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Ecuador Good Points & Bad

Everything… everyone… every time has its good points and bad.

One benefit to Ecuador Living Club membership is that the club can make discrete inquiries when required. For example one member just asked about a felony conviction of 20 years ago.  Would this affect his resident visa application?  We checked without mentioning names and found that the process only looks back five years.  That was good to know.

Another point in Ecuador is its currency, the US dollar, is at risk.

However we can turn the weak dollar into multi currency investing opportunity when we reflect on a Tale of Two Cities.

Take of Two Cities

A Tale of Two Cities at Amazon.com is FREE

A note from a concerned multi currency reader revealed ideas about good times and bad… the ups and downs… joys and sorrows… expansions and contractions – the frequencies that compose every measure in this symphony we call life.

This multi currency investor  wrote: Hi Gary Scott!  A long term reader trying to learn as much as possible before coming to Super Thinking International Investing Business Seminars.  Due to Newsmax I got tuned into Aftershock Survival Summit with Robert Weidemer who says real estate values going to dive down double dip from now until 2016.  He says don’t buy real estate now… rent until the significant declines hit.  What to do?

The answer came from Charles Dicken’s “A Tale of Two Cities” as it starts:  It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way.

I replied to the reader.  There are always multi currency problems and opportunities regardless of the current public mindset.

There is always someone predicting an upcoming disaster.  There is always someone lauding the upcoming boom. However dire and manic predictions never cover the entire picture.  Nor is the state of the canvas all that important.  It is what we do with the paint we possess that will determine our affairs, our fate and our fortunes in the coming days.

There are some good reasons to expect another shock between now and 2016.  Since 2000 our research (and our notes to readers) have shown that global equity markets are in a bear cycle of 13 to 20 years.

This last downwards pressure creates a huge opportunity.  This may be last bargain basement for investments that many of us will see.

First… the world  has a bigger global population with greater productive capacity and better ability to trade.  In other words, the really big picture is more production and more consumption.  Bigger… greater… better.  More people…. more to do…. more opportunity.

Second… we have more energy and use it better.   The industrial revolution has been fueled by fossil fuels and farmers (coming off the farm into the factory).   The increase in global natural gas and oil reserves along with the many steps that have been taken to increase fossil fuel efficiency are encouraging.

A September 2013 New York Times article “How We Learned Not to Guzzle” by Ralph Cavanagh says:  Over the past 40 years, we have found so many innovative ways to save energy that we more than doubled the economic productivity of our oil, natural gas and electricity.

Government data indicate that our energy-saving efforts already have yielded some amazingly good news. Our factories and businesses are producing substantially more products and value with less energy, which goes to the heart of the president’s climate strategy. In fact, energy use in the United States has been dropping since 2007, and last year’s total was below the 1999 level, even though the economy grew by more than 25 percent from 1999 to 2012, adjusted for inflation.

At the same time, the amount of oil we are using in our vehicles, homes and businesses continued to decline last year, down 14 percent from a peak in 2005. Surprisingly, oil use was lower in 2012 than in 1973 (when the nation’s economy was only about a third of its current size). The main reason is that we are demanding better mileage from our vehicles and driving them less.  (see a link to the entire article below).

Third… the value analysis from Keppler Asset Management shows an implicit three-to-five-year projection that the Equally Weighted World Index is expected to rise to 12,259 from its current level of 7,401 in three to five years. This corresponds to a compound annual total return estimate of 13.4 % in local currencies – up from 12.8 % last quarter. The upper-band estimate of 14,710 by June 30, 2017 implies a compound annual total return of 18.7 %, while the lower-band estimate of 9,807 corresponds to a compound total return of 7.3 % p.a.

Keppler Value

Click on charts to enlarge.  Read more about Keppler’s best value stock markets below.

In other words, the stock market should be good.

Fourth… our long term analysis of 30 year stock market cycles suggests that we are in the 13th year of a bear cycle that normally last 15 years so should expect a bull market to start fairly soon and last until about 2030.

dow-chart

Fifth…there is a new wave of technology that is changing the global socio-economic efficiency.   This has the potential  to create the buzz and exciting news that will stimulate non thinking expansion and reduces non thinking fear at the .com bubble news in the 1990s.  Those who do think can take advantage of the values created by distortions from the thundering herd as it stampedes up or down.

Sixth…the new wave of communications ability and technology allows society to tap productive markets (older people) who normally would leave the work place and become a social expense.

Seventh…changes in weather and the reorganization of emerging economies such as the Middle East will continue to stimulate the economy.

That is seven pieces of good news.

However, there are three negative forces we’ll want to avoid:

NF#1: The same technology that helps the economy also helps those in charge of the technology take advantage of the public.  We can see this in the New York Times article “The Rich Get Richer Through the Recovery” by Annie Lowrey that says:  The top 10 percent of earners took more than half of the country’s total income in 2012, the highest level recorded since the government began collecting the relevant data a century ago, according to an updated study by the prominent economists Emmanuel Saez and Thomas Piketty.

