Four Currencies BEATING the US Dollar

woke up today thought I would make a little episode for you on currency and investment opportunities around the world took me a while to get to this I'm uh getting a slow start I had a Hot Pocket for breakfast uh but it is Nomad Kappa te list where we talk just you and I around the kitchen table about the real world impact of being a nomad capitalist and uh today I want to talk to you about uh some charts that I came across that were sent over by my friends at Latino metrics talking about currencies that are strengthening including one that we've talked about one that I've mentioned stocks in this country and we're going to go through uh if you're holding US Dollars which currencies have strengthened versus the US dollar in The Last 5 Years and which have gotten weaker right now people are looking at strong dollar uh keep your investments in the US obviously what we talk about here at Nomad compx we'll be help our clients create you know complex holistic plans for we'll be talk about at NAD capitalist live is number one you want to have your money and other currencies for diversification sometimes by doing that you put the money in other countries that could lead to Residence permits citizenships it could lead to higher rates of return it could lead to higher yields uh it could allow you to invest in things that are up and coming and uh what's interesting I saw uh TAMU uh this big Chinese company that's trying to take on Amazon they're looking at what's happening with the Tik Tock ban in the US and they are going from I believe it was 63% of their Global ad spend in the US down to the 30s it was a big drop I may have the numbers a little bit off but they are pulling out of the US market NAD cess has done the same thing uh we have focused we love our American clients we love our American guests uh and we're continuing to serve them but most of our growth is in other Western countries Canada UK Germany Netherlands as well as a lot of folks in some of the countries that we're going to talk about today and so so people all around the world realize they need to go where uh they're treated best uh because of that uh if you're going to you know what's the next growth opportunity uh sure some us companies have exposure overseas but as we'll talk about with one of the currencies that has taken a beating against the US dollar I've actually done very well investing in that market in about the last four or five years so let's go through it uh here's the first headline the Mexican peso hasn't been this strong since 2015 now if you go back about a decade ago 2014 the era of emerging market dominance uh slowed down and you kind of enter this period of the dollar getting stronger obviously you know Co sent a lot of currencies that aren't the US dollar uh dramatically down many have recovered but the Mexican peso in particular was swept up and it it it devalued against the dollar since 2014 but it hasn't been as strong as it's been in almost a decade so it was about 6 uh 6.4 cents against the dollar back in 2015 got down down to about 4.6 cents during the pandemic that was a time when I talked about the opportunity to buy some of these currencies at a discount I bought uh George and Larry 3.4 earned about 133% yield on that and recently exited some of that position that was a nice time because the currencies appreciated dramatically earned a good yield along the way that's what you can do with some of these currencies if you're holding on to some cash and by the way Warren Buffett Apple a lot of people are holding on to cash these days anyway Mexican PES got down to 4.7 actually got even weaker than that I think it was like 242 to the dollar that's closer to 4 cents uh now it is uh it's almost back to those 2015 levels and so I've been talking about the opportunity uh to keep money in Mexican pesos now we've also talked about while a lot of our clients have gotten residence permits in Mexico some people live in Mexico some people live there parttime I have family now who lives in Mexico parttime Mexican Banks aren't necessarily where you want to put but your money and so if you want to you know get Singapore dollars you just open a bank of account in Singapore you know couple hundred thousand dollars and you can generally get an account there you know you can just keep it in cash if you want not sure I would do that in Mexico and so it shows that you want different strategies for different countries and it shows that you want true diversification the play in Mexico and I'm not giving investment advice cuz my needs are probably different than yours but for me it's been I'm going to buy some Mexican stocks I have a dividend portfolio as part of my overall Financial picture uh Mexican Bank uh you know Banks pay very high dividends and the dividend tax rate for someone like myself is much more favorable and Mexico's dividend tax rate is more favorable towards tax neutral structures offshore uh then let's say uh European stocks where like French stocks where they pay uh pretty high dividends on on as well but uh if you don't live in a country that they like the tax policy of you're going to pay a higher tax withholding rate so Mexico is more flexible there so all things that you want to consider but you know rather than just holding Mexican pesos there are uh some companies there that I think will do very well