Tag Archive | "the New York Times"

Multi Currency Warning


The rising US dollar and Japanese yen remind me of a 1970s multi currency warning.

Last Friday, the New York Times said: “Fear that the financial crisis is infecting once-healthy economies created another white-knuckle day for investors Friday, causing stocks to tumble from Tokyo to New York.

Uncertainty also roiled currency markets as investors continued to turn to the security of the United States dollar and the Japanese yen and drove down currencies of developing countries like Brazil, Ukraine and South Korea and even of developed countries like Britain.”

This article misses an important point. The dollar and yen are not rising just because they are viewed as secure currencies. They are not in my opinion secure multi currency investments now. Japan and the US are two of the largest debtors in the world. Their currencies must be suspect.

Over the past twenty years, more and more investors have been borrowing low and depositing high. I wrote one of the early books about this multi currency investing tactic in the 1980s. Subscribers to my multi currency course still study an updated version of this text.

Investors and institutions everywhere borrowed the US dollar, Japanese yen and Swiss francs…billions in loans at low interest rates. They then converted the loans and invested into currencies with high yields like the Brazilian real, Ukraine hryvnia, South Korea won and even the British pound.

Now as the high yield investments are tumbling, due to global economic panic, these investors have to sell their investments and convert the Brazilian real, Ukraine hryvnia, South Korea won, British pound and other currencies to buy dollars, yen and Swiss francs so they can pay off their loans.

A clue that reinforces this thought is seen in this chart from finance.yahoo. See how the pound has fallen verses Swiss franc.

Pound Chf chart

In theory the the Swiss franc should be linked to the euro and the euro to the pound.

Yet a year ago a Swiss franc bought 42 British pence. Now it buys 53 pence.

Even more telling is how the Swiss franc has risen sharply versus the euro itself. The strong Swiss franc puts Swiss industry at a distinct disadvantage at exactly the wrong time. The Swiss will not like this strong franc but I suspect they cannot stop it because the franc purchases are being made to pay off swiss franc loans…not to deposit in francs.

euro SFR chart

This buying of the dollar yen and franc is a forced and panicked move that may be like a crowded, dark theater. Someone yells, “FIRE.” Everyone stampedes for the door. The crowd gets there all at the same time and realizes they have run to the wrong door!

A reverse rush could create a chaos you should avoid….so be careful if you choose to bet on the greenback, yen or franc.

Rethink selling if you are holding emerging currencies without loans or have loans but do not have to pay them off.

An economic downside correction is unfolding yes. The end of the world…no. The end of commerce as we know it…no. The end of fundamentals as we know them…no.

Here are seven fundamentals that our multi currency studies over the past years have found are worth investing in again and again. I doubt that they have flown the coop.

Economic fundamental #1: Globalization is good for everyone and is here to stay. Bet against any globalization block. Bet for globalization.

Economic fundamental #2: Government involvement in global economics and business may dampen the sharper acceleration of the natural financial rhythm but eventually makes the corrections worse.

Economic fundamental #3: Mature economies cannot grow much faster than 3% per annum.

Economic fundamental #4: Emerging economies grow much faster than 3% per annum.

Economic fundamental #5: Emerging stock markets fall faster and further than major markets during times of panic.

Economic fundamental #6: Emerging stock markets rise sooner, faster and further than major markets after times of panic.

Economic Fundamental #7: The most guaranteed way to lose purchasing power in the long term is hold long term, low yielding…supposedly safe… government bonds.

If these fundamentals are still correct, than the current rush to the dollar and yen create a monumental opportunity! There will be a time to invest in the very currencies that are tumbling now. One way to do this will be in emerging bonds. This site recently examined some ideas about multi currency seasoned bonds.

Emerging equities also will make sense as will emerging currency certificates of deposit, major market equities and some discounted major market bonds.

Now, however, is probably not the time to act…yet.

I have been looking at seasoned bonds with my investment advisor at Jyske Global Asset Management.

He wrote: “Dear Gary, I recommend that we hold back before investing anything. The market spreads are simply too high right now. If we buy bonds today you will be down 10-20% when the trade is settled, as the bid-offer spread currently are at 10-15 points on bonds trading in the 40-50 area. So hold back until we see where this ends. I hope that you agree!!!!!!! Kind regards”

I did agree and had come to the same conclusion to hold off buying for now. I remember in the 1970s, when gold was selling at $860 an ounce and silver $48 an ounce. The spread on silver was $10 an ounce! You could buy for $48 but only sell for $38.

High spreads like this mean that even the pros are totally uncertain. My account exec is right. The cost of buying is way too high. If the traders are this uncertain, then I have no business trying to outsmart such chaos.

However the worse this confusion is now…the better it will be shortly. Be ready to see some real multi currency bargains.

You can get information about multi currency accounts from Jyske Bank and

Jyske Global Asset managers

US investors contact Thomas Fischer at fischer@jgam.com

Non US investors contact Rene Mathys at mathys@jbpb.dk

Until next message good global investing!

Gar

Join us at a course in Cotacachi this winter.

Jan. 16-21 Ecuador Spanish Course
Jan. 22-23 Imbabura Real Estate Tour
Jan. 24-27 Coastal Real Estate Tour

Feb. 13-15 International Business & Investing Made EZ
Feb. 16-17 Imbabura Real Estate Tour

March 8-9 Imbabura Real Estate Tour
March 10-15 Ecuador Export Expedition
March 16-19 Coastal Real Estate Tour

Ecuadorians love music.

