Ecuador Real Estate Versus Equities

by | Nov 7, 2009 | Archives

Ecuador real estate is a good diversification from equities.

On  October 26  (the week before the Dow dropped below 10,000) I sent my Multi Currency subscribers a Triple Crunch warning… three signals of caution in equity markets that could cause a market crunch.

Here is an excerpt of that equity market warning… then we’ll see a good diversification for stock market risk in Ecuador real estate.

Crunch #1: Seasonality and October.

We remind readers about twice a year of seasonality.

Equity markets have been really strong through the summer months, though historically, spring and summer are times when equities are weak.

October is traditionally the witching month when overbuying gets corrected.

Crunch #2: An important maxim in investing is that periods of high performance are followed by periods of low performance… and vice versa.

So after the second worst market correct in a century… we have seen one of the best upswings in history.  We looked at this in Keppler’s Emerging Market Analysis.

He wrote:

“After having recorded their highest ever quarterly returns in the second quarter 2009, Emerging Markets again  posted strong gains for the third quarter, which ranks as the ninth best in the history of the MSCI Emerging Markets Index:

“MSCI EM Total Return Index
Quarter ending Change in US Dollars (%)
June 2009  34.7
December 1993  32.6
March 1991  29.2
December 2001  26.6
December 1999  25.5
June 1999   24.4
June 2003   23.3
September 1989  22.8
September 2009  20.9
September 1994  20.8

“The MSCI Emerging Markets Total Return Index (December 1988 = 100) advanced 20.9 % in U.S. dollars and 16 % in euros last quarter.

We saw this in yesterday’s update with Keppler’s Major Market Analysis as well…  He wrote:

“Now, six months later, the Morgan Stanley Capital International (MSCI) World Total Return Index (with net dividends reinvested, December 1969=100) recorded its second consecutive quarterly double-digit gain after a string of seven consecutive negative quarters ended in March of this  year.

“Both the second and the third quarter 2009 total returns of the MSCI World Index are among the top ten quarters since the inception of the Index at the end of 1969:

“MSCI World Total Return Index
Quarter ending Change in Local Currencies (%)
March 1975  24.4
December 1998  19.0
December 1999  18.0
March 1986  17.0
March 1987  16.7
June 2009  16.5
June 2003  15.2
March 1998  15.1
December 1982  15.1
September 2009  14.8″

Thus we must ask… “When will the next downwards correction take place?”


This does not mean you should liquidate equities now if you are thinking long term.  Value analysis is more accurate long term than market timing.   In value theory… the markets will not be overvalued until the red line meets the blue line in the chart above.

However in theory when the red line meets the bottom gray line the risks of volatility grow dramatically.

You can read the entire Triple Crunch warning… see crunch #3 and what risks are in the market now as a subscriber to our multi currency service.
Seasonality suggests that November through April are times of greatest stock appreciation, but many other factors warn of downwards pressure on  US shares.  Perhaps this means sideways movement rather than a crash. In either case this triple analysis suggests that equity markets now have more risk and less potential.   This means that equities have less value now and good value is what investors should always seek.

With growing potential for inflation, shares, real estate, commodities and one’s own business offer the best protection.  If shares are riskier now, where should one invest instead?

Ecuador real estate is one option because property there gains impetus from North American problems.   Many fundamentals  that reduce North American equity prices such as… recession… rising unemployment… higher taxes… rising prices…  increased government interference in life… failing pensions… increased stress help Ecuador real estate.  These many problems push ex pats to Ecuador.  These problems add upwards pressure to Ecuador real estate prices at the same time they push equity prices down.

This is why we have increased the number and number of places where we’ll conduct Ecuador real estate tours in 2010… including Cuenca.

Though we have been writing about Ecuador real estate for almost 15 years, the benefits of Ecuador real estate are just becoming common knowledge.

A recent MSN Money Central article entitled “The world’s best places to retire” said: US retirees looking for lives of comfort at bargain-basement prices might do well to look at a sunny, sophisticated city near the equator. Cuenca, Ecuador’s third-largest city, is a well-preserved colonial city of cobblestone streets and dramatic period architecture, with modern suburbs, shopping and all the comforts American retirees might expect. Yet they can live there — and well — for about $17,000 a year, the magazine says.

Merri and I love Cuenca for its solid values, cleanliness and the wonderful colonial red tile roof  charm.


This shot taken from the roof of Stephen and Leanna Milden’s house in Cuenca shows what I mean by colonial charm.  Their house is in the foreground which is in San Joachin district of Cuenca.

Stephen and Leanna conduct our Cuenca real estate tours.  Our first Cuenca real estate tour starts January 22 and 23, 2010.  See the entire schedule below.

Cuenca is a modern sophisticated city with great colonial architecture. Here is one of the many squares in downtown Cuenca.


Yet Cuenca has a wonderful natural side as well.  Stephen & Leanna chose Cuenca in part because of access to organic raw food. Here are organic farms in the San Joachin area of Cuenca.


Ecuadorian real estate also benefits from strong family ties and religious involvement in the society.


This is the main Cathedral in the center of Cuenca with another church’s spire in the background.

A successful formula for long term investing is to expect inflation, seek good value and diversify… because we can never know everything.  Ecuador real estate offers a good counter balance to North American equities and provides delightful alternatives for living as well.


Join us at our upcoming courses and tours on international investments and business.

Nov. 9-10 Imbabura Real Estate Tour

Nov. 11-14 Ecuador Coastal Real Estate Tour

December 6-8 Blaine Watson’s  Beyond Logic & Shamanic Tour

December 9-10 Imbabura Real Estate Tour

December 11-13 Ecuador Coastal Real Estate Tour

Jan.   8-11     Ecuador Export Tour ($499)

Jan. 13-14     Imbabura Real Estate Tour
Jan. 16-17     Coastal Real Estate Tour
Jan. 19-20    Quito-Mindo Real Estate Tour
Jan. 22-23    Cuenca Real Estate Tour

Feb. 15-16   Travel to Quito and Andes
Feb  17-18   Imbabura Real Estate Tour
Feb. 20-21  Coastal Real Estate Tour
Feb. 23-24  Quito-Mindo Real Estate Tour
Feb. 26-27  Cuenca Real Estate Tour

Mar. 15-16    Travel to Quito and Andes
Mar. 17-18     Imbabura Real Estate Tour
Mar. 19-20    Cotacachi Shamanic Tour
Mar. 22-23    Coastal Real Estate Tour
Mar. 25-26    Cuenca Real Estate Tour

Our multi seminar-tour discounts have grown!

1 real estate tour  $499 Couple $749

2 seminar courses & tours $949 Couple  $1,399

3 seminar courses & tours   $1199 Couple  $1,749

4 seminar courses & tours   $1,399 Couple $2,149

5 seminar courses & tours  $1,599 Couple $2,499

(Be sure to show in the comments section which courses and tours you are attending)

Read the Money Central article The world’s best places to retire here.