We are really pleased at the results of the international investments in the first year of our Borrow Low-Deposit High tracking service. The five model portfolios of international investments we constructed and tracked are up an average 24% on an equal weighted basis in less then eleven months last (October 2005). The Emerging Asian portfolio is up over 84%. Yet this was during a period when emerging markets had their second worst crash in a decade. The traditional press was saying the Borrow Low concept was dead. If it died with performance like this, it went to heaven!
Now a new Borrow Low opportunity for international investments has emerged. Below is an excerpt from my report “Borrow Low – Deposit High” which readers receive free when they enroll in our Borrow Low – Deposit High tracking service.
You can skip the international investments for our natural health tip – Natural Health Squashed
Our Ecuador real estate tip, Ecuador Coasting, is about commercial land for sale in Punta Blanca on the Ecuadorian coast. If you want skip international investments and natural health tips reach Punta Blancait.
“Webs of steel span across the river. A cable and concrete bridge fans from one grassy bank to the other backset by rugged hills in a valley carved deep and covered with lava green vineyards spilling over the crests, through the valleys and down to the banks of the grey-blue waters that are the Rhine . Merri and I watch as the train rolls hour after hour closer to Brussels .
“The European Express. Vienna to Brussels is a comfortable way to travel. We enjoyed this trip to visit a German specialist in investment management. We wanted more data about investment systems that can help reap rich rewards with the MultiCurrency Sandwich.
“Every investment plan has two parts…the decision making process and a money management system.
“The MultiCurrency Sandwich decision making process requires you to know and follow three elements-the interest parity, the currency parity and the cost of the transaction.
“A sandwich starts when you spot a currency that has a much higher deposit rate than the borrowing rate of some other currency. Once this condition has been met, you want to see if the currency to be deposited is stable or is rising in value against the currency that will be borrowed.”
This part of that report explains that the key to good MultiCurrency Sandwiches is borrowing currencies that are very (hopefully overly) strong and have low interest rates. The loans are invested in currencies that are weak, but have reasons to recover and have high interest rates. You profit from the positive carry (the higher interest rate on the investment over the loan rate), plus you have a chance for a foreign exchange profit if the borrowed currency depreciates against invested currency. This is a magic formula when it works…but keep in mind that leverage also accelerates loss when investors guess wrong.
The new Borrow Low opportunity was recently revealed. A currency analysis at Jyske Bank last week outlined that the Swiss franc is at an all time low versus the euro. The Czech krona is at an all time high versus the euro.
I saw what this meant and personally acted immediately by switching half my Swiss franc loan into a Czech krona loan. I’ll explain why this works for me in a moment.
Eastern Europe’s economy is growing well right now and the Czech Republic has been one of the leaders. This nation has been a leading Eastern European economic power even through the Cold War.
Yet the Czech koruna may be a really good currency to borrow right now because it is so strong and its political system is having a hiccup.
Who would have thought that the Swiss currency would be weaker then the Czech currency? However Eastern Europe is changing. At this time Eastern Europe may offer some of the greatest potential in the world. See more on this at International Investments in Eastern Europe Makes Sense
As an Eastern European leader, the Czech Republic has the lowest interest rates in the European Union. The main Czech LIBOR (London Inter Bank Overnight Rate) rate is 2.25% which is the lowest in the EU, as much as 0.75 percentage point lower than the key interest rate in the 12 euro-zone countries.
But political uncertainty keeps the koruna under pressure so it does not grow too strong and may even fall in value.
The Czech koruna has appreciated against the euro but now the appreciation is slowing because of the uncertain political situation.
Czech politics are currently unpredictable. In the last the general election last June (2006), the left and right won equal numbers of seats in parliament. The winner of the general election has not been able to form a government and is preparing a minority cabinet. This creates uncertainty that may have a negative impact on the preparation of the state budget for 2007.
This instable political situation increases the risk of a koruna depreciation. Currency traders expect the koruna to be at risk until the political negativity clears – probably through a general election next April – June 2007. After the early general election, the currency is expected to strengthen again also because it is probable that the right-wing party will win the elections again. They are willing to introduce the reforms necessary for the Czech Republic.
