness in the poor countries’ currencies.

More poor countries will default on their debt than have in the past four decades.  This is a problem for the world because the money was owed to richer nations and private investors around the world.   In essence, that money is gone.

Richer nations such as the U.S. have the same problem in a different way.

The basic problem is still not enough money to service and pay back debt.

Poorer nations solve the problem simply by not paying.  Richer nations print more money instead.

inflation

A New York Times article “US Debt and Corona virus” (2) explains how this works,

The article says: Last week, a bipartisan group of 60 members of the U.S. House of Representatives sent a letter to congressional leadership, raising concerns about mounting debt and deficits that have come as a result of the federal government’s response to the coronavirus pandemic.  The letter warned of “irreparable damage to our country” if nothing is done to stem the tide of red ink.

The article then reveals what it calls a deficit myth: “that America’s debt and deficits are on an unsustainable path and that we need to develop a plan to fix the problem”.

The author of this article is a proponent of Modern Monetary Theory.  He is a former chief economist for the Democrats on the Senate Budget Committee and is intimately familiar with how public finance actually works.

He does not believe that the federal government needs to manage its finances in ways that holds spending in line with revenues and avoids adding debt whenever possible.

He believes that a crucial reality is  that governments in nations that maintain control of their own currencies  such as Japan, Britain and the United States, and unlike Greece, Spain and Italy — can increase spending without needing to raise taxes or borrow currency from other countries or investors.

The way sovereign debt has been allowed to rise, while interest rates have fallen, provides some merit to this thought.

The article points out the only restraints to MMT.

That doesn’t mean they can spend without limit, but it does mean they don’t need to worry about “finding the money,” as many politicians state, when they wish to spend more. Politics aside, the only economic constraints currency-issuing states face are inflation and the availability of labor and other material resources in the real economy.

The article also included a story about a man who wanted his two teenagers to work around the house, the yard mowed, the beds made, the dishes done, the cars washed and so on. To encourage them to help out, he promised to compensate them by paying for their labor with his business cards.

“Why would we work for your business cards?” they told him. So instead of offering to compensate them for volunteering to work he demanded a payment of 30 of his business cards, each month. Failure to pay would result in a loss of privileges: no more TV, use of the swimming pool or shopping trips to the mall.

The man had essentially imposed a tax that could be paid only with his own monogrammed paper. And he was prepared to enforce it. Now the cards were worth something. Before long, the kids were tidying up their bedrooms, the kitchen and the yard to maintain the lifestyle they wanted.

This, broadly speaking, is how our monetary system works. It is true that the dollars in your pocket are, in a physical sense, just pieces of paper.

This year our government has been showing us — in practice — exactly how M.M.T. works: It committed trillions of dollars this spring that in the conventional economic sense it did not “have.” It didn’t raise taxes or borrow from China to come up with dollars to support our ailing economy. Instead, lawmakers simply voted to pass spending bills, which effectively ordered up trillions of dollars from the government’s bank, the Federal Reserve. In reality, that’s how all government spending is paid for.

This will eventually bring inflation which  is too much money and too little production.

The shift of our global economy from broadband to broadcast, to a computer driven internet linked, modality has increased productivity by a quantum leap.  This helped keep inflation in check while government deficits rose over the last two decades.

This productivity boost cannot be relied on forever.  As governments increasingly use MMT, the reality of the economic constraint, inflation, is more likely to kick in, so beware.

No one knows the limits of MMT, but when reached inflation will rise, interest rates will go up, and taxes will have to be increased to service the huge debt.  The stock market will likely weaken then, so when you invest now, be sure to invest in good value.

Gary

Coronavirus and the Stock Market Round Two

Coronavirus and the stock market.  Round Two is coming.

This virus and the market faced off in the spring.  The market won.  As the chart below shows, after a huge March 2020 collapse,the DJIA is almost back to its December 2019 level.

stocks

The market’s back up, but history suggests that we’ll see volatility in the ten years ahead.

Here is a chart of the Dow Jones Index for the past three decades.  The .dotcom bubble burst just before the beginning of the 2000 decade.

microtrends.com

The market then went nowhere from 2000 to 2014.   Finally it started reaching new high levels.

Such decades long sideways movement after a severe correction is nothing new in the stock market.

So everything’s in order… except the pandemic.  The ravages of the coronavirus dramatically increase the unknown and this uncertainty is the greatest purveyor  of weakness that a stock market can have.

Such delays have profound implications for older generations who may need to cash in equities for income.  How do we maximize the return on your savings and investments during this extremely dangerous time?

For the past five years, my strategy, to protect against the next stock market crash and yet gain income and appreciation from rising share prices is to invest in an equally weighted portfolio of the value based country ETFs.

We track 46 stock markets around the world in our Purposeful Investing Course (Pi) to determine which markets offer the best value so we can be in a perfect position to take advantage of stock market corrections all over the world.

Since no one knows what the future will bring, investing in value makes the most long term sense.

Our Purposeful Investing Course (Pi) teaches 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.

