While some countries have still not accepted the currency as
their own (such as Britain, who still uses the sterling pound),
the process of currency conversion has been simplified
without the large number of various currencies that were
previously dealt with. Instead of dozens of currencies, the
main countries trade in five – U.S. dollars, Australian dollars,
British pounds sterling, the Euro, and the Japanese Yen.
Today, the Foreign Exchange Market is international and
worldwide. The market is open 24 hours a day, 5 days a
week, to accommodate all of the time zones for all of the
major players. These now include most of Europe, the
United States, and Asian markets, especially Japan. Even
Australia has joined the international trading markets, and
since such nations are halfway around the world from some
of the other top players, time zones obviously must be taken
into consideration.
Another completely separate but perhaps more important
concern with trading in Forex is understanding how trade
works in multiple currencies. How can you compare the
value of a stock across international lines if the values are
expressed in two separate, non-equivalent currencies? And
how do you measure gains and losses when conversion rate
is constantly changing?
Tuesday, February 26, 2008
The History Of Forex
When foreign trade began, it was not an international trade
market. It was borne out of the Bretton Woods agreement
in 1944, which set forth that foreign currencies would be
fixed against the dollar, which was valued at $35 per ounce
of gold. This precedent was first put into practice in 1967,
when a bank in Chicago refused to fund a loan to a professor
in sterling pound. Of course, his intention was to sell the
currency, which he felt was priced too high against the
dollar, then buy it back later when the value had declined,
turning a quick profit.
After 1971, when the dollar was no longer convertible to
gold and the domestic market was stronger, the Bretton
Woods agreement was abandoned, and the currency
conversion process became more variable. This allowed for
a stronger backing in the foreign markets, and the United
States and Europe began a strong trade relationship. In the
1980s, the market hours and usage was extended through
the use of computers and technology to include the Asian
time zones as well. At this time, foreign exchange equaled
about $70 billion a day. Today, about twenty years later,
the trade level has skyrocketed, with trade equaling close to
$1.5 trillion daily.
Originally, trading across international lines was more
difficult, with several different currencies involved across
Europe. Though the major players in the European market
were deeply involved in and veterans of international trade
by the time other markets joined in, there were more
currencies to keep track of – the franc, the pound, the lira,
and many more – than was reasonable. With the birth of
the European Union in 1992, the wheels were set in motion
to create a single currency that would be used across most
of Europe, and the Euro was finally established and put into
circulation in 1999.
market. It was borne out of the Bretton Woods agreement
in 1944, which set forth that foreign currencies would be
fixed against the dollar, which was valued at $35 per ounce
of gold. This precedent was first put into practice in 1967,
when a bank in Chicago refused to fund a loan to a professor
in sterling pound. Of course, his intention was to sell the
currency, which he felt was priced too high against the
dollar, then buy it back later when the value had declined,
turning a quick profit.
After 1971, when the dollar was no longer convertible to
gold and the domestic market was stronger, the Bretton
Woods agreement was abandoned, and the currency
conversion process became more variable. This allowed for
a stronger backing in the foreign markets, and the United
States and Europe began a strong trade relationship. In the
1980s, the market hours and usage was extended through
the use of computers and technology to include the Asian
time zones as well. At this time, foreign exchange equaled
about $70 billion a day. Today, about twenty years later,
the trade level has skyrocketed, with trade equaling close to
$1.5 trillion daily.
Originally, trading across international lines was more
difficult, with several different currencies involved across
Europe. Though the major players in the European market
were deeply involved in and veterans of international trade
by the time other markets joined in, there were more
currencies to keep track of – the franc, the pound, the lira,
and many more – than was reasonable. With the birth of
the European Union in 1992, the wheels were set in motion
to create a single currency that would be used across most
of Europe, and the Euro was finally established and put into
circulation in 1999.
Forex Functionality
While the functionality of Forex is the same as a domestic
stock exchange, the commodities and prices are more
volatile, and there are additional factors to take into
considerations besides the typical risks associated with a
domestic market. You will have to contend with not only the
value of your stocks and your currency, but also the foreign
currencies involved in any trades or exchanges on Forex, as
well as the inconsistencies of values of particular goods and
services across international borders. It is like driving a car
with a standard transmission as opposed to an automatic. On the domestic front, the work is mostly done for you, and
all you have to do is navigate, much like an automatic
transmission. However, shifting gears is quite similar to
having to constantly take part in the currency conversion. It
can be distracting, and it certainly complicates the act of
driving.
Because the financial situation of many countries is not as
secure as that of the United States, this can pose a
formidable problem in determining where to invest your
money and what to expect next in the international market.
Knowing what countries and currencies are involved in Forex
can assist you by allowing you to more closely monitor the
financial situation in the nations with which you will be
interacting.
stock exchange, the commodities and prices are more
volatile, and there are additional factors to take into
considerations besides the typical risks associated with a
domestic market. You will have to contend with not only the
value of your stocks and your currency, but also the foreign
currencies involved in any trades or exchanges on Forex, as
well as the inconsistencies of values of particular goods and
services across international borders. It is like driving a car
with a standard transmission as opposed to an automatic. On the domestic front, the work is mostly done for you, and
all you have to do is navigate, much like an automatic
transmission. However, shifting gears is quite similar to
having to constantly take part in the currency conversion. It
can be distracting, and it certainly complicates the act of
driving.
