NEWS/BLOG

Those E-mails Aren’t from Us!

Once again I must apologize for something I didn’t do! You may have received e-mails that appear to have come from liveabroad.com. Well, they were not sent by us but by strangers who decided to use our return address. I wish we could stop them, but there appears to be nothing we can do. Anyway, we are not selling pharmaceutical products or anything else via e-mail.

We do have advertisers and we’re grateful for their support. We also get credit for any Amazon purchases someone makes if they click on of our Amazon links. Even if you buy something else, something totally unrelated, Amazon credits us.

You’ve probably noticed by now that we have a section of the blog devoted to international investing. In case you haven’t looked, it isn’t about real estate in foreign countries. Other expat sites do a much better job with international real estate than we could possibly do. Instead it’s about emerging markets and exchange traded funds with some explanations of these investments. These things don’t have to be complicated, and I hope you find these explanations clear and timely as well. But as with any investments, of course, there are risks.

Mazatlán Is Mexico for Real

Puerto Vallarta may draw the tourists, but Mazatlán, about 275 miles to the north, is increasingly attracting expats who want to experience “the real Mexico.” Between 3,500 and 7,000 U.S. expats have settled in this city of about 400,000. Some are restoring historic houses near the center of town, while others have built modern villas on the hillsides overlooking the bay. Some have their eyes on beachfront high-rises still being developed.

For some time, it has been home to U.S. and Canadian citizens trying to stretch their retirement (or pre-retirement) dollars. It’s not difficult to find other English-speaking expats for socializing or, if you speak a little Spanish, to lose yourself among the local people. While some expats worry about finding quality healthcare, some who’ve settled here claim they’ve experienced the best care ever in Mazatlán.

Though you’ll see cruise ships docked in the harbor, Mazatlán is a working city which boasts the largest port facility between Los Angeles and the Panama Canal. It is home to Latin America’s biggest fleet of commercial shrimp vessels. Excellent seafood restaurants abound.

For more, see our article, Mexico—Still a Mecca for Expats and this Los Angeles Times article Mazatlan, a Mexican Harbor for American Expatriates

Be Prepared to Be Amazed by Argentina

Some have been arguing in favor of Argentina ever since the country started making its economic come back. According to the UN 2007-2008 Human Development Report, Argentina ranks 38th in economic, health and social development. (The report placed Iceland first and the U.S. in 12th place.) A baby born in Argentina today can expect to live 74.8 years. In literacy, Argentina ranks 27th; a total of 97.2% of Argentines are literate. The average Argentine spends 16.4 years in school. Only 570 out of 1000 have a cell phone, however, this was based on data from 2005 and has surely changed in the meantime. Argentina is on a roll.

The country just turned its clocks ahead an hour in order to take advantage of the daylight hours. It recently elected a woman president, Cristina Kirchner, who had previously been the country’s first lady.

What’s not to like in Argentina? U.S. foreign policy. According to a poll by The Chicago Council on Global Affairs and WorldPublicOpinion.org,. Argentina leads the list of countries that distrust the U.S. and the U.S. role in world affairs. This is understandable, since Reagonomics and IMF recommendations are seen here as the causes of the economic crisis which reduced over half the population to living below the poverty level. The antagonism, however, doesn’t extend to the American people or American products. Argentinians love McDonalds’s and this is in a country famous for its beef! (The Buenos Aires restaurant La Brigada has the title of “best steak in the city.")

Speaking of Beueos Aires, the hot new neighborhood is Puerto Madero, flanked by La Plata River and a protected nature reserve. Formerly a port area of brick warehouses, it has been transformed into upscale residential apartments, restaurants, offices and lofts flanked by picturesque canals. From all over the city, Porteños, as people of B.A.call themselves, are seen here on weekends, strolling, riding bikes and congregating in the cafes here. Weekdays, it’s business people from nearby high-rise offices and at night, it’s diners at elegant restaurants and moviegoers. In case you’re thinking of visiting, there are also some five star hotels. If you’d rather sleep cheap, look into hotels and guesthouses in the Microcentro area and Plaza de Mayo. The streets of Peurto Maderno, you’ll notice, are named after women. The area is served by a tramway and a few buses, but is not connected to the city’s subway system

More on Double Inverse ETFs

The top gaining ETFs for the week ending January 18 in Investors Business Daily were all double inverse short funds, and their returns were 18% and up. Now, after today’s big plunge in the Chinese markets and a downward slide in Europe as well, while we were taking a holiday in the U.S., there’s sure to be more interest in these double short funds. (See the earlier blogpost, Time to Let the Dog In?)

How do double inverse ETFs work? Instead of shorting all the stocks in an index, they use derivatives, which include futures contracts, options, and swaps, (A swap means you sell one security and buy a comparable one). Their value is derived from the value of an underlying security, commodity or other financial instrument. Derivatives don’t have the trading costs associated with shorting.

With swaps, there is a payment of interest.  Futures are “margined” or leveraged, which means a small amount of money is used to garner a greater return. For an ETF to give back 100% of a negative return of an index, the ETF need only invest 10% of its cash into the futures. If the ETF is to generate a 200% negative return, it invests 20% of its money into the futures. The remaining assets, 90% or 80%, are in short-term notes, which pay interest.