Sticking to math based stock market value and country ETFs eliminates the need for hours of research aimed at picking specific shares.   Investing in an index is like investing in all the major shares of the market.  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 Pi portfolio 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 held at the beginning of 2019.  Now I am updating my plan to decide when it’s best to invest more.

70% is diversified into developed markets: Austria, Canada, China, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in emerging markets: Brazil, Chile, Colombia, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the good value markets.

The ETFs provide incredible diversification for safety.  For example, the iShares MSCI  Japan (symbol EWJ) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Japan Index which is composed mainly of large cap and small cap stocks traded primarily on the Tokyo Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Japan so an investment in the ETF is an investment in hundreds of different Japanese shares.

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

There is an iShares country ETF for almost every market.

You can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (Pi).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

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.

You also receive a 100+ 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.

This year I will celebrate my 52nd anniversary of global investing and 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.

Those five decades of experience have taught me several incredibly valuable lessons.

The first lesson is that there is always something we do not know.

The second lesson is that stock market booms and busts always eventually return to value.

Third, the only sure way to succeed is to use time not timing.

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.

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%.

Subscribe to the first year of The Personal investing Course (Pi).  The annual fee is $299, but during the pandemic to introduce you to this online course  I am knocking $124.50 off the subscription.

Guarantee

Enroll in Pi.  Get the basic training, the 46 market value report and access to all the updates of the past two years.

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 in the first two months for a full no fuss full refund.

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

Due to the COVID-19 pandemic we have cut the subscription to $174.50.  You save $124.50!

Then because this global recovery is going to take years, we’ll maintain your subscription at just $99 a year rather than $299.  Your subscription will be autorenewed in 2021 at $99, though you can cancel at any time.

Click here to subscribe to Pi at the discounted rate of $174.50

Subscribe to Pi today and you get a year’s subscription to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.

Gary

 

(1) www.nytimes.com/2020/06/01/business/coronavirus-poor-countries-debt.html

(2) www.nytimes.com/2020/06/09/opinion/us-deficit-coronavirus.html?campaign_id=2&emc=edit_th_200610&instance_id=19251&nl=todaysheadlines&regi_id=48317279&segment_id=30516&user_id=208b2cbe62eb7b536babab791d172bc7

A Millionaire Gift


Here are three millionaire gifts.

gold-leaves

Today is my 64th birthday.  This is a shot I took from our meditation room this morning.

Years ago Merri started a family tradition… on one’s birthday we give gifts to others… it’s greater to give than receive… so here are three gifts for you.  The picture above is one of the gifts.

See why below.

We have been helping our readers make millions for nearly 30 years.  One reader confirmed this when he wrote this letter to me: “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,”

The first gift is a millionaire habit taught to me by the Ecuadorian Taita Yatchak we lived with for years. We took him on many trips through the USA and one day he visited us in Florida. We met his plane at Ft. Myers Airport and as we passed a roadside rest stop on the way to Naples he said, “Stop here. I want to teach you a golden word for prosperity.”

He gave us this golden word that I pass on here to you. The word is Golden Orange.

He said, Watch the sunrise every day. Then whenever you can visualize this color intensely and think GOLDEN ORANGE.

gold-leaves

The leaf change is spectacular here in our North Carolina front yard this autumn.  Visualize this golden orange every morning.

The second gift is an investment tip.

My birthday tip to readers October 2007 was inspired when one reader wrote:    “Gary I want to set up a multi currency sandwich without risk. I do not need the fantastic returns and can do fine with just 20% per annum.”

Well, here’s what I wrote back then:  “20% per annum is more than a fantastic return. If you can attain this on a long term basis you are one of the best investment managers in the world. Keep in mind that though equity markets are efficient in the long run they are not effective short term due to human behavior.

“Please remember the following rules of thumb about investing: We should expect 7% to 10% annual return in the stock market as a function of global nominal GDP growth and long term earnings growth plus risk premium over bonds. Getting higher growth comes from increased risk or luck. We have increased risks through leverage at a time of strong market growth.

“We always like to put together top performing portfolios but our mission statement is to track portfolios and learn from them as they rise and fall.  Periods of high performance are followed by times of low returns.  We never know for sure when an upwards cycle will stall.  To give our readers a better perspective, this year we are reducing leverage.”

That advice saved readers who followed it millions.

This birthday 2010, my advice is the opposite.  Avoid safety. Sell seemingly, safe long term bonds. Borrow Dollars. Invest in High Yielding Shares.
Governments have borrowed too much. Times are not about to change either.

Until social-economic evolution changes the way government debase currencies, great opportunity will exist for the alert investor who embraces risk.

Governments everywhere control currencies and most use fractional reserve banking and/or debt financing or the printing machine that debases their currencies. This is not done equally between and this inequality in currency erosion creates parity and interest rate distortions.

Currencies often follow certain cycles and we can track these cycles to spot profits from currency changes.

The cycles consists of 3 phases.

Phase 1 is when the high interest rates attract capital, which cause the currency to appreciate. This pushes down imported inflation, and the inflationary pressure in the economy diminishes.