Because the financial situation of many countries is not as
secure as that of the United States, this can pose a
formidable problem in determining where to invest your
money and what to expect next in the international market.
Knowing what countries and currencies are involved in Forex
can assist you by allowing you to more closely monitor the
financial situation in the nations with which you will be
interacting.
An Introduction to FOREX
Forex is the nickname for the Foreign Exchange Market. In
the United States, there are several branches of the stock
market, each with their own name. For instance, some
stocks trade on the Dow Jones, others on Nasdaq. Of
course, all stock market transactions in the United States
take place on the New York Stock Exchange (NYSE). In
other countries the same is true. There may be one or more
distinct markets.
However, international trade takes place on the market
termed the Foreign Exchange Market, or Forex. Several
countries across the world in almost every time zone
participate in trade on Forex, with multiple currencies being
utilized and stocks and commodities from all participating
countries being offered for trade. Because there are so
many nations and time zones involved, Forex does not
function as a “business day” entity like most domestic stock
markets. It remains open for trade 24 hours a day, 5 days a
week.
Of course, these additional hours increase the risk factor
intensely for those of us who are human and obviously
cannot monitor our investments 24 hours a day. This means
that the value of your holdings could potentially plummet overnight, while you sleep, because other countries are still
trading while you are in a dream world. Again, it is like a
car – there are many moving pieces under the hood, and
just because you cannot see them does not mean they are
not functioning.
This is one reason for several safety options, like limit
orders, which we will discuss later. This is also why it is
strongly recommended that your first attempts to make
money on the stock market are not transactions that take
place within the Foreign Exchange Market but on a standard
nine-to-five domestic trading market. In our car analogy,
this would be comparable to having asked someone who has
never driven or even changed the oil in a car to rebuild the
engine.
the United States, there are several branches of the stock
market, each with their own name. For instance, some
stocks trade on the Dow Jones, others on Nasdaq. Of
course, all stock market transactions in the United States
take place on the New York Stock Exchange (NYSE). In
other countries the same is true. There may be one or more
distinct markets.
However, international trade takes place on the market
termed the Foreign Exchange Market, or Forex. Several
countries across the world in almost every time zone
participate in trade on Forex, with multiple currencies being
utilized and stocks and commodities from all participating
countries being offered for trade. Because there are so
many nations and time zones involved, Forex does not
function as a “business day” entity like most domestic stock
markets. It remains open for trade 24 hours a day, 5 days a
week.
Of course, these additional hours increase the risk factor
intensely for those of us who are human and obviously
cannot monitor our investments 24 hours a day. This means
that the value of your holdings could potentially plummet overnight, while you sleep, because other countries are still
trading while you are in a dream world. Again, it is like a
car – there are many moving pieces under the hood, and
just because you cannot see them does not mean they are
not functioning.
This is one reason for several safety options, like limit
orders, which we will discuss later. This is also why it is
strongly recommended that your first attempts to make
money on the stock market are not transactions that take
place within the Foreign Exchange Market but on a standard
nine-to-five domestic trading market. In our car analogy,
this would be comparable to having asked someone who has
never driven or even changed the oil in a car to rebuild the
engine.
Monday, February 25, 2008
The Market Outlook
By taking note of various changes in the status of different
available stock options, you will learn how to spot early
market trends, giving you a clue to the future of a particular
commodity, and this can only add to your chances for
profitability. Prediction is a big part of the game when
working in the stock market, since you can never be
completely certain in what direction the market will swing at
any given time.
However, you can make an educated guess, much the same
way a meteorologist forecasts the weather. While he or she
is not right 100% of the time, the forecast is usually quite
close to the actual outcome of the weather because the
meteorologist is a scientist who has studied weather trends
and can pick out details that assist in making that educated
guess. With a little time and seasoning, you can attain the
same level of experience and intuition within the stock
market.
Once you have become more comfortable functioning in the
same world as the stockbrokers and day traders, and you
feel confident (or at least less nervous or awkward) making
such important financial decisions, you may decide to make
your move toward the Foreign Exchange Market (more
commonly known as Forex), and the goal of this book is to
prepare you to operate within the boundaries of this more
complex entity. Next, we will discuss some of the properties
of Forex and how much more complex this stock market
entity can be than a standard domestic market.
The Foreign Exchange Market is incredibly volatile, and there
are a lot more factors to consider when placing an order on
this market than on a domestic market. The following
chapter is an introduction to the exciting and somewhat
scary world of the Foreign Exchange Market, or Forex.
available stock options, you will learn how to spot early
market trends, giving you a clue to the future of a particular
commodity, and this can only add to your chances for
profitability. Prediction is a big part of the game when
working in the stock market, since you can never be
completely certain in what direction the market will swing at
any given time.
