Written by Thomas Ryan Ward
Sunday, 12 October 2008
Safeguarding your portfolio should be your main concern.
The S & P 500 has fallen 42.5% from its all time high one year ago. The TSE has fallen 35.3%. Since 1950, the two worst bear market declines were from January 1973 to October 1974, minus 48% on the S&P, and March 2000 to January 2002, minus 49% (the “tech wreck”). So it may be a bit early to be brave.
However, even bear markets have bear market rallies, up as much as 20% in short time periods. Looking ahead to the bear market rally (November, anyone?), many investors are looking to diversify their portfolios from all-Canadian assets into foreign assets, such as real estate, denominated in U.S. dollars. This gives them safety with diversification, plus hedging against the falling Canadian dollar.
A brief history. The loonie hit a low point at $0.62 to the U.S. dollar in 2002, rallied to a brief top of $1.10 a year ago (or a longer-lived top of around $1.04), before retracing to $0.85 recently, a 23% retracement from the peak and an 18% retracement measured from the longer-lived top.
Previous periods of falling exchange rates against the U.S. dollar, from November 1976 to February 1986, and from November 1991 to January 2002, saw declines of 33% and 31%.
Real Estate is all about location. Why not follow the experts? Not only do they have more information than we do, their building plans are long term and generate travel demand and rising real estate values.
Many astute investors are getting a leg up by investing in Latin markets, such as Costa Rica, that are going up, rather than trying to find the bottom in a falling U.S. market.
Following are excerpts from a recent press release, indicating plans to expand Hilton´s operations in the Caribbean and Latin America from seven to 30 properties, including a focus on the Guanacaste region of Costa Rica.
Hilton Hotels Corporation Announces Major Expansion Plans to Quadruple its Caribbean and Latin America Portfolio Company Appoints New Development Team to Spearhead Addition of 150 Hotels & Resorts “BEVERLY HILLS, Calif., Sep 30, 2008 (BUSINESS WIRE) — Hilton Hotels Corporation today announces expansion plans to quadruple its presence in the Caribbean and Latin America by adding 150 new hotels to the portfolio over the next five years. ….”
Central America
“Simon Suarez, chief development representative, Central America, will be responsible for expansion in Central America and adding 23 properties to the current collection of seven hotels. …The company’s growth is expected in all of the region’s capitals, as well as secondary markets such as Liberia, Costa Rica; David, Panama; and Leon, Nicaragua. This will be complemented by active pursuit of opportunities in the principal resort destinations of Guanacaste, Costa Rica; Antigua, Guatemala; Atlantic coast of Honduras and Belize; and Pacific coast of El Salvador, Nicaragua, and Panama. …”
SOURCE: Hilton Hotels Corporation
The greatest investment error is failing to look ahead, instead looking back and saying “I should have bought at the bottom” or “I should have sold at the top”. 20-20 hindsight leads to “woulda, coulda, shoulda”.
It is much easier to identify a trend and then get on the right side of the trend. By thinking outside the box, and looking ahead, you can safeguard your portfolio, enjoy sunny warm winters away from the snow, and enhance your lifestyle. For more information, check out Discover Costa Rica Magazine and Seminars.