there are conglomerates involved in things like Mining and transportation that could be interesting is more you know activity with the China tariffs more stuff moves to Mexico I think Mexico is a bright future I've talked about that uh it's not all going to happen overnight but I think there's some opportunities to find companies that you like maybe get paid a higher yield while you wait maybe it's more tax favorable depending on where you live and own Mexican pesos I think in the long run the Mexican peso and the country will do well other countries other currencies that have strengthened over the last five years the Swiss frank has done incredibly well uh now yields on that are very low although uh some Swiss insurers and reinsurers for example pay decent yields uh Switzerland has one of the the worst dividend tax rates in the world uh again depending on where you live uh but if you if you open up a bank account in Switzerland or lonstein and you hold held Swiss Franks 5 years ago as part of your cash pile you are up one of the highest gaining currencies uh in the teens over the last 5 years now this does not include currencies like the Georgian lari and the Armenian Dram so there's other very exotic currencies like that that have done well I would expect that those have outperformed all these currencies uh they just don't make these charts and and some of the high highest yielding currencies of all uh sadly a war I suppose uh you know helped those currencies to some extent anyway down in the mid single digit appreciation against the US dollar is the Singaporean dollar people sometimes say if I want to keep money in Fiat I want to save Haven currency hey do your own research but for me it's hard to beat the Singaporean dollar and I mean those Banks some of the strongest in the world there having a bank account allows you to access Singapore government debt um different kinds of government debt more easily uh such as savings bonds if you're just a retail investor there's things like that you can do yields are not going to be as high as dollars right now but the currency has out paced uh the dollar and for me neutrality is going to be the thing to have in the next 10 to 20 years Singapore will be I mean obviously they are in some regards kind of a western leading country uh but I think that a more neutral place even than Switzerland now uh will not be the worst place to have money and so again could you open a Singapore bank account and and hold Singapore dollars there sure in some cases you want one but not the other in Singapore you could do both theoretically the Canadian dollar somehow is strengthened a little bit against the US dollar that's just a couple percentage points talked about how I've closed my Canadian bank account not long ago Hong Kong dollar obviously trades within a very tight Peg or or a band with the US dollar it is just ever so slightly down and that is one where they've talked about uh the carry trade when interest rates in the US uh were higher and you essentially had this very narrow band that the Hong Kong dollar trades in people were were basically uh you know selling their Hong Kong dollars to buy US Dollars and get that extra you know two% in interest and uh the question was I I think they had to defend the uh the peg I mean dozens of times uh so the Hong Kong dollar essentially a par the Chinese were maybe down a little bit these are all kind of very minor you know one or 2% New Taiwan dollar British Pound strling Down 2 or 3% Australian dollar has uh dropped the Euro has dropped in The Last 5 Years so if you you know we've talked about at times when the Euro dropped more dramatically than four five six % that was an opportunity get your citizenship in Malta U because it's priced in euros go and get your golden Visa in Europe go and buy that property go and get that residence permit It all becomes cheaper especially when you look at the donation for a Malta citizenship Europe in that upper six figures in Euros if you have a 5 to 10% drop in the Euro against your currency that's a substantial savings uh and so I was telling you what 18 months ago I think go out and take advantage of the when the Euro got down to par with the dollar I said this is a great opportunity to go out and get your backup plan in place at a discount and so the euro is still down but it's up uh what is it you know 8% since then uh Danish croner is down New Zealand dollar is down Paul isti is down I'm actually interested in some things that Poland's doing I'm not totally bullish on Poland but they're doing some things that I like they have some good yielding stocks they have some of the stronger banks in that region you know companies like Orlando you know provide uh a lot of energy in that region that could be interesting kind of in a in an era when when Russia is being pushed out uh but polti actually is uh coming back to its the levels it would have been at about 5 years ago so I think that you know if you find a different point in 2019 the Polish watti is pretty close to where it was if we do an exact 5year calculation I think it's not down as much as they say here Swedish Crona uh is down uh Indian rupee is down we're talking 15% now look at the Indian stock market uh look at some of the stocks on there you've seen incredible gains Over The Last 5 Years um 100 200 300 400% on some of those stocks and so you know 