Long term the koruna has fundamentals that suggest it will remain strong amid fast economic growth and a continuing inflow of foreign investment, and to remain within the range of 28.00 to 28.50 against the euro.
The Czech economy is expected to grow by more than 6% this year, after expanding by 6.1% in 2005. GDP is expected to slow to 5.1% next year. GDP growth in percentage terms has been excellent since September 2000.
Here is why this scenario works for me. About 12% of my portfolio did until last week consist of Swiss franc loans invested into Euro. These Swiss loans currently cost 3.125%. The loans have a nice forex profit. When I borrowed Swiss francs it took 1.50 Swiss francs to buy one euro. Now the parity is about 1.60 Swiss francs.
This means for each 100,000 Swiss francs I borrowed (and I have borrowed hundreds of thousands) I received about 67,000 euro. The euro bonds I bought are paying me an average in the 5% range. This means that I get paid a positive carry of about 1.875% above my loan costs for taking this risk. So for each 100,000 Swiss franc borrowed I have been paid CHF1,875 extra francs each year. So if I started with CHF 100,000 and borrowed 200,000 more, I earned 8.75% on my safe conservative bonds in euro instead of 5%. Here is where the beautiful extra profits come in.
The euro has appreciated versus the Swiss franc so now the 67,000 euro that I borrowed 100,000 Swiss francs to invest is worth 107,200 Swiss francs! In short my forex profit is an extra 7%.
But what should I do? If I pay off the Swiss loan, I stop earning that extra positive carry. By switching into the Koruna, I pay a higher interest rate. The 2.25% LIBOR means I pay 3.75%, but still have some positive carry.
The switch locks in my Swiss forex profit, plus I now again have borrowed a strong currency (at a pretty low interest rate) that is likely to depreciate and make yet another forex profit.
Join Merri and me this November 9-12 in Ecuador. Meet economic experts from Jyske Bank. Meet Steve, our man in Ecuador, and learn about products to export. Meet our Ecuadorian attorney, Dr. Andres Cordova, and learn how to own real estate in Galapagos and the cloud forests. Meet our tour operator, Santiago Guamani, and learn how to create your own tour business. Review where to invest and do business now and learn which markets and currencies may be strong in the year ahead. International Business and Investing Made EZ
See tomorrow’s message to learn what makes this deal even better! Learn how to join our Borrow Low – Deposit High Tracking Service at Borrow Low Deposit High – How to Use the Multicurrency Sandwich
The Borrow Low – Deposit High strategy can reap rich harvests. Yet what good is wealth without good health? If you don’t feel good, money does not matter so much. Plus you might have to give away everything you have earned for health care.
Thinking about all this and a nice harvest brings us to autumn. This is my favorite time of year but tinged with melancholy. Parts of me hate to see the lazy hazy summer go. One part of this sadness is that our garden is near its end. We lose the joy of stepping out and picking fresh corn, beans, greens, peas and ripe rich tomatoes.
However, the bright spot is that this is time for pumpkin and winter squash! Our fields around here are dotted with the bright orange of autumn including these wonderful gourd foods. Few foods are healthier and here is a wonderful protein balanced meal using butternut squash. This is a spin off from a William and Sonoma recipe but replaces the high carbohydrate rice with quinoa and alters some of the spices to enhance the food’s balancing attributes.
Butternut Squash Quinoa Risotto. Risotto is a delicious Italian recipe that dates far back into history. Risotto is usually served as a first course, but with the additional of the quinoa can become the main meal. Risotto is normally made from a high-starch rice, but the quinoa adds a extra protein punch.
7 Tbs. Ghee or clarified butter
2 Tbs. minced fresh sage
6 cups vegetable or chicken stock
2 cups butternut squash puree
2 Tbs. olive oil
2/3 cup caramelized onions
2 cups quinoa
1 tsp. minced fresh rosemary
1/8 cup dry white wine vinegar diluted in 1/3 cup water
1/2 cup grated Jack or Mozzarella cheese
Salt and freshly ground pepper, to taste
In a small saucepan melt 4 tbs of the ghee over medium heat. Add 1 Tbs. of the sage and heat until the butter browns. Strain the butter into a small bowl and discard the sage. Cover the bowl to keep the butter warm.
