International Investments in Emerging Markets Bring Safety

by | Oct 28, 2006 | Archives

International investments bring safety and enhance wealth. Some times investments that traditionally appears to be safe, are actually at the highest risk. All too often that which is new seems risky. Yet deep inside we really know that change is the reality. The real risk is in things that are old. We cannot stop evolution. (Though we really do often try). The familiar offers such comfort, even when we don’t like it, and the unfamiliar smacks so strongly of potential errors.

This is human nature, but history has shown again and again, that stepping boldly into the unknown is usually the richest way to live.

A great example of this was seen when we recently celebrated the one year anniversary of our Borrow Low – Deposit High Educational Service. We started five model portfolios October 21, 2005 and we reviewed them bi-weekly through the year.

During this time the portfolios had to cope with the second worst emerging market crash of the decade (from March through July 2006). Despite this they came through pretty well. These real time, case studies performed as below:

Emerging Asia Portfolio             + 110.48%
Emerging Currencies Portfolio  + 42.86%
US dollar Hedge Portfolio         + 10.60%
US dollar Long Portfolio            + 8.81%
US dollar Short Portfolio           + 7.32%

The Emerging Asia and Emerging Currencies portfolios strongly over performed their projections. The three dollar portfolios gained less than projected, but still beat any US dollar, Euro or Western European currency bond yield or CD interest. The price for this extra performance was volatility. The portfolios rose strongly early in the year and then fell sharply before slowly recovering.

Most of the growth in all the portfolios came from four funds.

Jyske Invest China Fund – Up from $75,000 to $117,498.05
Jyske Invest India Fund – Up from $75,000 to $115,343.40
Jyske Invest Eastern European Equity Fund – Up from $51,000 to $76,115.82
Jyske Invest Latin America Equity Fund – Up from $51,000 to $70,049.75

Had we taken an aggressive view and invested $100,000 (plus $200,000 borrowed) and invested $75,000 each in these four funds, our return would have been much higher.

Had we been more conservative and invested just in seemingly safer bonds instead we would have lost money for the year.

Though the US stock market via the Dow Jones Industrial Index achieved an all-time high over the same period, few US share portfolios achieved such high returns.

Next week we are doing a final review of these particular portfolios with an in depth analysis of what went right and what also could have gone very wrong…and why it did for some investors.

We hope to learn from this review (see how to receive it free below) a better understanding of why safety comes in the new. We hope to learn how to better see through the illusion of safety in the past.

Until then good global investing, Gary

P.S. During its first year, our Borrow Low – Deposit High Educational; Service, had the fortunate offer to be taken over by one of the largest publishing companies in the US. We looked at this offer in many ways and finally had to decline due to differences in various philosophical ideals. It seems that our desire to provide an intimate, fast paced, real time service, does not blend well with the restrictions that larger institutions must apply to themselves.

During this trial (and negotiating) year we maintained an artificially low price ($99 per annum) for our charter members of the service. Now are raising the annual fee to a higher, more sustainable level ($149 per annum).

However you can still enroll (until next week) at the $99 per annum price.

We’ll be doing an annual summary of the five portfolios we began with plus introduce the new portfolio models we’ll study over the next year. You’ll receive all this in an immediate enrollment,. Details are at Borrow Low – Deposit High

Even better, join Merri, Jyske Bank and me at our upcoming November International Business and Investing Course in Ecuador. Learn how to diversify globally. See International Business Made EZ – Ecuador