International Investment Changes in My Portfolio
International investments are a sensible way to combat inflation and protect purchasing power. Equities have traditionally been one of the best ways to fight inflation and international equity can be enhanced with low interest rate loans.
Recent messages have looked at three international investment portfolios using Czech koruna loans to leverage international investments in equity mutual funds.
Readers have been reporting great success with these types of international investment portfolios. One reader just sent this note.
“I want you to know that although I did not follow your exact advice, I made some Asian investments and took out a Czech Coruna loan some months ago. The statement from Jyske came yesterday. As with every month, it is up substantially over the previous month.”
However this is not so easy for US investors because the American government is protecting us (I hope you feel the sarcasm dripping from my pen).
Overseas mutual funds have to beware of Big Brother in the form of a US regulation. This regulation says that even if an overseas fund does not invest in the US, does not do business in the US,; is not resident in the US, and does not sell in the US, if an overseas fund accepts more than 99 US clients, the US authorities can claim jurisdiction.
Overseas fund managers may not be in the US , but they all have to do business in the US , so no fund manager wishes to incur this wrath.
Many overseas funds simply refuse to accept US investors. Others (such as Jyske Invest) will accept 99 clients.
The bad news is that the most popular funds I have written about often, such as Jyske Invest Favorite, India, China and Japan are filled. When a US investor sells, a position opens, but this limits maneuverability and long term, I doubt that this will get better. I have watched US regulation slowly reduce the options US investors enjoy for decades and cannot imagine this will end any time soon. US investors should look for alternatives to overseas funds.
One idea is to mirror successful funds and as a US investor myself, I am always looking for better ways to do this.
A recent message looked at mirror investing and gave examples of portfolios derived by mirroring. You can see that entire message at garyascott.com/international_investments/international_investments_158.html
One of the examples of international investments I gave looked at the five top funds in Jyske Invest China Equity fund. These shares were:
#1: China Mobile
#2: China Life Insurance Co.
#4: China Construction Bank
#5: China Petroleum & Chemical
I reviewed this with Thomas Fischer at Jyske Bank and he shared two interesting insights.
He wrote: “Gary , Invest Loan investors should have diversification. The five shares above are all HKD related. Also Jyske Invest’s holding list is delayed for up to 3 months due to competition. So funds shown in the holdings could, in principle, be on our sell list and not part of the fund now.
“I suggest that you use our updated buy list and pick stocks from this list they are all backed by our trading room. Please remember that our account managers will want investors who use a Multi Currency Sandwich to hold at least six shares in 3 different sectors for adequate diversification.”
See Jyske’s buy list: http://www.jbpb.dk/files/equity_recommendations/kob_uk.pdf
That recent message pointed out that no one should just invest blindly in any mirrored share. Thomas’s insights outline why.
However looking at a fund’s portfolio can help you zero in, even if it is three months dated. Looking at Jyske’s buy list should help zero in as well and looking at Keppler’s top value markets refines the outlook even more.
You can see Keppler’s most recent valuations at https://www.garyascott.com/international_investments/181.html
Keppler’s recent valuations in major markets downgraded Hong Kong from “Buy” to “Neutral”. His emerging market valuations also rank China as a neutral value market.
We can also see that none of the shares above are on Jyske’s buy list.
This three point vector offers a really easy and yet extremely powerful starting point for your research. But then we should do much more.
*** INTERNATIONAL INVESTMENTS GREEN PORTFOLIOS UP 50.15% IN 2.75 MONTHS ***
You can see below from our Green Multi-Currency Portfolio how select individual shares can outperform mutual funds.
First, we should invest in ideas we believe in, what we know, what we love and what we feel comfortable with. This is one reason we have formulated the GREEN portfolio that we are tracking in our multi-currency portfolio tracking service.
This portfolio is the top performer of the five portfolios we are tracking so far this year, up 50.15% in less than three months.
The Green portfolio is the only one of the portfolios that does not contain mutual funds, but consist of just six shares. Two of these shares specialize in water purification. Messages have been recommending this sector for a number of years and my belief in water continues to grow.
Look at the bottled water industry in just the US alone. Americans spent an estimated $11 billion last year on bottled water. Americans now drink 28 gallons per capita. This is more than any other commercial drink except carbonated soft drinks (50 gallons per capita). This is more than milk, coffee or beer.
This trend is still growing at a rate of 10% per annum! At this rate, within ten years bottled water could overtake carbonated beverages as the leading American drink.
This is driven by the health and wellness market.
Bottled water is not the only sector where investing makes sense. Municipalities spend billions to pipe clean, cheap water into homes.
This also leads to another sector in which our Green portfolio has invested, trash removal. The bottled water industry creates an entirely new problem, the removal of billions of plastic water containers.
You can learn more about the GREEN portfolio at garyscott.com/international_investments/international_investments_116.html
You can track our Green and the other four portfolios with us with our Multi-Currency Educational tracking Service. Here is how these portfolios have performed so far since November 2006.
|TOTAL APPRECIATION TO DATE|
Learn why we have chosen these portfolios in a sixteen page email report about how 13 economic forces that may well shape investment markets this year. Learn how to get the report free at https://www.garyascott.com/catalog/bldh
* * * Changes in My Portfolio * * *
BASED ON THE THINKING ABOVE, PLUS ONE OTHER VITAL FACTOR LAST WEEK I LIQUIDATED ALL MY EQUITY MUTUAL FUNDS AND SHIFTED INTO SWEDISH AND DANISH BONDS INSTEAD.
This does not mean you that you should liquidate now. There may be plenty of steam in emerging equity markets and you’ll want to shoot me if you follow my lead and these markets move on to new highs.
Our decision to unload equities relate to several thoughts.
#1: Our review of Keppler’s emerging market valuations notes that emerging markets have outperformed major markets for six year’s in a row.
#2: We learned from tracking our multi-currency portfolios last year that emerging markets were subject sudden corrections. Since then risk aversion has diminished and so the next correction could be even more sudden.
#3: Most of the funds we held that have done so well are now in markets that Keppler rates as neutral or low value.
#4: Most of the equity regions (i.e. Latin America, Asia, Europe are in phase 4 of their bell curve (top of the bubble).
To review the four phases go to garyscott.com/international_investments/international_investments_85.html
#5: MOST IMPORTANT! We are making other investments that lead us to becoming more risk adverse in our liquid portfolio.
This fifth point goes back to the statement above that “First we should invest in ideas we believe in, what we know, what we love and what we feel comfortable with”.
Thus Merri and I are making a major commitment right now in Ecuador real estate. See how this led to our decision to liquidate our equities now at garyascott.com/international_investments/186.html
Until next message, may all your international investments be good.
P.S. Join us in the Ecuador sun this winter. Here is a schedule of the courses Merri and I will sponsor and or conduct.
Feb. 20 – 25, Tues.-Sun. Import-Export Course.
Mar. 9 – 15, Fri.-Thurs. Expanded Super Thinking + Spanish.
Mar. 16 -18, Fri.-Sun. International Business and Investing Made EZ.
Mar. 19 – 21, Mon.-Wed. Andes Extension & Real Estate Tour.