Phase 2 follows. As a result of the lower inflation, the Central Bank cuts interest rates, boosting domestic demand. This often leads to a demand for foreign products, and exports struggle with a stronger currency. The current account deteriorates, and the interest in the currency cools down. Often rates drop low enough so the currency can be borrowed to reinvest.  In Phase 2 it is a good time to borrow.

The final Phase 3 comes when fear of interest-rate hikes begins to develop or a local shock triggers risk aversion. Most loan positions are closed.

The government raises interest rates to cool the economy. Or maybe there are political problems, and investors fear that interest rates will have to rise. Phase 3 causes the local currency to depreciate markedly, which has an adverse effect on inflation and the Central Bank raises interest rates!

At some point, interest rates are raised so high the inflation situation improves as well as the external balances and investors return. The cycle then begins with Phase 1 all over again.

This may seem slightly complicated, so study this over the weekend and send me your questions and comments. We’ll answer them in the Saturday Q&A.

The way to enhance profits from international currency trends created by these phases takes three steps.

Step #1:  Spot countries and currencies which are ending Phase 3 and returning to or starting Phase 1.

Step #2:  Invest in the countries/currencies and keep the investment until the end of Phase 2.

Step #3:  Be out of a currency when Phase 3 begins.

Here is a really neat trick when watching the phases. When a country is in Phase 3, the situation in a country is at its gloomiest. This is the time when everyone is saying “Get out stay away”.  However, this is probably the time to get ready to invest!

When the situation is at its gloomiest, it may be the start of a new upturn so look for the following signals. These are signs that a good opportunity may be near.

* A local shock or interest rate hikes

* Carry positions are closed

* The currency depreciates

* Local Central Bank raises interest rates when inflation rises

Here is the total cycle of high interest currencies again:

* High interest rates attract capital

* The currency begins to appreciate

* Inflationary pressure diminishes

* Local interest rates are cut

* Inflation declines

* Capital inflow continues

* Domestic demand rises

* Current account deteriorates

* The strength of the currency declines

Be sure to send me your questions about this. I want every reader to understand the power and importance of the Borrow Low-Deposit High strategy so feel free to ask questions that I can answer to all.

Look for currency phases, spot trends and distortions so you can borrow low and deposit high or more. This process can make millions for you.

Your third gift is a $200 Ecuador banking gift free. Get it here.

Until next message, may every phase of your investing be good.

Gary

Join us for a seminar.

Here is what one delegate from a seminar shared:

Thank you. You two are both such wondrous creatures-so wise and nurturing. You have inspired us. We are rejuvenated. Merri is a magician. Her wizardry removed six pounds of avoirdupois from Olga and three pounds from me. Your course has made us “Healthy, Wealthy, and Wise.” We love you for it.

Belong to the International Club

The Huge 2020 Risk

Here is a huge risk that could explode in 2020.

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

According to Treasurydirect.com, (1) as of December 26, 2020 the total US public debt was 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.

treasury direct

Look at how the interest costs alone have risen to over a half trillion dollars a year.

treasury direct

 

The bad news is that the (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) that, under law at that time, debt held by the public would exceed $16 trillion by 2020, reaching nearly 70 percent of GDP.

The $7 Trillion Error.

They sure goofed on that.  Here we are… only in 2020 and debt has shot past 23 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 $573 billion.  Yet in 2008 on debt of only $9 trillion +  the interest that year was $451 billion +.

Interest payments in 2017 were 27% higher than they were in 2008.  Yet the debt is over 250% higher.  

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

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

Rising interest rates, will create an almost unimaginable debt crisis.  If government interest doubles it is like the $23+ trillion national debt  rising to 46 trillion!  Unless there are some huge tax increase the interest payments are not sustainable.

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 2020.

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 2020 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 a record high, 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 2020 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 $299 per annum but as a club member you receive Pi at no charge and save an additional $2299.

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 when you become a club member.

Join the International Club and receive:

#1: The $299 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 2019”. 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.

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 

 

 

Seasonality


Seasonality can have a big impact on your wealth.

seasonality-in-equities

Spring blooms at our North Carolina farm.

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

#1: Move where costs are lower.

#2: Invest in real estate.

#3: Invest in commodities.

#4: Have your own small business.

#5: Invest in equities.

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

April showers bring May flowers in the

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Blue Ridge like these on…

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Little Horse Creek.

But spring also eliminates the bloom on the stock market.

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

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

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

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

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

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

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

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

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

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

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

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

Gary

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

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

ecuador-wine and cheese

West Jefferson Hampton Inn.

ecuador-wine and cheese

Just opening this June 2009 with very nice rooms and…

ecuador-wine and cheese

really great…

ecuador-wine and cheese

views.

ecuador-wine and cheese

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

Ecuador-tour

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

Ecuador-tour

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

Ecuador-tour

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

May  13-14    Ecuador Shamanic Minga

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

May  16-17    Imbabura Real Estate Tour

May  19-20    Coastal Real Estate Tour

May  22-23    Quito Real Estate Tour

May  25-26    Cuenca Real Estate Tour

June 30-Jul 1 Imbabura Real Estate Tour

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

Mother’s Day roses in Ecuador.

ecuador-mother's-day-Roses