The top 1 percent took more than one-fifth of the income earned by Americans, one of the highest levels on record since 1913, when the government instituted an income tax.

The figures underscore that even after the recession the country remains in a new Gilded Age, with income as concentrated as it was in the years that preceded the Depression of the 1930s, if not more so.

NYT chart

To read “The Rich Get Richer” see the link below.

NF#2: During the last 15 year bear cycle the US and many other nations have badly increased debt.

US National debt alone is now near 17 trillion dollars or over $148,000 per person. That’s just Federal debt. State, County, City, Personal all make this worse.

debt clock

See more US debt data at the www.usdebtclock.org link below

The US is not unique in this problem and has led many governments to confiscate pensions.

The Christian Science Monitor article “European nations begin seizing private pensions” by Jan Iwanik shows how governments have started tackling private pension funds in a stronger way.  The article says:  Hungary, Poland, and three other nations take over citizens’ pension money to make up government budget shortfalls.

People’s retirement savings are a convenient source of revenue for governments that don’t want to reduce spending or make privatizations.

The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.

The Bulgarian government has come up with a similar idea.

A slightly less drastic situation is developing in Poland.

The fourth example is Ireland. In 2001, the National Pension Reserve Fund was brought into existence for the purpose of supporting pensions of the Irish people in the years 2025-2050.  However, in March 2009, the Irish government earmarked €4bn from this fund for rescuing banks. In November 2010, the remaining savings of €2.5bn was seized to support the bailout of the rest of the country.

The final example is France. In November, the French parliament decided to earmark €33bn from the national reserve pension fund FRR to reduce the short-term pension scheme deficit.

Since that article, Poland, the largest of central Europe’s emerging economies, did take over many of the assets held by private pension funds, including treasury bonds, to a state vehicle.

Also in Cypress as part of a last-minute $13 billion deal with international lenders to prevent the country from financial collapse, deposit-holders with more than 100,000 euros will face big losses up to 40% of their assets.

This is not likely to happen in the US. There hasn’t been a depositor haircut in the U.S. since the Great Depression.

Instead the government has been putting pressure on private pension managers to be safer and has been subtly coercing them to invest in the US dollar and US bonds.  Because the US is a currency issuer the government can create conditions so more dollars are printed which leads to the third problem.

NF#3:  Terribly weak dollar fundamentals. The one thing I have learned about stocks and currencies is you can never predict what will happen short term as both markets are ruled by emotion.

However you can also be sure that long term the markets will be ruled by fundamentals and four important currency fundamentals are:

* Trade Balance and Current Account
* Federal Debt as % of GDP
* Federal Deficit as % of GDP
* Interest rate
* Inflation

The US is among the worst of any developed nation in four of the five these fundamentals.

Concerns over these weak fundamentals are compounded by the history of the dollar after the 1980s recession. The dollar showed a strength that was not supported by fundamentals in the 1980s with a steep decline after.

granfather economics chart

This chart is from a great report about dollar fundamentals at Financial Sense Editorials.(See link below)

These facts suggest that the dollar could have a serious decline in forex parity and purchasing power and should not be trusted as the only currency held.

This is what we look at in the multi currency sessions of our International Investing and Business seminar October 4-5-6.  There is always someone telling us that it’s the best times. There is always someone warning it’s the worst.

Our seminars explains why the times are both and looks at how to take advantage of the new wisdoms and avoid damage from the old foolishness.

This is our 45th year of creating ways to serve. to earn and diversify our savings and investments to protect against loss of the dollar’s purchasing power.

We share what we are doing and what one can do in small and large ways at our seminars and courses.

Read more about our philosophy about how to earn and invest below.

Gary

Multi Currency Value Investing Seminar

The Best Multi Currency International Investing Seminar in 32 Years

Cash in on the best opportunity in 32 years.  Currency diversification has always been important for safety, but right now a multi currency opportunity is brewing and has more profit potential then you have seen in over three decades.

Our “International Investing Seminars” started 32 years ago at about the best time for investors ever.  Over these decades our semi annual seminars have updated what’s going on in global investment markets and what to do.  In all those years, few times offered as much long term opportunity as in 1982.

Join us to learn the great opportunities that are just ahead.

Mount Dora Florida. Multi Currency, Protect Against a Weak Dollar Investing Seminar. (Normally $799 or $999 for a couple)

Sept 4-5-6, 2015, West Jefferson, North Carolina.  Multi Currency, Protect Against a Weak Dollar Investing Seminar. (Normally $799 or $999 for a couple)

jefferson Landing

Our summer and autumn courses are at the Jefferson Landing Country Club.

Finally, conditions have come full circle and the several conditions are coming together just as we saw at our first seminars in the 1980s.  The US dollar. the US stock market and the price of oil are acting almost exactly as they did in the early 1980s.  Knowing the conditions and why they have merged  and what to do about them can help you create a fortune.

One way to tap this potential (we’ll review this at the seminar) is to invest in a Good Value Country Strategy with ETFs (Country Index Exchange Traded Funds).  For example there are currently ten good value developed markets, Australia, Austria, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore and the United Kingdom.  You can easily create a diversified portfolio in each or all of these ten countries with Country Index ETFs.