However, you can make an educated guess, much the same
way a meteorologist forecasts the weather. While he or she
is not right 100% of the time, the forecast is usually quite
close to the actual outcome of the weather because the
meteorologist is a scientist who has studied weather trends
and can pick out details that assist in making that educated
guess. With a little time and seasoning, you can attain the
same level of experience and intuition within the stock
market.
Once you have become more comfortable functioning in the
same world as the stockbrokers and day traders, and you
feel confident (or at least less nervous or awkward) making
such important financial decisions, you may decide to make
your move toward the Foreign Exchange Market (more
commonly known as Forex), and the goal of this book is to
prepare you to operate within the boundaries of this more
complex entity. Next, we will discuss some of the properties
of Forex and how much more complex this stock market
entity can be than a standard domestic market.
The Foreign Exchange Market is incredibly volatile, and there
are a lot more factors to consider when placing an order on
this market than on a domestic market. The following
chapter is an introduction to the exciting and somewhat
scary world of the Foreign Exchange Market, or Forex.
Bulls And Bears
Understanding stock market trends can make your job of
earning money in the market much simpler. In contrast, if
you know little or nothing about these trends can cause
serious loss.
Bulls And Bears
As you dig deeper into the market and learn more about the
way it functions, you will begin to hear certain terms about
marketing trends that seem to be repeated over and over
again. Market trends are variable and volatile, both on a
daily basis and over extended periods of time. In the past,
for example, the United States has had devastating stock
market crashes, but due to the freedom of a capitalist
society, the American economy has always eventually
rebound.
What does it mean for the market or a particular stock to
rebound? Assuming that the value of a company or its stock
has plummeted to a level that seem unrecoverable, leaving
it practically worthless, it may feel as though that company
is in danger of bankruptcy and falling off the scope of the
free trade markets altogether. All of a sudden, however, the
founder of that company may introduce a new product over
which consumers go wild. Everyone wants one, and this
product may be in short supply upon its introduction,
causing a race to the department store shelves.
When such a move occurs, the law of supply and demand
will take over, making the company valuable once again.
The stock price for that company’s shares will recover, and
the resulting gain in value would be considered a rebound –
a return to the original status (or better) prior to the
devastating loss.
The market trends either up or down, and there are specific
references to strong changes in the market values that you
may frequently hear. If several different areas of the
market are in a steep downward slide, with values dropping
rapidly (perhaps even ten or twenty percent in a few days),
it is referred to as a bear market. You can remember this
reference as though you are in the extremely dangerous
position of being chased by a bear – if you are in possession
of several stocks or other commodities worth a goodly sum,
you have a serious chance of losing a great deal of value
that could translate to a loss of net worth should you choose
to sell, and it can be a similar, very dangerous situation.
Your best bet in these cases is to either sell before prices
drop below your original purchase price or to hold onto the
shares until the market rebounds. However, when the bear
market reaches a low point, it can be an ideal time to get
into the game, as it is rare for prices to drop below this
point. Then, if you patiently await the recovery or rebound
of the market, you can make a great deal of money from a
bear market. These options will be discussed in more depth
in later chapters.
At the same time, a bull market is a strong general upward
trend for many stocks. You might compare this to the
running of the bulls in Pamplona, Spain, every year. You are
safer if you are indoors when the running occurs, and by the
same token, if you own stock during a bull market, you are
in a prime position to increase your net worth and sell your
shares, making a great deal of money. This is another idea
will be further explored in greater detail further on in this
ebook.
earning money in the market much simpler. In contrast, if
you know little or nothing about these trends can cause
serious loss.
Bulls And Bears
As you dig deeper into the market and learn more about the
way it functions, you will begin to hear certain terms about
marketing trends that seem to be repeated over and over
again. Market trends are variable and volatile, both on a
daily basis and over extended periods of time. In the past,
for example, the United States has had devastating stock
market crashes, but due to the freedom of a capitalist
society, the American economy has always eventually
rebound.
What does it mean for the market or a particular stock to
rebound? Assuming that the value of a company or its stock
has plummeted to a level that seem unrecoverable, leaving
it practically worthless, it may feel as though that company
is in danger of bankruptcy and falling off the scope of the
free trade markets altogether. All of a sudden, however, the
founder of that company may introduce a new product over
which consumers go wild. Everyone wants one, and this
product may be in short supply upon its introduction,
causing a race to the department store shelves.
When such a move occurs, the law of supply and demand
will take over, making the company valuable once again.
The stock price for that company’s shares will recover, and
the resulting gain in value would be considered a rebound –
a return to the original status (or better) prior to the
devastating loss.
The market trends either up or down, and there are specific
references to strong changes in the market values that you
may frequently hear. If several different areas of the
market are in a steep downward slide, with values dropping
rapidly (perhaps even ten or twenty percent in a few days),
it is referred to as a bear market. You can remember this
reference as though you are in the extremely dangerous
position of being chased by a bear – if you are in possession
of several stocks or other commodities worth a goodly sum,
you have a serious chance of losing a great deal of value
that could translate to a loss of net worth should you choose
to sell, and it can be a similar, very dangerous situation.
