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International Investments



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International Investments
7 Come 11 in 2006

international investment trends

By
Gary Scott

Merri and I send our best wishes for a Happy, Fulfilled and Prosperous New Year. In what we hope is one of your first emails to be received this year, we share seven predictions and eleven good resolutions that we hope can make your life better in 2006.

First, the predictions:

2006 Prediction #1: Not all seven of these predictions will be right. This is the only prediction I am quite sure of, but each can help you in your planning for the next 12 months.

2006 Prediction #2: The US dollar will fall. This will create opportunity for alert investors!

The normal downwards pressures remain in play: huge Federal debt, continued huge federal deficits, continued trade and current account deficit, increased entitlement liabilities (Social Security, Medicaid and pedicare), no increases in tax and not enough economic growth.

In addition March 2006 is the suggested opening date of the Iranian Oil Bourse and increased oil payments in euro rather than dollars. In simple terms, this means more demand for euros and less demand for US dollars. The laws of supply and demand suggest that less demand brings lower price.

“In 2005-2006, The Tehran government has developed a plan to begin competing with New York's NYMEX and London's IPE with respect to international oil trades - using a euro-denominated international oil-trading mechanism. This means that without some form of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given U.S. debt levels and the stated neoconservative project for U.S. global domination, Tehran's objective constitutes an obvious encroachment on U.S. dollar supremacy in the international oil market.”

“Iran announced in September its petroleum exchange will become operational by March 2006 “Experts from International Petroleum Exchange (IPE) and the New York Mercantile Exchange (NYMEX) have reportedly confirmed the feasibility of the project.”

 “Iran - a threat to the petrodollar? Iran's decision to set up an oil and associated derivatives market next year has generated a great deal of interest.

“This is primarily because of Iran's reported intention to invoice energy contracts in euros rather than dollars.

“The contention that this could unseat the dollar's dominance as the de facto currency for oil transactions may be overstated, but this has not stopped many commentators from linking America's current political disquiet with Iran to the proposed Iranian Oil Bourse (IOB).”

Prediction #3: Faux will fall as well. This prediction is based on one simple fact. That’s how I feel. Because I am such a typical boomer there are 20 or 30 million other people, many with economic and social clout who probably feel the same way. I am sharing this note from our condo in Naples, Florida and each day I take a walk along the beach and through neighborhoods that have miles and miles of McMansion canyon. Am I impressed by the 10,000, 20,000+ square footage French and Italian villas and chalets? Quite the opposite. There is a feeling of disdain. This is a different form of obesity. Too much excess. Huge European castles and mansions on 7,500 feet lots with 15 foot setbacks? Give me a break. I pondered why these fake euro showcases and the fact that every restaurant in town is a French, Italian, German or something bothers me so. Finally, the conclusion came that there are no roots, no real history, no solid foundations. If I take a trip to a remote Italian, French or German village and eat at a great restaurant there, I am immersed in a history and evolution that formed the food, the service, the building in innumerable ways.

Here most of the Euro, Latin and Asian gobbledygook are just stories and most of us now are too sophisticated to buy just a tale. Give me a great restaurant with good, fresh food, grown in and authentic to the region, cooked and served as it has been locally for decades or centuries and served by born-there locals any day! Saturday mornings, you’ll find Merri and me at the local Cuban restaurant dusting off our Spanish, eating a real Cuban breakfast with real Cuban coffee and surrounded by Cubanos and paying less than $4 bucks for more than we can eat! Authenticity will rule. Watch for it in 2006!    

Prediction #4: The greeting card industry will go through dramatic change.  I am not sure how this will work and what this tidbit of thought is worth, but I discovered this while preparing Christmas cards this year. I don’t have anyone’s addresses anymore, just their email and phone numbers. If I were a shareholder of Hallmark cards, I would be looking hard as I am sure they are. But I am not this a private company with over 4 billion in sales and 18,000 employees run by the grandson of the founder. Imagine that!

Prediction #5: Minivans will become fashionable. I suspect there will be an altered form and an environmentally friendly version, perhaps a minivan hybrid. Minivans are the most sensible vehicle for a huge segment of the population. I know. I am about to buy my fifth in a row over 15 years or so. Each time round I swear I’ll get something different but when all the facts are put together-cost, convenience, space, gas consumption, comfort, safety and driving ease, they are just the best deal. What they lack is image (Merri and I could care less if people think we are soccer moms) but sales have dwindled due to this.

Practicality along with authenticity will become an image in itself. Watch for the car company who comes up with just the right formula that tweaks the image and blends it with all the good stuff.

Prediction #6: Investment banks, stockbrokers and such will prosper. The first boomers started turning 60 as I send this note. Many are not prepared for retirement and they will make some dramatic shifts in the way they live, spend, invest and save. Two of the four shares I hold are in banks with strong investment banking arms.

Prediction #7: New agers will wane. Back to basics will grow. We’ll look at this in much more detail as the year rolls on.

There you have it…seven ideas. Right or wrong I hope they stimulate some thinking in you that makes your life better in 2006.

Tomorrow, we’ll look at eleven resolutions you can keep that will help you enhance your health and wealth the year through.

Until then, Happy New Year from both of us.

Gary & Merri

international investment trends
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