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International Investments



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International Investments - Seven Year Portfolio Shift

By Gary Scott

International investments take many forms. To help everyone see what can be done we periodically look at Merri’s and my investment portfolio. We do not suggest that this should be your portfolio. We only hope that sharing why and how we make changes can help you direct your financial planner and affairs.

We seem to be at an end of a seven year period in our portfolio. We have been making some big changes so let’s look at the portfolio, then the whys and how.

Investment

Description

Currency

Int. Rate Maturity % of Portfolio
Current account   US$

4.500%

   
Current account   Brit Pds. 4.000%    
Current account   NOK 2.000%    
Current account   AUD 5.125%    
Cert. Deposit   US$ 5.110%    
3 Month Money Mkt.   US$ 5.205%    
Cash Total         15%
 
Shares Bank of Florida US$      
Shares Jyske Bank DKK      
Shares HYFLUX LIMITED Singpore $      

Shares Total

        7%
 
Mutual Fund Jyske Invest Latin America Fund USD      
Mutual Fund Jyske Invest Eastern Europe Fund EUR      
Mutual Fund Jyske Invest German Equity Fund EUR      
Mutual Fund Jyske Invest Japanese Stocks        
Mutual Fund Jyske Invest CHINA        
Mutual Fund Jyske Invest INDIA        
Mutual Fund Jyske Invest FAR EAST        
Mutual Fund Jyske Invest Favorite Stocks        
Mutual Fund Total         7%
 
Bond LB Reinland-Phalz AUD 5.875% 24.07.2006  
Bond Great Belt Bonds DKK 4.000% 20.12.2006  
Bond British Telecom GBP 7.125% 07.12.2006  
Bond Landwirt. Rentenbank AUD 4.500% 28.12.2006  
Bond Norway S467 NOK 6.750% 15.01.2007  
Bond Rabobank NL USD 4.875% 23.01.2007  
Bond Council of Europe USD 4.875% 23.01.2007  
Bond Westpac Trust NZ NZD 6.000% 05.03.2007  
Bond Nederl. Gemeenten USD 5.000% 22.03.2007  
Bond Ford Credit Canada GBP 7.250% 07.12.2007  
Bond Swedish Export Credit NZD 6.250% 19.12.2007  
Bond Dresdner Bank EUR 4.000% 19.01.2007  
Bond Landwirt. Rentenbank AUD 5.500% 16.04.2007  
Bond Hungary Governm. HUF 6.250% 12.06.2007  
Bond Scandinavian Airlines EUR 6.000% 20.06.2008  
Bond Spintab SWE SEK 5.000% 18.06.2008  
Bond Deutsche Telekom USD 3.875% 22.07.2008  
Bond NRW Bank NZD 6.500% 26.08.2008  
Bond Volkswagen Intl. Finance NOK 5.000% 10.11.2008  
Bond Rabobank NL CAD 4.250% 05.01.2009  
Bond European Investment BK TRY 10.000% 28.01.2011  
Bond Hungary Govern HUF 6.750% 12.02.2013  
Bond Brazil GVT BRL 12.500% 05.01.2016  
Bond Total         33%
 
Leverage Invest Loan CHF 2.750% -208,634 -12%
 
Gold          
Silver          
Metal Total         4%
 

Farm & Commercial Property

      46%
 

Breakdown By Investment Type

       
Current and CDS 15.6%        
Stocks 7.2%        
Mutual Funds 6.7%        
Bonds 33.32%        
Metals 4.00%        
Real estate 46.00%        
Loan -12.82%        
 

Breakdown By Currency

       
US$ 56%        
Brit Pd. 9%        
Emerging 8%        
Euro 9%        
Danish kroner 7%        
NZ$ 4%        
Norway kroner 3%        
Aust. $ 3%        
Japan yen 2%        
Swede kroner 1%        
Canada $ 1%        
Swiss franc -12.0%        

Seven years ago we shifted our portfolio as we sold most of our publishing business and shifted to an internet only affair. Interest rates and inflation were low then. Our interest was developing income then and seeing our bond values rise as interest rates dropped. At that time we were most heavily invested in bonds denominated in euro and affiliated currencies (British pounds, plus Danish, Swedish and Norwegian kroner). Second we were adding real estate we could enjoy and use in our business that would appreciate as well.

The portfolio above shows that as bonds have matured we have now added many more equities and emerging market currencies.

This is because we believe in global inflation and a weakening US dollar.

Here are some thoughts on our portfolio. First, we are increasing shares, but still only have three specific equities. Two of these equities are in businesses (banking) we know well, These are companies where we know the top management well as well. The third is based on our belief that water will become increasingly scarce, plus is a play in China. This company (Hyflux) does a big part of its business in China. We are adding other equities via mutual funds. We have chosen only ideas (Germany, Japan, India, China, Latin America and Eastern Europe) and let Jyske managers decide on the specific shares in each region. Our biggest weighting is in Japan with Emerging Asia second and the rest at equal weightings.

Second the portfolio is over diversified. This has to do with our PIEC three phase investing formulation. If you do not understand PIEC, see garyascott.com/archives/2000/02/02/55/index.html

Our business absorbs our main time, energy and interest. This portfolio’s goal is to keep our second and third tier capital stable until it is required and protect this capital against inflation. The diversification almost guarantees protection against doing really well. On the other hand it also keeps volatility low. This last month, which has been the second worst in a decade, the portfolio only dropped about 4% for the month. This is not as bad as it seems since the portfolio had risen almost 2% the month before. Even after this really terrible month the overall portfolio is still up over the last year.

Third, we continue to hold a large percentage in real estate. Well purchased and managed land will fight inflation and a falling greenback. Plus the land (farmland attached to our home) provides recreation and helps our business. This adds a huge holistic value to this asset! We enjoy this real estate, use it in our business and it has appreciated about 700% in the last seven years.

Learn more about fighting inflation by investing in emerging currencies, gold, silver, Ecuador, import-export, overseas markets and more. Join Merri, Thomas Fischer from Copenhagen and Steve Marchant from Ecuador and me at our September 15-16-17, 2006 International Business and Investing Made EZ course in North Carolina. Review where to invest and do business now and learn which markets and currencies may be strong in the year ahead. Learn more about Ecuador import and export from Steve. Our May course was overbooked and the September up date is coming along. Our free accommodations are reserved on a first come first served basis so do not delay! Go to http://www.garyascott.com/catalog/ibeznc

Gary

June, 2006

 

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