Your best bet in these cases is to either sell before prices
drop below your original purchase price or to hold onto the
shares until the market rebounds. However, when the bear
market reaches a low point, it can be an ideal time to get
into the game, as it is rare for prices to drop below this
point. Then, if you patiently await the recovery or rebound
of the market, you can make a great deal of money from a
bear market. These options will be discussed in more depth
in later chapters.
At the same time, a bull market is a strong general upward
trend for many stocks. You might compare this to the
running of the bulls in Pamplona, Spain, every year. You are
safer if you are indoors when the running occurs, and by the
same token, if you own stock during a bull market, you are
in a prime position to increase your net worth and sell your
shares, making a great deal of money. This is another idea
will be further explored in greater detail further on in this
ebook.
Saturday, February 23, 2008
The 6 Giants of Global Profits
The U.S. dollar is falling so quickly …
And so many of our favorite investments are moving up so broadly …
I've gathered the wisdom of our entire team this morning to give you a full run-down on the six giants of global profits.
I won't keep you guessing as to who the giants are. They're China, India, Japan, Brazil, Australia … and Canada.
There is nothing, I repeat nothing, that you do every day that is not connected to, or dependent upon, these six countries.
They make the clothes you wear. They answer the phones when you call customer service.
They supply the gas for your car. They build your car. They make the paste in your toothpaste. Some of them even examine your CT scans instead of your doctor.
Quietly, invisibly, they have penetrated every corner of your daily life … except perhaps one: Your portfolio.
If you do not hold significant investments related to these six global giants, you are already missing out on an opportunity that comes along (maybe) once every 100 years.
China's stock market, for example, rose 131% in 2006 — nearly ten times more than ours.
Even Brazil's market, despite a relatively slower economy, delivered double the gains of the S&P 500.
In fact, fifty-five different foreign stock markets beat the U.S. in 2006.
Now, those markets are soaring even further, still widely outperforming the Dow. China is trumping the U.S. markets. So are Brazil and every other country we've been recommending.
Safety First
Mike Larson warns us that the housing woes in the U.S. are not over. They're getting worse.
And no matter what the profit potential may be overseas, we all feel strongly that your first priority must be capital preservation. That means putting SAFETY first.
That means keeping a good chunk of your core holdings in the most conservative investments you can find.
At the same time, if you're like most investors, the idea of global investing often sounds like a crapshoot. But that's just not true. If you've got all of your money invested in U.S. stocks, you've got all your eggs in one basket. So you could be exposing yourself to more risk.
And you could be missing some of the largest, most sustainable profit opportunities in the world today.
So let's embark on a quick, 10-minute global excursion to review where we've come from and where we're going …
China: "To Get Rich is Glorious"
When Chinese Premiere Deng Xiaoping spoke these words back in 1993, Larry Edelson was among the first to let us know.
And indeed, that's when China unleashed an economic force unprecedented in modern history. That single, but pivotal, change in philosophy marked the beginning of China's relentless march to prosperity.
And along the way, we are seeing a series of largely untold economic miracles:
Chinese consumer spending has jumped from virtually zero to nearly $1 trillion.
There are now over 100 cities in China with a population over 1 million. The U.S. has only nine.
China currently boasts 1.3 billion consumers. Plus, to stimulate foreign investments, Beijing is pulling out all the stops.
China plans to boost natural gas consumption by as much as 500 percent … invest nearly $4 billion in information technology and infrastructure … expand fiber optic networks … beef up mobile communications capacity … establish digital capable HDTV transmission … and use GPS technology for traffic control.
China is building massive skyscrapers, highways, city expressways, subway lines, and an intra-city light rail.
It's expanding the Beijing airport, improving water, electric, gas, and heating facilities. All across China, the equivalent of a city the size of San Francisco is being built every two weeks. This year alone, Shanghai (with 17 million people) will complete towers with more square footage than all the available space in Manhattan combined.
Even more significant is that China just launched a rural initiative for over 800 million citizens.
It plans to spend over $11 billion a year on rural education, irrigation, and medical services.
And it's investing tens of billions to build 112,000 miles of rural roads — enough to circle the globe four times over.
Imagine, just imagine, the raw materials and natural resources like cement, asphalt, tar and steel required to feed that kind of growth. That's why consumption of just about every imaginable resource is flying off the charts!
The Relentless Rise of India:
"It's Like China 15 or 20 Years Ago."
Those are the words of a renowned emerging-markets investor that appeared in a recent issue of Time magazine. But that's just a tiny glimpse of India's almost unlimited potential:
India is currently home to more than 1 billion people and projected to surpass China as the most populous country on Earth by 2015.
India's economy is growing 8 percent a year — the second fastest rate in the world.
The Indian stock market has tripled in three years — creating a record number of billionaires. One reason: Foreign investors have poured $30 billion into India's stock market in 36 months.
Just like China, India needs massive amounts of natural resources and commodities to feed its booming economy.
And this is not just a passing trend. It's an economic appetite that could last for a long time. But where will China and India find the commodities, natural resources, and consumer products to feed their unbridled expansion?
A "Back Door" to Asia: Brazil!
