International Investing Made EZ

by | Jan 1, 2005 | Archives

The ultimate form of financial security.

Dear International Friend,

Our goal at is to give you useful, easy to use credible information that makes your life better. We have divided this information into five (highly connected) sections, the first being how to invest better.

Why Invest Abroad?

Being international is in tune with the nature of current events.

Night in the tropics, air so soft its velvet, mist and warmth brushes my skin. Thick evening scents in this fragrant harbor. Mellow insects purr in rhythm with the cacophony that is a great city beyond. At this airport, I enter an enormous metropolis and an adventure begins. Kai Tak Airport, Hong Kong. May 1968.

American born and bred, this was my first airplane trip, first time out of Oregon. Portland to Vancouver, Tokyo to Hong Kong. Melting within my heavy woolen blazer, weariness and fear swept over me. But there was excitement too. An exciting journey was about to begin. Who could have known how exciting the next 35 years would be, how much information, facts, figures, ideas and insights on how to invest globally would be gained. Had I known the mistakes to be made I would probably have run! Thankfully all the trials, tortures and errors were mitigated by much fun and an earnest endeavor to live right and learn.

One goal at this site is to share basics of global investing learned over these 35 years. Global investing has changed during this time but fundamentals remain immutable. We move inaccurately through the mists of the here and now, blindly trying to see what we cannot (the future) but not being able to stop trying Share the excitement, the fun, the incredible fulfillment that growing in this ever expanding universe can bring.

Investing globally is not a panacea, but expanded horizons are. Life is a trip and we have an entire globe to enjoy the ride.

Why be International?

My first trip abroad 35 years ago was significant because 1968 was the beginning of a new era for world stock markets. When I arrived in Hong Kong the world of investing was dominated by Wall Street. That was about to end. 1968 was the year when the Hong Kong Stock Market began to explode upwards along with Tokyo's market. What a ride!

The Heng Seng Index was then 100 and rose to 18,000. Anyone who steadily committed money to this market then made a fortune.

Here is the performance of the stock markets of the world over the next two decades after I arrived in Hong Kong.

               Japan                           3,093%

Hong Kong 1,456%

Spain 1,254%

Austria 1,193%

Switzerland 1,112%

Singapore 1,011%

Denmark 826%

United Kingdom 557%

Germany 556%

Belgium 546%

New Zealand 532%

France 485%

United States 378%

This was an era when all one needed to do was invest in the next market to emerge.

Today, especially while the economy is depressed investing is not so easy, but here are just seven ways we try to spot global opportunities now.

#1: Borrow Low-Deposit High takes advantage of currency distortions. This is a powerful tactic I have been writing about for nearly two decades. This idea begins with making a diversified investment, 20% in CDS of which 10% is in Hungarian florins paying 8.63% and 10% in Polish zlotys paying 7.88%. 55% is in medium term bonds: 15% in Euro A- rated denominated Rolls Royce bonds maturing 2007 and yielding 6.00% 20% in AAA rated Norwegian kroner Norway government bonds yielding 6.90% and 20% in New Zealand dollar AAA rated IADB bonds maturing 2004 and yielding 6.25%.

The remaining 25% of the diversification is in the Jyske Bank Emerging Market Bond fund denominated in Euro and yielding 8.40%. This investment has an expected return of 7.28%.

You then use the investment as collateral to make a loan. Borrow 1/4 in Japanese yen at 1.38% and one half in Swiss francs at 2.63% and 1/4 in US dollars at 3.13%. This gives you an average loan value of 2.44%.

You then invest the loan in the same spread earning 7.28% bringing you a net return of 4.84% (the 7.28% less the 4.84%).

If you borrow the same amount as you originally invested, your projected return increases to 12.12%. If you borrow two times your investment, the return on your original investment is 16.96%. A three times loan brings the projection up to 21.8% and four times to 26.64%.

Of course keep in mind that there are several ways one can lose money in this investment as well! Currencies or bond values can drop. Interest rates can change. The more leverage you have, the more you earn or lose so make this risk portfolio just a part of the high-risk portion of your portfolio.

This Multicurrency Sandwich tactic is covered in detail at my courses (see you can get more details from eclub advisor Thomas Fischer of Jyskebank at

#2: We look for value. In this section we periodically review global stock markets based on a value analysis provided by our advisor Michael Keppler of Keppler Asset Management.

Keppler updates markets each month and we let you know which offer the best value. Michael Keppler reports his latest market value update and explains why the State Street Global Advantage Major Markets High Value Fund that follows his value recommendations continues to be ranked #1 in three year performance compared to its peers. This fund's largest draw down is only about half compared to the average fund.

Michael compares every major market monthly looking at their current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return on equity compared to their average and relative vales and compares them to all other markets. Based on this research he determines which markets offer top value (buy candidates), low value (sell candidates) and which are neutral. There are other intelligent ways to invest that we follow.

#3: Find shares that will be winners in the next industrial era. (bio-tech, nano-tech, alternate medicine, etc.)

#4: In troubled times it also makes sense to invest in businesses that sell nostalgia. Harley Davidson for example when the market was crashing announced record revenue and earnings for its second quarter. The Company's second quarter revenue was $1.0 billion, an increase of 16.1 percent over the same period last year. Diluted earnings per share for the second quarter were 47 cents, a 25.4 percent increase compared to its last year.

#5: Another way to invest in these troubled times is to fight inflation with real estate and commodities (gold, silver, platinum, oil or etc.). If trends repeat the 70s and 80s, real estate prices and commodity prices will rise as the U.S. dollar falls. For example a USA Today Money section cover story titled “Collector cars flex muscle versus markets” read “Rekindled nostalgia fuels red-hot sales as stocks plummet.” The article pointed out that classic car markets were on fire as the stock market fell fueled by muscle cars from the 60s and 70s. Recently a Chevelle convertible with a 454 engine and four speed manual transmission sold for $172,800. A Plymouth Roadrunner for $135,000 and a 67 Corvette for $151,200. The list goes on.

Collectibles generally do well at the same time that commodities and precious metals rise. This could be a good time for silver and gold. Collectibles that have done well in the past include coins, stamps, sports cards and such. The key here though is to remember that a bubble will appear. Keys to success in investing in collectibles is to know what you are doing and to be buying now so you can sell when the bubble really heats up.

#6: Another way to invest now is to find and hold shares that will succeed in and even because of the slow economy and turmoil in the world, such as defense shares as the world builds up for another arms race.

#7: Finally there is a way to invest in government guaranteed investments that earn up to 25%. This may seem to good to be true but is not. You can learn more about this at

And as the world turns so too will our seven favorite ways to invest. Our search for the best places to invest never ends so to stay in touch with our discoveries watch this section of

Until then, good global investing!