Ecuador-music

They love flowers and beauty.

Ecuador-flowers

They are friendly.

international-club

They are very religious. Here is the cathedral next to our hotel.

multi-currency-Ecuador-cotacachi-dawn

Cotacachi-Statue

Here are Merri and me with our Ecuador family and Godson, “Quinti Ananki” (King of the Hummingbirds).

ecuador-family

Better still join us all year in Ecuador! See our schedule of 26 courses, tours, mingos and expeditions we’ll conduct in 2009.

International Investing & Business Made EZ IV


International investing and business have proven themselves over the past 40 years to be profitable. This series is looking at how important it is for the international investing and business process to provide fulfillment and fun!

The last two parts of this series reviewed that the Western medical model has many flaws, and they are about to get worse.

Because fun is healthy, having a healthy having a fun international investing and business process can help us spend less on pharmaceuticals and expensive medical treatment.

To support this notion a reader just set this note.

“Gary, a New York Times article says:

“Ben S. Bernanke, chairman of the Federal Reserve, told Congress on Monday that health spending would ‘rise relentlessly’ unless lawmakers overhauled the health care system, and he recommended an eclectic approach,” The New York Times reports. “His remarks opened a daylong bipartisan symposium convened by the Senate Finance Committee to lay the groundwork for what leaders of both parties predict will be a major push for health care legislation next year.”

This articles is at
http://www.nytimes.com/2008/06/17/business/17fed.html?partner=rssnyt&emc=rss

Until next message may your health always be good

Gary

Learn International Business Made EZ online.

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

Ecuador Ecuador Import Export Course

International Investing and Business Made EZ Ecuador

Multi Currency Inflation


Multi Currency Inflation

Multi currency inflation is with us. Merri and I are conducting our International Investing and Business course this week.  When we do these courses at the farm we provide al the meals. Merri is a great cook and everyone enjoys her home cooking, and she enjoys it also.

We do all the shopping for these meals and just being back from Ecuador…wow…sticker shock!

Being a multi currency investor, my portfolio is up…but it needs to be with rising prices. My heart goes out to anyone trying to preserve purchasing power with investments just in US dollars.

Quality has suffered here as well.  We feel deprived in US super markets after shopping in Ecuador’s markets where the food is fresh, the fruit and vegetables ripe…as well as costs a fourth or less of the US.

This is what we are used to in Ecuador with food prices so low it makes us want to give the people more than they ask.

Ecuador-food-market
But inflation is everywhere. This is why I am buying Ecuador real estate as fast as I can. I believe prices will rise for two reasons.

The first is because of commodity hikes.

In February, I wrote an Ecuador Beach Condos Introduction.

This introduction revealed a number of brand new beach view condos available for $79,000. The developer reported that these condos literally sold out in a week. However he also offered all the buyers a 60 day cooling off period.  Several have dropped out so a few of these $79,000 units are on the market again.

My feeling is that these $79,000 units will not last long based on the reply that the developer Kjetil Haugan sent when I asked if these units were still available at this price.

“Gary, thanks..it is ok for me to offer the apartments at $79k with the $5,000 club fee waived.  The problem I am facing now is that building material prices are going up every month..steel has gone up 65% since January and the total construction cost is about 40% more than it was in November 2007..it looks like we will be able to do the infrastructure a bit less expensive so I am okay with this price but we want to build most of the blocks as soon as possible before prices will be even bigger problem!  We have started with two blocks now and will start with the upper blocks where you bought next week.”

The second reason I believe prices will rise in Ecuador is that the Italians and Spaniards have caught on!

Our friend, Anne Williamson, is a veteran journalist, who has written for the Wall Street Journal and the New York Times. She authored a definitive and eye-opening analysis of the nation’s banking system for WorldNet and discussed this issue on national televion and radio programs, including “The O’Reilly Factor.” .  She is an authority on Russia and international finance and testified before the House Banking Committee.

Having spent months with us in Ecuador she has caught on quickly and sent this note to us.

“Hello Gary, I spotted the above in an email from idealista.com (a weekly investing review of Spanish and Italian real estate trends), and thought you might find the information useful.  All the best,  Anne

“A dwelling in Quito or Guayaquil, the same price as a garage in Madrid
Negocio, Monday 12, May 08.

“A three-bedroom dwelling measuring 800 square feet  in a luxury complex in Ecuador can be bought for €36,000, which is equivalent to what, with luck, a well-situated garage costs in Madrid.  These low prices have made Ecuador a destination to be taken into consideration by Spanish investors as the same dwelling would cost €126,000 in areas such as Mexico or the Dominican Republic the market in Ecuador is expected to offer 7% returns in the coming years.”

This will make it tough for Americans and diminished dollars to compete with the Europeans and their euro which has double in strength against the greenback in the past few years.

You can learn more about the $79,000 beach condos from Kjetil Haugan at kjetil@haugancruises.com

Inflation is everywhere but multi currency investing in real estate, commodities and shares can maintain and increase our purchasing power.  This is what I am doing and look forward to sharing my experiences with you.

Gary

See dates for our other Ecuador courses and tours:

Coastal Real Estate Tour

Here is a house on the beach we saw on our last coastal tour.

Ecuador-beach-property-for-sale

Super Thinking + Spanish Course

Imbabura Real Estate Tour

Here is a house in Quito we’ll see on our next tour.

quito-property-for-sale
Ecuador Shaman Tour

Ecuador Import Export Course


See discounts for attending more than one course.