Tag Archive | "online multi currency course"

Multi Currency Risk Premium


Getting a multi currency risk premium is important because the government bail outs that will be announced in the weeks ahead, whatever they will be, will accelerate inflation. Multi currency risk premiums will help beat the price increases which have already been bad enough.

Emerging real estate and emerging bonds (seen below) are two ways to gain some extra multi currency premiums that can help fight this rise in costs.

The three main multi currency investments that fight inflation are:

#1: Commerce. (normally equities but sometimes bonds as shown below).

Prices have risen on these condos, but still offer an incredible value, plus until October 1, Kjetil is offering the original price (a $10,000 savings) to Ecuador Living subscribers.

For details on the units below contact Thor Anderson at thor@sanclementeecuador.com

#2: The raw materials required by commerce (commodities).

#3 Real estate (required in commerce for production and consumption).

Some real estate markets offer a better risk premium than others. This is what I like about Ecuador. So few people have been there so the majority of the investment market get it wrong. They misunderstand the politics, the people, the rumors of crime, the entire ambiance of the place. This has kept Ecuador real estate prices low. Prices are beginning to rise but are still low in terms of Latin America where a deluge of US, Canadian and European investors are now arriving.

This is why I have been harping on the $79,000 condos (where Merri and I bought) north of Manta.

Ecuador-beach-condo

I doubt that investors will ever see prices this low again in our life time for the quality of construction and so much green space. There are only 63 units on 12 are that include 5,000 fruit trees and an organic vegetable garden. (This one shown above is of course not quite finished.)

Ecuador-beach-condo-clubhouse

Plus such views like this sunset shot I took.

Ecuador-beach-condo-sunset view

Prices have risen on these condos, but still offer an incredible value, plus until October 1, Kjetil is offering the original price (a $10,000 savings) to Ecuador Living subscribers.

For details on the units below contact Thor Anderson at thor@sanclementeecuador.com

However during times (like now) when there is a lot of volatility, some investors need a place to park cash while they wait for the picture to clear.

Where is safe when even money market funds have risk?

The answer is “every type of investment has risk…especially now”. The key is to at least be properly paid for taking it.

Here is a simple fact that can help you spot distortions so you get the maximum bang for your at risk buck.

Industrialized economies seem unable to increase their output at any rate better than about 3% percent a year on a sustained basis. This seems to be a universal standard of human evolution.

This is a huge fact as it means we should not expect major economies to grow faster than about 3%.

This is a baseline that can help us sort out whether an investment has extra or too little risk premium because the baseline for safe savings than should be about the same as industrial growth…3%…if the money supply is keeping pace with the economy.

Bank accounts and government bonds, for example, are perceived as the safest investments (especially if government guaranteed). A look at their long term history shows that they pay about 3%. So if a bank account or government bond pays less…in the long term it’s bad. If it pays more…that’s better. Yet the idea is that bank accounts will not really make money. They will just keep up with growth…at 3%.

Knowing this, rather than wasting time trying to avoid risk…which cannot be done, we can assess risk and what we are paid to take it instead by asking:

#1: How much risk is there in any particular investment?

#2: What perceptions do the market have of the risk?

#3: What risk premium is due?

To get real growth requires taking risk. If an investment appears to be less safe than the safest (that pays 3%) the less safe investment will pay more than 3%. The extra payment is called a risk premium.

Bonds pay more than bank accounts because they are perceived to be less safe. Stocks pay more than bonds because they are perceived even riskier. Emerging market stocks pay more than major market stocks. Emerging market bonds pay more than major markets bonds.

Over the long run, bonds issued in countries and currencies perceived to be stable pay 5% to 7%…if they are issued in their own currencies.

Stocks in major countries should pay 7% to 10% annual return in the stock market as a function of global growth, long term earnings growth plus risk premium (above bank accounts and bonds).

To attain higher growth than 7% to 10% investors must either increase risk, trust luck or spot distortions.

This is good because the market is almost always wrong. Most investors always trying to avoid risk. Most investors dump their wealth into investments that are perceived to be safe. This creates excessive demand and lowers value and actually makes the perception wrong.

Knowing this helps wise investors spot trends created by distortions.

For example, right now short term bonds denominated in Euro issued by major market governments pay about 4.25%. One can increase yield by about 50% by buying emerging government bonds. Here are yields on some short term bonds denominated in euro.

South Africa 2013 6.22%
Philippines 2010 6.19%
Romania 2010 5.16%
Brazil 2012 6.03%
Colombia 2011 6.15%

It is not likely that any of these governments will default on their bonds in this short term…so at a time when equities are very volatile this could be a good place to get out of the US dollar, park cash in euro and still make a bit extra.