Elisabeth's mother, who lives in Brazil, recently turned 90. At the reservoir on our farm, her grandchildren and even their dog joined us in celebrating.
Ever since Luiz Inácio Lula da Silva ("Lula") was elected Brazil's president five years ago, she's been saying he'd wreck the economy.
Lula has done precisely the opposite.
He's implemented the most disciplined fiscal and monetary policy the country has seen in half a century.
He has boosted Brazil's currency by 69% since he took office in January 2003. He has increased the trade surplus by 225% from $14.1 billion to $45.8 billion. And he has paid off 100% of Brazil's debts to the International Monetary Fund.
To achieve all that, however, Lula had to pay a stiff price: Spartan government spending, sky-high interest rates … and, consequently, a relatively slow economy last year.
So it's only now, in his second term, that he feels he's got a firm enough financial foundation in place to go for the real prize: Big growth.
With that goal in mind, the Bank of Brazil (the equivalent to our Fed) has already slashed its benchmark interest rate 14 times, to the lowest level in recent history.
And sure enough, the economy is responding:
Retail sales have jumped 8.5%. Capital goods production jumped 18%. And Brazil's key stock index, the Bovespa, which rose 32.9% last year, has gone on to new highs in 2007.
In just four years, Brazil's president, Luiz Inácio Lula da Silva, has transformed the Brazilian economy and forged monumental deals with China.
Brazil's trade balance has gone from an $8 billion deficit to a $46 billion surplus. Just recently, Brazil's state-owned oil company inked a deal to sell China 12 million barrels of crude oil.
How do you get all that oil out of Brazil when its infrastructure is not up to par? No problem for China.
They've offered many billions to improve Brazil's port and railway infrastructure — so they can extract natural resources more efficiently. China is also building the world's second largest dam in the Brazilian Amazon.
And energy from that dam will power mines that send raw material to … China. Brazil's natural resources are equivalent to those of the U.S. and Canada combined. But even those resources alone can't feed the needs of China, India, and all of Asia.
So these resource-gobbling giants are looking elsewhere too.
Canada: The Strongest, Most Stable
Natural Resource Nation in the World
Sean Brodrick tells us that, unlike emerging nations, Canada has all the technology and expertise it needs to exploit its vast resources.
Even more important, Canada has modern deep-water ports on both the Atlantic and Pacific coasts — giving it easy access to both European and Asian markets.
Best of all, Canada is sitting on massive deposits of gold, uranium, coal, oil and other vital resources.
And they're already cashing in. Canada recently recorded its fifth-best trade surplus in history.
The reason? China.
Chinese importers are buying all the raw materials that Canada can sell them. That, plus a boom in mining projects and fattening margins, helps explain why the TSX-Venture exchange (Canada's small-cap market) has outperformed the S&P 500 by 153% over the past five years. Meanwhile …
China has bought one of Canada's largest oil companies.
China has blanketed the country with a vast network of scouts (armed with truckloads of money) to scoop up coal mines, oil sand fields, natural gas pipelines and metals.
Remember: Canada is the most modern and technologically advanced of the world's large natural resource nations.
Exploration spending for mining in British Columbia alone hit a record high of $230 million dollars in 2006, and should keep ramping up in 2007.
A New Chinese "Gold"
Rush in Australia?
In the 1800s, Chinese miners flocked to Australia for the great gold rush. Today, it's happening again.
Only the Chinese aren't looking for gold; they're after uranium. And they're not coming with picks and shovels.
They're coming with mountains of money. Why? Because Australia happens to sit on the world's largest known deposits of uranium — with more reserves than the United States, Canada, Russia and Brazil combined. And with more than 900 new nuclear plants now being planned, the hunger for uranium is just beginning.
Australia's abundant natural resources — including iron ore, nickel, coal, uranium, and more — are in such huge demand in nearby Asia, it's no surprise then that …
Australia's economy is now in its sixteenth consecutive year of expansion.
Job growth has been the strongest in 17 years, dropping the jobless rate to the lowest level in more than three decades! Result: Consumer spending is growing and consumer confidence recently hit a 19-month high.
There's no better indicator of a country's future than its currency, and the Aussie dollar recently reached its highest level since 1996.
Japan: The Sun is Rising Again
Japan is now enjoying its longest, non-stop, sustained expansion since World War II.
Automakers are soaring. Banks are thriving. Unemployment hit a record low.
And the stock market doubled in 24 months. So what's the mega-force behind Japan's remarkable recovery? You guessed it — China.
Japan's trade with China jumped to $189 billion last year, the seventh straight annual record. This year, it should easily top $200 billion.
Look. Just when most people were giving up on Japan a few years ago, the country was cleaning up its balance sheet and starting to capitalize on China's economic boom.
At the same time, Japan is also solidifying trade and security links with Australia. It's currently the biggest buyer of that country's coal, natural gas, oil, and agricultural goods. And if the two countries hammer out a free trade agreement, both economies will get an additional boost.
Tony Sagami, who recently revisited his native Japan, puts it this way:
"Everybody I talked to — from the fish vendors at Tsukiji market to the Shiseido clerks at luxury Takashimaya department store — says their companies are making more money and they're much more optimistic about the future.