15% lost you know nominal terms not the end of the world for the opportunities in many cases outperformed a lot of you know us stocks and you know what I like about Emerging Markets is sometimes uh and I'm speaking kind of generally here you you you invest in some Emerging Market Bank that just goes crazy and it return like almost Nvidia level returns for a a casual investor and I've said I'm an entrepreneur more than an investor I have Investments that makes me an investor I I look at this stuff uh I'm not a total entrepreneur but if I had to pick one I'm an entrepreneur I'm not perhaps quite as analytical about every you know detail as someone who is more of an investor and so if you're in that category you know then I think are you going to figure out is NVIDIA going to be uh the next thing or is someone going to overtake them I mean that that moves so quickly that can be hard to keep up with rather than hey set it and forget it I think that the banks in Singapore are going to continue to be strong places they're expanding into India they're expanding into other places in Asia fast growing markets I think they're going to do well I'm just going to kind of set it and forget it for a while versus having to check up on which Tech stock is doing what now and what is Sam mton say whatever you may you may be an investor and you may check that stuff every day for people who don't I like Emerging Markets because you just you can get greater growth without having to necessarily watch it every day so one of the things that I like about having offshore brokerage accounts bank accounts in other places is my Indian portfolio I keep checking I'm paying a little bit more than a US listed ETF uh to have exposure to India I don't know 10 or 20 basis points more I think I saw India ETFs I mean the fees on those are not they're not nothing I mean it's not eight basis points I think I looked at one the other day it was 80 or 85 basis points and I think I'm paying 1% and I compared it said all right you know if I just wanted to hold this Indian you know basket of stocks in my own you know in a brokerage account rather than through a bank account you know and I'll save a few bucks uh would that be better and none of the US listed stuff outperformed uh what I have because what I have invested in is is uh I think a more locally managed fund it's not just kind of a passive you know mirr the index it's we're looking for deals on the ground in India you know we've talked about this for years you can look at a US listed or a European listed ETF or a uset and you can say oh well you know India hasn't done that well has it really been that much more you know better than the S&P 500 you know for the volatility yeah if you're if you're investing offshore generally it is now you know the other reason that I don't think it really applies to India I don't see a lot of Indian very good dividend paying stocks I mean you see like again like a bank where you'd see you know in in France or Georgia or you know any kind of a market you think like Indian Banks would pay you know dividends they don't the idea of having to have the investment offshore to uh control dividend tax exposure is not the issue because a US listed uh ETF in my case you know running an offshore asset protection structure would be 30% that doesn't even apply it's just that the Returns on some of these locally managed funds are better and and so uh even with that currency depreciation India remains uh one of my best performers uh the one that has been uh more more waffly uh has been Indonesia and I don't see their currency on there not a great currency but I think it's a country I believe in to some extent anyway North South Korean Juan interesting uh opportunity if you want developed Asia in your residence portfolio they have a residence program uh they've restricted a little bit in the last year or so I think but good opportunity we're seeing the one creep B up to pandemic levels against the US dollar and so if you want that that exposure uh to developed Asian country let's say oh you know okay Singapore is you're probably priced out unless you really want to live there and run your company there and then there just you know it's more expensive it's tax whatever South Korea and the wands depreciation could be a good opportunity if you want that developed Asian base uh potentially even citizenship but very very hard to get citizenship and they don't generally speaking allow duel uh with without except for a few exceptions that's interesting with the South Korean one Norwegian croner there actually were some yield stocks I looked at I think passed on there but that's interesting Japanese yen is down again same thing and and people have said to to Warren Buffett and to myself oh yeah you're doing well with Japanese stocks uh but the currency is down just as much go back and look at some of the appreciation of companies again I mean like Indian levels 300 400% in some of these companies I followed a little bit later um Warren Buffett into one of the soas the the trading houses in Japan uh Mara Benny uh I again don't don't take my investment advice for it um do your own research but I think Warren Buffett bought all four some of the big shoga Shas I said Mara Benny seems like it has good International exposure and me in a matter of months um I think you're up 50% on that trade if you go back a little