We are reviewing five emerging bond portfolios in our online multi currency course this week. You can learn them as a multi currency course subscriber

Until next message, may you get a premium for everything you do.

Gary

I’ll also review these emerging bonds and review my entire portfolio and all this thinking next weekend. October 3-5 in North Carolina at our International Investing and Business Course. Why don’t you join me.

The course was fully booked but we had many late applications and have have moved to a larger meeting room so still have space.

Join me with Thomas Fischer of Denmark’s Jyske Global Asset Management, who was a currency trader for years to review our multi currency portfolio thinking for the year ahead.

To help our subscribers meet and learn, we are giving all delegates at the North Carolina course a FREE year’s subscription to our online multi currency course. This is a $249 value.

This will not be all work-no play. We selected this particular weekend as the most likely to be beautiful with the autumnal leaf change. The colors are glorious.

autumn-gold

Here delegates at a previous course chat during a coffee break.

blue-ridge-leaf-change

Gary

Join us in North Carolina next week end October 3-5 and save $249. Enroll here.

Or join us in November to inspect Ecuador property for sale

Vistazul-Ecuador-beach-condos-model

Our September 17-20 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour was sold out as was our September 28-29 Imbabura Real Estate Tour was sold out.

Our Oct 14-18 Ecuador Import Export Course only has a couple of spaces open.
https://www.garyascott.com/catalog/ecuador-import-and-export-tour

We still have space in November

Join us in Cotacachi at El Meson de las Flores.

cotacachi-daybreak

Nov 7-9 International Investing and Business Made EZ Ecuador
https://www.garyascott.com/catalog/international-business-made-ez-ecuador

See these condos at $46,000 in Cotacachi.

Nov 10-11 Imbabura Real Estate tour
https://www.garyascott.com/catalog/ecuador-real-estat

Dine with delegates at the Vistazul clubhouse.

Ecuador-fishng-view-4

November 12-15, 2008 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour
https://www.garyascott.com/catalog/ecuador-coastal-real-estate-tour

Multi Currency Trust


Multi currency trust is really important now. A huge multi currency stock market and property correction could be just ahead.

This correction can bring unprecedented value opportunity. But how do we know who to trust?

If our multi currency investments are in what we know and with those we trust…our investing is always one step ahead.

For example, below you will see a breakdown of my total multi currency position and why I have made money this last year when so many have lost.

One important point to note is that the largest increase in my multi currency portfolio is in Ecuador real estate. This is because I am involved in Ecuador every day and have a feel for what is going on. Plus I know people in Ecuador that I trust.

Take for example the Vitazul Ecuador beach condos built by Kjetil Haugan.

One reason I made an investment there is because I have worked with Kjetil for more than a decade and I trust him. I first met Kjetil when he had just moved to Ecuador and was beginning to develop business there. Now, just over a decade later he has one of the largest Spanish schools in Ecuador, one of the largest travel agencies in Ecuador, two boats that tour the Galapagos, a hotel and he is building 63 condos. Here is Kjetil at the condo construction.

multi-currency-condo-builder

Over the decade Kjetil has surprised me with what he gets done again and again. So when he contacted me last November and told me about the condos and the clubhouse-hotel he was building, I immediately became interested.

Last November when he contacted me the condo clubhouse looked like this.

multi-currency-condo-hotel

and the clubhouse swimming pool was…

multi-currency-condo-beach-pool

Yet he told me that he would be operational for the new year.

He was.

I drove down from our home in the Andes shortly (January 20 to be exact) after and was the first condo investor because of trust AND WHAT I KNOW ABOUT ECUADOR. This is on the record. See what I wrote in January 2008 about this project at Ecuador Beaches.

Here is the club house now…less than a year later.

multi-currency-condo-clubhouse

and the pool.

multi-currency-condo-pool

When I arrived nine months ago, the land where the condos were to be built looked like this.

multi-currency-condo-site

…just nine months ago. Here it is now.

multi-currency-condo-construction

In nine months…in Ecuador…on the coast…amazing!

Yet I was able to invest at the beginning before inflation started to really bite. Investing in what you know and in those you trust pays.

Prices have risen on these condos, but still offer an incredible value, plus until October 1, Kjetil is offering the original price (a $10,000 savings) to Ecuador Living subscribers.

For details on the units below contact Thor Anderson at thor@sanclementeecuador.com

Before you invest anywhere, however, let me please exclaim loudly…proceed with care.

We may be seeing a systemic cleansing similar to the 20s. Even if we are not, this is a time when investors can do everything, that in the past, was right and still lose. This is one reason why I like investing in real estate (US and Ecuador) now. I know and trust real estate. Real estate is a multi currency inflation hedge. Real estate is a hedge aganst a falling US dollar. Government bail outs create inflation. Real estate is an inflation hedge.