Confusing? There are more detailed explanations in these articles:

Inverse (Short) Market Cap ETFs

How Short ETFs Make Money

The double inverse ETFs actually pay quarterly dividends with the money earned in interest. The reason to own them, though, is to protect a portfolio against downside risks, which are now looming large. Or to take money out of a bear market.

Time to Let the Dog In?

Yes, there is a fund with the symbol DOG, the Short Dow 30, which moves the opposite of the direction the Dow is moving and at the same pace. But when the bears are really in control, as they seem to be in recent days, it can make sense to hedge with some of the “double short,” also known as UltraShort, funds. The funds do the shorting, which means an investor is permitted to hold them in an account where shorting isn’t allowed. Remember, though, that a volatile market may change directions several times in a single day.

These funds are the double inverse of the Dow, the Nasdaq and the S&P:
DXD UltraShort Dow30
QID UltraShort QQQ (Nasdaq)
SDS UltraShort S&P500

These are the double inverse of some international markets:
FXP UltraShort Ftse/xinhua China 25
EFU UltraShort MSCI EAFE
EEV UltraShort MSCI Emerging Markets
EWV UltraShort MSCI Japan

These are the double inverse of specific sectors:
DUG UltraShort UltraShort Oil & Gas
SKF UltraShort Financials
SRS UltraShort Real Estate
SCC UltraShort Consumer Services
RXD UltraShort Health Care
SMN UltraShort Basic Materials
SZK UltraShort Consumer Goods
SSG UltraShort Semiconductors
REW UltraShort Technology

Do your own due diligence. Remember, there’s no such thing as a sure-thing investment. This is not an ad for ProFunds, just some ideas of things you can do when the market goes south. For more, including information you can download, see www.proshares.com/funds/

Ways to Stay with Locals

Homestays for travelers existed long before the Internet, but websites and e-mail make it much easier to link with people in other countries. Now there’s couchsurfing.com with over 400,000 members worldwide and more joining everyday. The average age is 26, but members are all ages. A nonprofit supported by contributions, it has no charge for joining. Newcomers are urged to have themselves vouched for by existing members. The organization stresses that it is not just a way of traveling on the cheap and that the real purpose is have a better understanding of other places and other cultures.

Some of the organizations that have been around longer are Servas International and the Friendship Force, both dedicated to fostering world peace. Servas (it’s the Esperanto word for service) is best suited for individuals traveling alone although some hosts can accommodate two people. A homestay usually lasts just two days. To become a member of Servas, you must be interviewed by an existing member. For a list of members in areas you plan to visit, a deposit is required and certain rules must be observed. You make your own arrangements and show your “letter of introduction” upon arriving at your host’s home. For more, see Servas.org.

With chapters in many cities, the Friendship Force plans trips or “exchanges” for groups who are then hosted by groups in foreign countries. Travelers are designated “ambassadors.” For visiting destinations where you’d prefer traveling with a group and having preplanned activities, this is an interesting and relatively inexpensive possibility. The website describes “exchanges” currently offered with the dates. It’s advisable to apply early. See theFriendshipForce.org - and not friendshipforce.org, which is an online dating and penpal service, unless that’s what you’re looking for.

Helping People with Parks and Bike Trails

"Income equality is impossible, so what other equality is?” asked Enrique Peñalosa during recent New York stopover. “Access to green areas, a waterfront, to sports and music facilities. What we do with our cities will determine quality of life for hundreds of years.”

While serving as mayor of Bogotá, Colombia from 1998 to 2000, he instigated the transformation of this city of 6.7 million from a traffic-snarled, crime-ridden metropolis into an inclusive and clean urban area with buses, parks, bike paths and libraries. One of his first moves was to prevent cars from parking on city sidewalks, reclaiming them for pedestrians and cyclists.

While he was in office, a city bus system was built at a mere a fraction of the cost of modern subways, and a bike path 211 miles long (the longest outside of China) was created. A derelict downtown avenue became a grand pedestrian boulevard, and a slum near the presidential palace was turned into a 39.5-acre park. Crime fell 35% during this time.

His ideas are especially important as uncontrolled growth in the cities of India and China presents a grave threat to the environment. Interestingly, though, environmental concerns aren’t his motivation. His main focus has always been to improve the quality of life for large numbers of people.

Not building roads or rail services the city saved money for other uses. During his term the city built or improved 1,200 parks and added 100 nurseries, 51 schools and 14 libraries. School enrollment rose 31%. His achievements won the Stockholm Challenge prize for Bogotá and a $1 million award from the Gates Foundation for Peñalosa himself.

From 2001 to 2004 he was a visiting scholar at New York University and a fellow at the Institute for Transportation and Development Policy, a nonprofit agency. During that time, he provided advice on urban planning to such diverse cities as Hanoi, New Delhi, Jakarta, Dakar, Senegal, Guangzhou, China, and even Los Angeles.

Returning to Bogotá in 2004, he continues to work with cities where goals of sustainability, equality, quality of life and competitiveness are acknowledged. “Future competition between societies will be for quality of life,” he says. “Talented people will go to cities that are socially inclusive, pleasant and move. The 80% of Asian cities to be built by 2100 could be much better than New York or London. My mouth waters at what could be done.”