"But investors aren't quite as bullish. So valuations on Japanese stocks are still among the lowest in the world."
How to Invest Overseas
Years ago, investing in foreign stocks was cumbersome. You had to start with substantial sums. You had to open special brokerage accounts in Hong Kong, London or elsewhere. And you often had to pay very substantial commissions. Today, it's far more convenient because …
You can buy American Depository Receipts, or ADRs, a certificate issued by a U.S. institution representing a specific number of shares of a foreign stock. Favor ADRs that are liquid, trading hundreds of thousands of shares daily on major U.S. exchanges like the NYSE.
You can buy foreign stocks through a U.S. broker with a strong international desk such as Euro-Pacific Capital or Schwab. And most convenient of all …
You can buy exchange traded funds (ETFs) that invest in overseas stocks for you. There are actively traded ETFs for China (FXI) … Brazil (EWZ) … Singapore (EWS) … Japan (EWJ) … and many, many more.
Plus, as Jack Crooks explains …
Even Individual Currencies Are
Now Cheap and Easy to Trade!
Clearly, there is explosive growth happening all around the world. And one of the best parts of all this action is that currencies — the very lifeblood of these economies — are also making monumental moves on an almost daily basis.
Look, the foreign exchange market is, without a doubt, the largest market in the world — and the most liquid.
As much as $3 trillion a day trade in the currency market, more than all of the world's stock markets combined.
Moreover, about 80% of all that trading is in seven major currencies, meaning that the volume in each of the majors is massive.
That makes the currency market the most critical market to support global trade and international transactions.
But what I like most is that there's always a bull market in currencies. That gives you the power to make money regardless of what's happening in the world.
The reason is simple: Currencies are different from stocks, bonds or commodities in that they let you make money by buying and selling one currency against another.
Plus, unlike the wild days of yesteryear, you no longer have to open big accounts or take huge risks to trade in this market. Two new revolutionary vehicles — currency ETFs and the Philadelphia Exchange's World Currency Options — now make it possible for average investors to trade currencies as easily as any other ETF or option.
The greatest advantage of all? The profit potential thanks to three factors: Big moves, potentially huge leverage, and strictly limited risk!
To me, they're just one more way for you to reap massive profits from the global giants of profits. And as Martin's been telling you …
This Worldwide Growth and Expansion
Represents the Greatest Wealth-Building
Opportunity in the Last 100 Years.
I hope I’ve managed to communicate the colossal magnitude of the expansion that’s now happening. I also hope you understand that opportunities like these come along maybe once every hundred years. The time is now.
You can stand pat with a narrow-minded investment strategy that focuses on the USA. Or you can intelligently diversify with these exploding markets and watch your portfolio multiply.
But never forget: Don't overinvest. Allocate your money prudently. Stay on top of it regularly. And do your best to wait for normal corrections before adding new funds.
And so many of our favorite investments are moving up so broadly …
I've gathered the wisdom of our entire team this morning to give you a full run-down on the six giants of global profits.
I won't keep you guessing as to who the giants are. They're China, India, Japan, Brazil, Australia … and Canada.
There is nothing, I repeat nothing, that you do every day that is not connected to, or dependent upon, these six countries.
They make the clothes you wear. They answer the phones when you call customer service.
They supply the gas for your car. They build your car. They make the paste in your toothpaste. Some of them even examine your CT scans instead of your doctor.
Quietly, invisibly, they have penetrated every corner of your daily life … except perhaps one: Your portfolio.
If you do not hold significant investments related to these six global giants, you are already missing out on an opportunity that comes along (maybe) once every 100 years.
China's stock market, for example, rose 131% in 2006 — nearly ten times more than ours.
Even Brazil's market, despite a relatively slower economy, delivered double the gains of the S&P 500.
In fact, fifty-five different foreign stock markets beat the U.S. in 2006.
Now, those markets are soaring even further, still widely outperforming the Dow. China is trumping the U.S. markets. So are Brazil and every other country we've been recommending.
Safety First
Mike Larson warns us that the housing woes in the U.S. are not over. They're getting worse.
And no matter what the profit potential may be overseas, we all feel strongly that your first priority must be capital preservation. That means putting SAFETY first.
That means keeping a good chunk of your core holdings in the most conservative investments you can find.
At the same time, if you're like most investors, the idea of global investing often sounds like a crapshoot. But that's just not true. If you've got all of your money invested in U.S. stocks, you've got all your eggs in one basket. So you could be exposing yourself to more risk.
And you could be missing some of the largest, most sustainable profit opportunities in the world today.
So let's embark on a quick, 10-minute global excursion to review where we've come from and where we're going …
China: "To Get Rich is Glorious"
When Chinese Premiere Deng Xiaoping spoke these words back in 1993, Larry Edelson was among the first to let us know.
And indeed, that's when China unleashed an economic force unprecedented in modern history. That single, but pivotal, change in philosophy marked the beginning of China's relentless march to prosperity.