You can see the increase of real estate in the breakdown of my own portfolio this year

Many indicators suggest that this is a time when most investors believe the market will be down, but it actually will rise…perhaps a lot. So looking for value in equities and real estate make sense now.

Invest now? Does this sound crazy? Probably no crazier than in August 2007 when everything looked so fantastic and I warned readers to reduce debt and I unloaded most of my equities, moving into cash, Ecuador real estate and bonds instead.

As you can imagine I am pretty happy about this right now. I am reviewing my exact portfolio with my multi currency course subscribers at this time. Here is a portion of what they are reviewing, the breakdown of my personal portfolio a year ago and where it is right now. The percentages are rounded.

October 2007 Total Cash 9.7%

October 2008 Cash 10%

October 2008 Foreclosure Cash 3%

October 2008 Total Cash 13%

October 2007 Equities 6%

October 2007 Emerging Equities 1.5%

October 2008 Equities 5%

October 2008 Emerging Equities 1%

October 2008 Total Equities 6%

October 2007 Bonds 31.7%

October 2007 Emerging Bonds 8.5%

October 2008 Bonds 24%

October 2008 Emerging Bonds 10%

October 2008 Total Bonds 34%

October 2007 US Farmland 21%

October 2008 US Farmland 31%

October 2007 US Commercial Property 19%

October 2008 US Commercial Property 6%

October 2007 Ecuador Property 3%

October 2008 Ecuador Property 10%

First, let me clarify that this portfolio is not totally accurate. All the property is shown at cost. Much of this was purchased as long as a decade ago and could be sold for much more than shown. Both US and Ecuador property.

Second, even without trying to estimate a real estate value the portfolio rose…just a bit…about 5%. That is less then half the performance in 2007, but for this last year I am pleased. Not losing in 2008 is good! In addition to maintaining the portfolio’s capital, I feel especially well positioned to capitalize on current events. My cash position has grown and and many of the existing bonds mature this next year. This gives me plenty of liquidity to pick up bargains created by the market correction.

Third, I did little buying or selling of equities this year. The reduction of equities in the portfolio is entirely due to drops in price of the equities held.

I mostly looked for bargains in real estate…mainly in Ecuador and picked up several.

The same is true for bonds. The reduction in bonds in the portfolio is due to
maturities and the increase in emerging markets is due to currency strengthening of the bonds held.

Last year I felt a bit like a spider sitting in its web watching the fly come closer.

Now I am ready to bite! I have committed 3% of my portfolio to buying US real estate foreclosures.

Plus I am watching equities. The time to buy may be near. You can learn why as a multi currency course subscriber

Until next message may everything you believe in be worthy of your trust.

Gary

I’ll review my entire portfolio and all this thinking next weekend. October 3-5 in North Carolina at our International Investing and Business Course. Why don’t you join me.

The course was fully booked but we had many late applications and have have moved to a larger meeting room so still have space.

Join me with Thomas Fischer of Denmark’s Jyske Global Asset Management, who was a currency trader for years to review our multi currency portfolio thinking for the year ahead.

To help our subscribers meet and learn, we are giving all delegates at the North Carolina course a FREE year’s subscription to our online multi currency course. This is a $249 value.

This will not be all work-no play. We selected this particular weekend as the most likely to be beautiful with the autumnal leaf change. The colors are glorious.

autumn-gold

Here delegates at a previous course chat during a coffee break.

blue-ridge-leaf-change

Gary

Join us in North Carolina next week end October 3-5 and save $249. Enroll here.

Or join us in November to inspect Ecuador property for sale

Vistazul-Ecuador-beach-condos-model

Our September 17-20 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour was sold out as was our September 28-29 Imbabura Real Estate Tour was sold out.

Our Oct 14-18 Ecuador Import Export Course only has a couple of spaces open.
https://www.garyascott.com/catalog/ecuador-import-and-export-tour

We still have space in November

Join us in Cotacachi at El Meson de las Flores.

cotacachi-daybreak

Nov 7-9 International Investing and Business Made EZ Ecuador
https://www.garyascott.com/catalog/international-business-made-ez-ecuador

See these condos at $46,000 in Cotacachi.

Nov 10-11 Imbabura Real Estate tour
https://www.garyascott.com/catalog/ecuador-real-estat

Dine with delegates at the Vistazul clubhouse.

Ecuador-fishng-view-4

November 12-15, 2008 Ecuador Coastal Real Estate Tour; Quito Real Estate Tour
https://www.garyascott.com/catalog/ecuador-coastal-real-estate-tour