The chart above from grandfather.com shows how the US dollar has fallen steadily over the past 40 years.
Yet recent posts at this site have looked at borrowing Japanese yen and investing in Euro.
Why not borrow US dollars instead of yen?
We must always proceed with caution when we borrow low & deposit high. The chart above shows how the dollar has had a steady downwards trend for 40 years. However note the six year spike in 1980. Anyone who borrowed the US dollar in 1980 was clobbered or had a long wait before it fell.
A lot of the thinking behind the idea of the falling dollar is based around the huge US government debt and deficits along with the ever growing trade and current account deficits in the US.
However Japan has even more debt as a per cent of GDP than the US… though it is mainly internally financed.
Yet we need to look beyond these negatives before we speculate. There are positive forces for the greenback as well. Ignoring them is an error.
These positives in the US are one reason why it may be better to borrow yen instead of the US dollar.
There are five fundamental beliefs that should always part of our economic thinking.
#1: Markets are efficient and always reflect fundamental forces in the long run.
#2: Human emotions are not efficient and create short term distortions in markets.
#3: There are always things we cannot see.
#4: We should not speculate with more than we can afford to lose! (Because of point number one.)
#5: Belief in fundamental ideas are vital. There are always things we do not know… but fundamental beliefs have enormous power at incredibly deep levels of investing. Belief in fundamentals help us ride through short term market fluctuations created by human emotion.
These facts always keep me looking for new ideas in which to believe. Having ideas that upgrade human productivity is one type of idea I actively seek. I believe that increased productivity brings greater abundance.
One way I look for improved productivity is to continually monitor innovation.
A recent story in the Economist about Russia included this chart showing innovation. The US was still in the lead.
Chart from Economist article Modernising Russia – Another great leap forward?
The source of the data for this chart is World Economic Forum
Here are excepts from The Global Competitiveness Report 2009-2010 by this forum.
Switzerland tops the overall ranking in The Global Competitiveness Report 2009-2010. The United States falls one place to second position, with weakening in its financial markets and macroeconomic stability. Singapore, Sweden and Denmark round out the top five. European economies continue to prevail in the top 10 with Finland, Germany and the Netherlands following suit. The United Kingdom, while remaining very competitive, has continued its fall from last year, moving down one more place this year to 13th, mainly attributable to continuing weakening of its financial markets.
The rankings are calculated from both publicly available data and the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum together with its network of Partner Institutes (leading research institutes and business organizations) in the countries covered by the Report.
The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas.
This 38-year think tank has headquarters in Geneva, Switzerland and is an independent, international organization incorporated as a Swiss not-for-profit foundation. They strive towards a world-class corporate governance system where values are as important a basis as rules. Their motto is ‘entrepreneurship in the global public interest’. They believe that economic progress without social development is not sustainable, while social development without economic progress is not feasible.
Their members represent the 1,000 leading companies and 200 smaller businesses – many from the developing world – that play a potent role in their industry or region. Since 1971 they have had an annual meeting in the village of Davos, Switzerland.
So we cannot totally write off the US dollar because of the American spirit of innovation.
Though it is hard to sometimes see how America can deal with its debt and deficits… imagine how much wealth another innovation, like the internet can mean to the greenback, if it comes from American innovation.
This is another reason why when we borrow low-deposit high, we always look first and foremost at the positive carry… the difference between the loan rate and what we earn. Right now you can borrow Japanese yen (from Jyske Bank) at 2.5 to 1.75% (depending on how you borrow). Interest rates on the US dollar are higher… 2.75% down to to 2%.
Finally we like the idea of borrowing yen right now because it has been so strong recently… without fundamental cause. This contrarian view has made sense. The yen has fallen about 5% versus the euro in the last month.
The borrow low -deposit high tactic can increase earnings and profit… yet if you use a multicurrency sandwich be sure to think about the five rules above and the gold rule of all investing… never speculate with more than you can afford or willing to lose.
Gary
The yen loan position looks so strong to me now that I am updating my report “Borrow Low – Deposit High”. Our emailed Borrow Low-Deposit High report can help you learn how to expand your profits with up to 400% loans just as our reports have helped thousands of readers do over the past twenty years.
You can learn why this profit is available in my new updated “Borrow Low-Deposit High–How to Use the Multi Currency Investment Sandwich” emailed report. This email report explains everything you need to know about how to create and invest in the Multi Currency Investment Sandwich. (See details below.)
Tens of thousands of readers have purchased this report, and several updates, since it was first published in the 1980s. You however can have the most up to date edition at a $30 savings.