In a large saucepan over medium-high heat, whisk together the stock and squash puree. Bring just to a simmer, 8 to 10 minutes; maintain over low heat.
Warm the olive oil over medium heat in a large sauce pan. Add the caramelized onions and quinoa and stir until the grains are well coated. Stir in the remaining sage and the rosemary. Add the wine vinegar and stir until it is absorbed.
Add the simmering stock mixture a spoonful at a time, stir continuously.
When the quinoa is tender (about 30 minutes), stir in the remaining ghee, cheese, salt and pepper. Add more stock if needed, so the quinoa is thick and creamy. Let stand for a few minutes. Drizzle with the reserved sage butter and serve immediately.
Join Merri and me in the Blue Ridge leaf change for Self Publishers – Writer’s Camp October 2-6. Walk through our eleven step business development program that helps you create and sell products. We’ll enjoy Merri’s cooking every day and eat some delicious high country squash. See Writing and Publishing Courses for Self Publishing
Merri and I, after combing Ecuador for a decade, and traveling to every part of this wonderful country have settled in the northern part of the Andes . We love Imbabura Province, but know that others have a fondness for the sea and coast. So some while back a message at this site introduced Eduardo Vela and some of his work in Punta Blanca.
Punta Blanca is south of our favorite Ecuadorian coastal area but for those who like development and action this is a pretty nice part of the coast. Senor Vela represents companies that have land and houses.
This area is most easily accessed from Guayaquil, Ecuador’s largest city with the international airport being only 2 hours away.
This area has full utilities, good paved roads from Guayaquil , mobile phone service, electricity, potable water, security, trash removal, internet, satellite television. Senor Vela currently has two oceanfront lots that could be used for condominiums, hotels, or major projects: ·One is 75,320 square feet with an asking price of US$2,100,000; The other 7,532 square ft at US$210,000 asking price. Senor Vela also offers large parcels of land for Golf Courses. Here is a shot of the two lots offered.
A reader just sent me this note.
Hi Gary, Read every newsletter since I saw you last in Cotacachi. Thanks for keeping them coming. I’m returning to Ecuador next week to show a friend around, starting in the south and working our way north to El Meson. I’ll meet the little girl I’ve sponsored through Children International for 10 years on this trip and visit Gonzalo Eduardo Vela’s development in Punta Blanca while in the south. Also, he gave me a great link of a company with an office in the US providing schedules and bookings of all the regional airport carriers, with schedules and rates, within Ecuador . Invaluable for the likes of our jump around trip coming up next week: Go to www.turisvision.com and click on “Flights” on the dark blue menu bar on the right side. I’ll send you pictures and an on-site review of the development after we visit it one week from today. Thanks.”
You can learn more about the Punta Blanca project from Eduardo Vela at firstname.lastname@example.org
You can see photos and more details about Punta Blanca at Punta Blanca
Until next message, may your investment be coasting and your health never squashed!
P.S. Enjoy the beauty of Ecuador and our courses this autumn and winter of 2006-2007.
October 12-16, 2006 – Learn how to learn, retain and process information better + Spanish. Super Thinking + Super Memory + Spanish
November 9-12, 2006 – International Business and Investing Made EZ
November 13-15, 2006 – High Andes Tour. Discover the Mystical Andes
January 5-7, 2007 – Inspired Investing beyond Logic. Vedic Astrology in Ecuador
January 8-10, 2007 – Ayurvedic Cleanse.
February 2-8, 2007 – Learn how to Earn anywhere through Import – Export. Gary & Merri Scott’s Import/Export Expedition in Ecuador
Any time that space is available. Rejuvenate your health with a week’s R & R at El Meson.
See R & R at El Meson
Any time that space is available. Stay a month in El Meson and enjoy the full winter sun. El Meson da las Flores Hometel