Ecuador Profits Out of Fashion

by | Sep 28, 2007 | Archives

Ecuador profits may be out of Fashion but Ecuador’s President may be  good.

One frequent concern that readers express when they ask about Ecuador  is about the political stability.

This is interesting for two reasons. First, most of these concerns come  from Americans where I feel the political scenario is less stable than most.

Where else are other nations trying to kill the population? Where else  are there so many rules and regulations that concern everyday life (like  how to carry toothpaste onto an airplane)? Where else is the currency in a  free fall?  So why worry about political stability in another place? We have enough worries at home!

Second, I am probably not the best person to ask.  I do not like politicians.  My attitude and cynicism is not really fair. 

Most  political offices are impossible jobs that come with temptations which few human beings can resist.  The whole idea of the position probably attracts  the wrong people. Then the pressures and realities of the post change even  the good ones who are elected.  Even when they try and do the right things  (as I believe Jimmy Carter did) the system sabotages them.

I should not be disappointed in politicians and the democratic  capitalistic political system.  Everything I see says it’s the best system we have  had so far.  Yet continually I am, by graft, corruption and thinking that  seems to me short term to me.   I hate the wars, the waste, the lies and get  enough of it right here in the US.  So in Ecuador I try to escape this

Yet Neanderthal Man probably did not want to think about the Saber  Tooth Tiger either but…if it was nipping at his heels.  So I read, I ask, I listen and I think about politics in Ecuador.

Darn when I add everything together, I quite like Ecuador’s current President, Rafael Correa.  If this positive perception is correct, this  is good from an investing point of view.  Correa has a running battle with  the Ecuadorian press and what is written about him abroad is just cookie  cutter stuff…he is leftist…he is populist…he is like Chavez…he is another  Peron.
This turns the world off Ecuador and makes the place less fashionable.

Writing this way is easy and fashionable. Everyone understands leftist, Chavez and Peron so the press just stick with the easy fashionable  stuff.

Why bother with looking at the reality? 

This allows those of us who avoid investing in fashion an opportunity  to find special values in which to invest.

At Ecuador Living I am doing a series entitled “Seven Reasons why  Ecuador’s President May be Good”. Let me quote an excerpt from reason #1.       

Many people and especially many articles in the press compare Rafael  Correa to Hugo Chavez and Peron. Yet there is a huge difference.

First, Peron and Chavez both came from a military background. They were cunning, (not smart) soldiers who took over and ruled with a lot of  help from military force.  Correa has never been in the military and appears  to be smart. He comes from an entirely different upbringing and career.

This was highlighted in Wikipedia which says:

“Correa earned an Economics degree at the Catholic University of  Guayaquil in 1987. Following his degree, he worked for one year in a mission and welfare center run by the Salesian order in Cotopaxi Province, where he acquired some knowledge of Quichua, the language of the majority of the native pre-Columbian population concentrated in the Andes region. In addition to Spanish and Quichua, he is fluent in French and English.

“Correa received a Master’s degree in Economics from the Université Catholique de Louvain (Belgium), and a Ph.D. in Economics from the University of Illinois at Urbana-Champaign (United States) in 2001.

According to The Washington Post, Correa’s adviser at the University of Illinois, Werner Baer, supports his former student. ‘He appreciates the market to a certain point, but he knows that the market left alone concentrates wealth,’ he said. ‘He is not going to do anything  foolish… because he is a fairly open-minded person.'”

An article in the Orange County Register by Amy Taxin entitled “A Lake Forest woman lives a dream while her son campaigns to govern Ecuador  gives an even deeper insight” says:

“LAKE FOREST – Norma Delgado starts out each morning feeding her 101-year-old father and 99-year-old mother breakfast and giving them  their medication in their Lake Forest mobile home.  She tidies the house and begins preparing lunch. Sometimes, she heads outside to clip the  fuchsia rosebuds she planted on the lot the family owns in the seniors’  community.

Norma was born on a coffee and cocoa plantation on Ecuador’s rugged  Pacific coast. She walked to work every day and met her husband on the way, a  road inspector named Rafael Correa who ushered her to dances, courted her
and married her.”

The article goes on to say how when her son Rafael Correa was born and  left for school each day, Norma cooked lunches she would sell to neighbors  to make a living, asking the boys to deliver the food.

The article outlines how Rafael joined the Boy Scouts and excelled in  public speaking.

It says that Correa’s grandparents, mother and aunt moved to California  and became U.S. citizens and Rafael headed to Belgium for his master’s  degree in economics and to Illinois for his doctorate. He eventually returned to Ecuador and began teaching at a university on the outskirts of the  capital.

He then served as Ecuador’s finance minister in 2005.

Correa’s mother, aunt and many of his close family still live in  California.

They call him on Sundays. She still spends her days caring for his grandparents with help from his aunts, who shuttle in groceries from  Costco every few weeks.

This is the first reason why Correa may be a good president. He is a  smart person of humble beginnings who has worked his way to the top. He is  well educated, cosmopolitan and has an economic background as well as world
experience and an international lifestyle with a Belgian wife and US  family.

That said, no one can see within a man’s heart. No one can know how the system will react to the man or the man to the system.  The rest of the Ecuador Living series looks at some of Correa’s actions to date in the  hopes we can get a better clue.

All in all no one ever knows what politics will do in any one place to business and investing.  However when there is a perception of risk,  the premium that gets added to the investment return is often more than the
actual risk.  This is especially true when the risk is magnified by misperception and a biased press.

I am betting this is the case and investing more in Ecuador.  You can  see why in greater detail at Ecuador Living.  See

Until next message, good investing to you.


Better still, see for yourself.  Join us this November in Ecuador. See