I am updating Borrow Low-Deposit High now. When the new update is complete it will be offered at $79.
This report will include ideas on were to invest in China and Russia (both neighbors of Japan) now.
You do not have to wait and miss this yen opportunity, buy our report “Borrow Low-Deposit High” for $49. I will email it to you immediately… plus when the new update is complete, I’ll email that to you also… FREE.
The report helps you see why and where to invest and learn why and how currencies and interest rates rise and or fall.
Finally, as always you are protected by our 30 day completely satisfied or your money back guarantee.
Borrow Low Deposit High – How to Use the Multi Currency Investment Sandwich… click here to get this emailed report for only $49.
This is also why we maintain close contact with Jyske Bank, Denmark’s second largest bank. Denmark is rated by Standard & Poor’s as the safest country in the world to bank in. Jyske Bank is the only bank we know that specializes in the Borrow Low Deposit High strategy. Jyske Bank is also one of the leading currency traders in the world. Unlike most banks (that trade only eight hours a day) Jyske maintains a 24 hour trading service. They have been our bank for over twenty years and help us stay informed about global equity markets, plus global currency parity and interest rate trends so we can learn from portfolios that are real time. What you learn from is actually happening as our service unfolds.
More importantly Jyske Bank has created an entire subsidiary that provides a stable and safe institution for US investors who wish to invest globally including a Borrow Low-Deposit High strategy.
Gary
Save $100 more. There is another important benefit you gain when you order my emailed report “Borrow Low-Deposit High”. You can save $100 at the next Jyske seminar where I review the new H.I.R.E. overseas banking regulations.
Share strategies with me in California and Save.
I speak at the Jyske Global Asset Management’s April 30 – May 2 Foreign Exchange Investment Seminar in Laguna Beach, California.
The normal seminar fee is$499 or $750 for two.
However Jyske is providing the same discount to our premium subscribers (including those who order Borrow Low – Deposit High) as to their clients… $399 single and $599 for a couple. You save $100…even though the emailed report “Borrow Low Deposit High” is only $49.
Order “Borrow Low-Deposit High – How to Use the Multi Currency Investment Sandwich”… click here to get this emailed report for only $49. Save $100 on JGAM’s California seminar.
See more on the JGAM California seminar here.
If you have questions about Jyske’s seminars contact Thomas Fischer of JGAM at fischer@jgam.com
Join us in North Carolina this June to learn more about how to bank abroad. June 24-27 International Investing and Business North Carolina
Gary
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Apr. 23-24 Quito & Mindo Real Estate Tour ($499 or couple $749)
April 26-27 Cuenca Real Estate Tour
May 9-12 Super Thinking + Spanish Course, Cotacachi Ecuador
May 13-14 Ecuador Shamanic Minga
May 16-17 Imbabura Real Estate Tour
May 19-20 Coastal Real Estate Tour
May 22-23 Quito Real Estate Tour
May 25-26 Cuenca Real Estate Tour
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Here is the balance of our 2010 schedule.
June 24-27 International Investing and Business North Carolina
June 28-29 Ecuador Travel & Andes
June 30-Jul 1 Imbabura Real Estate Tour
2010 Summer Schedule
July 3-4 Coastal Real Estate Tour
July 6-7 Quito Real Estate Tour
July 9-10 Cuenca Real Estate Tour
Sept. 3-6 Ecuador Export Tour
Sept. 8-9 Imbabura Real Estate Tour
Sept. 11-12 Coastal Real Estate Tour
Sept. 14-15 Cuenca Real Estate Tour
Sept. 17-18 Ecuador Shamanic Mingo
Oct. 7 Quantum Wealth North Carolina
Oct. 8-10 International Investing & Business North Carolina
Oct. 11-12 Travel to Quito and Andean Tour
Oct. 13-14 Imbabura Real Estate Tour
Oct. 16-17 Coastal Real Estate Tour
Oct. 19-20 Quito Real Estate Tour
Oct. 22-23 Cuenca Real Estate Tour
Nov. 4-7 Super Thinking + Spanish Course Florida
Nov. 8-9 Travel to Quito and Andean Tour
Nov. 10-11 Imbabura Real Estate Tour
Nov. 13-14 Coastal Real Estate Tour
Nov. 16-17 Quito Real Estate
Nov. 19-20 Cuenca Real Estate Tour
Dec. 3-5 Ecuador Shamanic Mingo
Dec. 7-8 Imbabura Real Estate Tour
Dec. 10-11 Coastal Real Estate Tour
Dec. 13-14 Quito Real Estate Tour
Dec. 16-17 Cuenca Real Estate Tour