We review more than two dozen Country Index ETFs at the seminars.   One example is the iShares Germany MSCI Index ETF.

MSCI Germany

Click on image to enlarge.

Germany’s stock market is a good value market.  Germany has the world’s fourth largest economy.  The country is the third largest exporter in the world and in 2013 recorded the highest trade surplus in the world making it the biggest capital exporter globally.  Yet German shares have been overlooked. German share prices are cheap.

The problem most investors have is knowing which German shares to buy.  The country Index ETF solves this by investing in almost all the shares traded on Germany’s largest stock exchange in Frankfurt.  The iShares Germany MSCI Index ETF is a share traded on the New York Stock Exchange that invests in 85% of the shares in Germany.  This ETF is a passive fund that does not try to outperform the growth of the German Stock Market. The managers simply track the investment results of the MSCI Germany Index.

The MSCI Germany Index is designed to measure the performance of the large and mid cap segments of the German index is composed of the stocks of 54 different German companies and covers about 85% of all the German equities.  Germany’s ten largest companies compose about 60% of the index.  These ten companies are:  BAYER (Health Care) composes 9.91% of the index – SIEMENS (Industrials) 7.89% – DAIMLER (Consumer Discretionary) 7.04% – BASF (Materials)  6.81% – ALLIANZ (Financials) 6.65% – SAP STAMM (Info Tech) 5.69% – DEUTSCHE TELEKOM (Telecom Srvcs) 4.46% – DEUTSCHE BANK NAMEN  (Financials) 3.66%  – VOLKSWAGEN VORZUG (Consumer Discretionary) 3.18% – BMW STAM (Consumer Discretionary)  3.15%.

The iShares MSCI ETF invests in all the important sectors in the German market, so your one investment in the ETF gives you a spread of good value German shares.

MSCI Germany

The fund has over 4 billion of assets and those assets are invested mainly in the 54 German shares, so your investment gives you enormous diversification within the German stock market. What makes ETFs such easy and simple investments is that even a small investment of $1000 (at this time) will buy about 25 shares.  For just $1,000 the investment is spread into this vast powerful, good value equity market.

At our seminars we review Country Index ETFs for every good value stock market in the world. One benefit of these ETFs is that investors can invest very small amounts so it is possible to invest in all good value countries, even if your portfolio is not large.

You save on tax.  Managed funds exert a heftier tax bill on your portfolio than passive products.  You save on reduced portfolio turnover.  Every time a manager makes a trade, there’s a cost. ETFs invest in the shares that compose the index and do not trade.  During 2013 actively managed funds in the US turned over 85% of their holdings.  Remember that this activity resulted in poorer average results than the indices for 75% of these funds.

Join me at our 2015 seminars to explain how to use ETFs and much more.  The “International Investing Seminar” looks at how to protect purchasing power and pensions with multi currency investing.  The course teaches how to add safety and create to profit from multi currency and global equity cycles.

Value Investing Outside the Box.  Here is a partial syllabus of the seminar:

* See new breakout possibilities… in global investing.

* Benefits of early investments in an oil that’s up 22.8 times in the past ten years.

* Beyond Gold.  Three hard assets that protect against all currency erosion.

* The Small Country Effect. Why small markets rise more than large ones.

* Top Value small markets and how to easily invest small or large amounts.

* The best four currencies for the year ahead.

Few decisions are as important to your wealth as WHICH CURRENCIES to invest in. This has been our area of expertise since the 1970s.  Learn how to use ETFs to gain multi currency diversification.

Details in this session also include:

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

*  The benefits of investing in real estate in Small Town USA.  We will share why the 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 – how interest rates at zero eliminate opportunity costs of diversification in precious metals and foreign currencies.

* New tax strategies.  How to create businesses that earn income and reduce tax.

gary scott

Gary Scott at a multi currency session

The course begins with a 1000 Year Economic Review that leads us up to where markets are in 2015.

Learn how to:

* Find good investing value.

* Use Multi Currency Portfolios.

* To use multi currency for diversification-speculation & hedge.

* Earn in water and agricultural investing.

* Gain with special situations now for aggressive growth

Join Merri and me for this multi currency economic update seminar.

gary-scott

Gary Scott speaking to 400 delegates in Quito, Ecuador

Sept 4-5-6, 2015, West Jefferson, North Carolina.  Multi Currency, Protect Against a Weak Dollar Investing Seminar. (Normally $799 or $999 for a couple)

Join my wife, Merri, and me at our International Investing Seminar. Enroll here $799. Couple $999

Gary

Read more about our philosophy about how to earn and invest at PIEC Investing

How We Learned Not to Guzzle by Ralph Cavanagh

Read about the best value stock markets here.

Read The Rich Get Richer click here  US Debt Data is at www.usdebtclock.org/

European nations begin seizing private pensions

Read about the dollar’s demise at Financial Sense Editorials.