And along the way, we are seeing a series of largely untold economic miracles:
Chinese consumer spending has jumped from virtually zero to nearly $1 trillion.
There are now over 100 cities in China with a population over 1 million. The U.S. has only nine.
China currently boasts 1.3 billion consumers. Plus, to stimulate foreign investments, Beijing is pulling out all the stops.
China plans to boost natural gas consumption by as much as 500 percent … invest nearly $4 billion in information technology and infrastructure … expand fiber optic networks … beef up mobile communications capacity … establish digital capable HDTV transmission … and use GPS technology for traffic control.
China is building massive skyscrapers, highways, city expressways, subway lines, and an intra-city light rail.
It's expanding the Beijing airport, improving water, electric, gas, and heating facilities. All across China, the equivalent of a city the size of San Francisco is being built every two weeks. This year alone, Shanghai (with 17 million people) will complete towers with more square footage than all the available space in Manhattan combined.
Even more significant is that China just launched a rural initiative for over 800 million citizens.
It plans to spend over $11 billion a year on rural education, irrigation, and medical services.
And it's investing tens of billions to build 112,000 miles of rural roads — enough to circle the globe four times over.
Imagine, just imagine, the raw materials and natural resources like cement, asphalt, tar and steel required to feed that kind of growth. That's why consumption of just about every imaginable resource is flying off the charts!
The Relentless Rise of India:
"It's Like China 15 or 20 Years Ago."
Those are the words of a renowned emerging-markets investor that appeared in a recent issue of Time magazine. But that's just a tiny glimpse of India's almost unlimited potential:
India is currently home to more than 1 billion people and projected to surpass China as the most populous country on Earth by 2015.
India's economy is growing 8 percent a year — the second fastest rate in the world.
The Indian stock market has tripled in three years — creating a record number of billionaires. One reason: Foreign investors have poured $30 billion into India's stock market in 36 months.
Just like China, India needs massive amounts of natural resources and commodities to feed its booming economy.
And this is not just a passing trend. It's an economic appetite that could last for a long time. But where will China and India find the commodities, natural resources, and consumer products to feed their unbridled expansion?
A "Back Door" to Asia: Brazil!
Elisabeth's mother, who lives in Brazil, recently turned 90. At the reservoir on our farm, her grandchildren and even their dog joined us in celebrating.
Ever since Luiz Inácio Lula da Silva ("Lula") was elected Brazil's president five years ago, she's been saying he'd wreck the economy.
Lula has done precisely the opposite.
He's implemented the most disciplined fiscal and monetary policy the country has seen in half a century.
He has boosted Brazil's currency by 69% since he took office in January 2003. He has increased the trade surplus by 225% from $14.1 billion to $45.8 billion. And he has paid off 100% of Brazil's debts to the International Monetary Fund.
To achieve all that, however, Lula had to pay a stiff price: Spartan government spending, sky-high interest rates … and, consequently, a relatively slow economy last year.
So it's only now, in his second term, that he feels he's got a firm enough financial foundation in place to go for the real prize: Big growth.
With that goal in mind, the Bank of Brazil (the equivalent to our Fed) has already slashed its benchmark interest rate 14 times, to the lowest level in recent history.
And sure enough, the economy is responding:
Retail sales have jumped 8.5%. Capital goods production jumped 18%. And Brazil's key stock index, the Bovespa, which rose 32.9% last year, has gone on to new highs in 2007.
In just four years, Brazil's president, Luiz Inácio Lula da Silva, has transformed the Brazilian economy and forged monumental deals with China.
Brazil's trade balance has gone from an $8 billion deficit to a $46 billion surplus. Just recently, Brazil's state-owned oil company inked a deal to sell China 12 million barrels of crude oil.
How do you get all that oil out of Brazil when its infrastructure is not up to par? No problem for China.
They've offered many billions to improve Brazil's port and railway infrastructure — so they can extract natural resources more efficiently. China is also building the world's second largest dam in the Brazilian Amazon.
And energy from that dam will power mines that send raw material to … China. Brazil's natural resources are equivalent to those of the U.S. and Canada combined. But even those resources alone can't feed the needs of China, India, and all of Asia.
So these resource-gobbling giants are looking elsewhere too.
Canada: The Strongest, Most Stable
Natural Resource Nation in the World
Sean Brodrick tells us that, unlike emerging nations, Canada has all the technology and expertise it needs to exploit its vast resources.
Even more important, Canada has modern deep-water ports on both the Atlantic and Pacific coasts — giving it easy access to both European and Asian markets.
Best of all, Canada is sitting on massive deposits of gold, uranium, coal, oil and other vital resources.
And they're already cashing in. Canada recently recorded its fifth-best trade surplus in history.
The reason? China.
Chinese importers are buying all the raw materials that Canada can sell them. That, plus a boom in mining projects and fattening margins, helps explain why the TSX-Venture exchange (Canada's small-cap market) has outperformed the S&P 500 by 153% over the past five years. Meanwhile …
China has bought one of Canada's largest oil companies.
China has blanketed the country with a vast network of scouts (armed with truckloads of money) to scoop up coal mines, oil sand fields, natural gas pipelines and metals.