bit further I mean you've doubled your money in that trade also get into Toyota you know doubled money that trade so you know 177 18% in 5 years versus uh you know if you're buying stocks in Japan when they were just totally beaten down a couple of years ago uh you are still uh ahead yields are are nominal there so you're adding a few bucks in cash to that and in Japan you know it's not a country where you get any kind of immigration benefit and there's no citizenship I mean you wouldn't want it by the way they have a a weird estate tax law for Citizens and long-term residents but you know you can see is some of these countries just offer opportunities do I think Japan is going to be the place to be longterm no I think there's an opportunity and for me I looked at what are the companies that are very International that are well-run um I got a couple of those stayed away from the rest anything that's purely domestic Japan wouldn't interest me um and perhaps you take profits on some of those eventually but you know there's some where you can you know there's a short-term trading opportunity there's some where there's a long-term hold opportunity and there's somewhere by making the investment it could be the the conduit to some kind of resident or citizenship uh some of the worst performing currencies the absolute worst is the uh South African rand among these major currencies I'm sure there's something in there like the USC s or something or the tajik whatever that's even worse but um Brazilian hii is down Brazil has a program we don't talk about as much for for immigration it does involve generally living there but there's a path to citizenship interesting citizenship to have not a tax friendly country but there could be something there for someone who wants to diversify into a large economy generally speaking the Brazilian uh the big Brazilian companies they list on the on the New York Stock Exchange so new for example you know some of the energy companies um so I don't know that people are generally buying stuff in the Brazilian Stock Exchange but I mean you have that that consideration in there so Mexican peso uh Place we've talked about more recently I'm bullish on Mexico uh again you don't have to be bullish on a country to go and live there that's just kind of incidental the fact that you might choose to go and live there or at least have a residence permit there or if your parents are from there claim your Mexican citizenship whatever um that's that's in addition to the fact that I think there are economic opportunities which you know for me if I can have a citizenship without changing my life too much that gives me economic opportunities uh or the potential for greater economic opportunities in a country that's not a bad thing I think having residences and ultimately citizenships in places that are on the upswing will be a good thing to do if not for yourself for your children and that's one of the reasons why I think besides having a plan B and a plan C for where you're going to go and what you're going to do in times of Crisis high taxes pandemics Black Swan events what have you hey if you can keep going as I have Plan D plan e Plan F if nothing else give your kids the opportunity to have citizenship in a place that that could be uh a 10 bagger at some point in the future uh the US is losing its influence you can say the US dollar will always have some influence I think uh there's some Merit that I think it's also I don't hear too many people in places where it's not uh to their advantage to say that saying that um outside of the western world I don't hear that a lot um so that is kind of a product of the western world but there's some truth sure the US dollar will remain somewhat relevant but I think you're going to see more people shifting away from the US shifting away from that we you saw it with TAMU as I mentioned they're pulling out if I'm a Chinese company do I want to do business in the US and you can say oh good be gone with you well that's one of the growth places I mean the Chinese stock market's been coming back we'll see how that goes going forward but you know you can't just say everyone you don't like should get out of your economy because your housing prices are too much or you don't like their geopolitics and then expect for your economy to grow as fast as theirs will and I think that you know having neutral places in your portfolio that welcome investment from all is going to be good for places to live places to have citizenship in and places to hold their currency and places to invest and so for those reasons places like Mexico intrigue me obviously Switzerland for different reasons Singapore uh for for some of the same reasons as Switzerland and even some of these that are down I think that timately if you found the right opportunities you would be in a very good position

Channel: Nomad Capitalist

Views: 38,212

Keywords: nomad capitalist, Currency Analysis, Investment Opportunities, Forex Market, Nomad Capitalist, Diversification, Global Investing, Emerging Markets, Wealth Management, Financial Freedom, International Finance, Residency Planning, Citizenship By Investment, Economic Trends, Currency Strength, Market Insights, Asset Allocation, Capital Management, Offshore Investing, Tax Planning, Wealth Preservation

Id: hLvuzqRqlbk

Length: 19min 33sec (1173 seconds)

Published: Sat May 18 2024