Remember: Canada is the most modern and technologically advanced of the world's large natural resource nations.
Exploration spending for mining in British Columbia alone hit a record high of $230 million dollars in 2006, and should keep ramping up in 2007.
A New Chinese "Gold"
Rush in Australia?
In the 1800s, Chinese miners flocked to Australia for the great gold rush. Today, it's happening again.
Only the Chinese aren't looking for gold; they're after uranium. And they're not coming with picks and shovels.
They're coming with mountains of money. Why? Because Australia happens to sit on the world's largest known deposits of uranium — with more reserves than the United States, Canada, Russia and Brazil combined. And with more than 900 new nuclear plants now being planned, the hunger for uranium is just beginning.
Australia's abundant natural resources — including iron ore, nickel, coal, uranium, and more — are in such huge demand in nearby Asia, it's no surprise then that …
Australia's economy is now in its sixteenth consecutive year of expansion.
Job growth has been the strongest in 17 years, dropping the jobless rate to the lowest level in more than three decades! Result: Consumer spending is growing and consumer confidence recently hit a 19-month high.
There's no better indicator of a country's future than its currency, and the Aussie dollar recently reached its highest level since 1996.
Japan: The Sun is Rising Again
Japan is now enjoying its longest, non-stop, sustained expansion since World War II.
Automakers are soaring. Banks are thriving. Unemployment hit a record low.
And the stock market doubled in 24 months. So what's the mega-force behind Japan's remarkable recovery? You guessed it — China.
Japan's trade with China jumped to $189 billion last year, the seventh straight annual record. This year, it should easily top $200 billion.
Look. Just when most people were giving up on Japan a few years ago, the country was cleaning up its balance sheet and starting to capitalize on China's economic boom.
At the same time, Japan is also solidifying trade and security links with Australia. It's currently the biggest buyer of that country's coal, natural gas, oil, and agricultural goods. And if the two countries hammer out a free trade agreement, both economies will get an additional boost.
Tony Sagami, who recently revisited his native Japan, puts it this way:
"Everybody I talked to — from the fish vendors at Tsukiji market to the Shiseido clerks at luxury Takashimaya department store — says their companies are making more money and they're much more optimistic about the future.
"But investors aren't quite as bullish. So valuations on Japanese stocks are still among the lowest in the world."
How to Invest Overseas
Years ago, investing in foreign stocks was cumbersome. You had to start with substantial sums. You had to open special brokerage accounts in Hong Kong, London or elsewhere. And you often had to pay very substantial commissions. Today, it's far more convenient because …
You can buy American Depository Receipts, or ADRs, a certificate issued by a U.S. institution representing a specific number of shares of a foreign stock. Favor ADRs that are liquid, trading hundreds of thousands of shares daily on major U.S. exchanges like the NYSE.
You can buy foreign stocks through a U.S. broker with a strong international desk such as Euro-Pacific Capital or Schwab. And most convenient of all …
You can buy exchange traded funds (ETFs) that invest in overseas stocks for you. There are actively traded ETFs for China (FXI) … Brazil (EWZ) … Singapore (EWS) … Japan (EWJ) … and many, many more.
Plus, as Jack Crooks explains …
Even Individual Currencies Are
Now Cheap and Easy to Trade!
Clearly, there is explosive growth happening all around the world. And one of the best parts of all this action is that currencies — the very lifeblood of these economies — are also making monumental moves on an almost daily basis.
Look, the foreign exchange market is, without a doubt, the largest market in the world — and the most liquid.
As much as $3 trillion a day trade in the currency market, more than all of the world's stock markets combined.
Moreover, about 80% of all that trading is in seven major currencies, meaning that the volume in each of the majors is massive.
That makes the currency market the most critical market to support global trade and international transactions.
But what I like most is that there's always a bull market in currencies. That gives you the power to make money regardless of what's happening in the world.
The reason is simple: Currencies are different from stocks, bonds or commodities in that they let you make money by buying and selling one currency against another.
Plus, unlike the wild days of yesteryear, you no longer have to open big accounts or take huge risks to trade in this market. Two new revolutionary vehicles — currency ETFs and the Philadelphia Exchange's World Currency Options — now make it possible for average investors to trade currencies as easily as any other ETF or option.
The greatest advantage of all? The profit potential thanks to three factors: Big moves, potentially huge leverage, and strictly limited risk!
To me, they're just one more way for you to reap massive profits from the global giants of profits. And as Martin's been telling you …
This Worldwide Growth and Expansion
Represents the Greatest Wealth-Building
Opportunity in the Last 100 Years.
I hope I’ve managed to communicate the colossal magnitude of the expansion that’s now happening. I also hope you understand that opportunities like these come along maybe once every hundred years. The time is now.
You can stand pat with a narrow-minded investment strategy that focuses on the USA. Or you can intelligently diversify with these exploding markets and watch your portfolio multiply.
But never forget: Don't overinvest. Allocate your money prudently. Stay on top of it regularly. And do your best to wait for normal corrections before adding new funds.
Subscribe to:
Posts (Atom)