Where Should You Hold Your Cash?

Transcription

Issue 3 / September 2012
Where Should You Hold Your Cash?
Dear Reader,
Cash, yield, and safety – you need all three, but
where can you find them all in the same place? We
recommend keeping about a third of your portfolio in
cash, but where can you keep that cash safe and still
earn a little return?
Many investors have large portions of their portfolios
in dividend-paying stocks for this very reason. My first
article, Twelve Tips for Dividend-Paying Stocks, offers
suggestions on how to sort through your investment
options to find the right dividend-paying stocks for
your portfolio.
In This Issue
Click on title below to go to article
Twelve Tips for Buying Dividend-Paying
Stocks
International Parking Spots for Your Cash:
An Interview with Chuck Butler
What to Look for in a Currency
PLAN A
Money Forever Portfolio
Data Box
End Notes
A return of the “Good Old Days” – when CDs and
bonds were paying 6-7% – does not appear to be close
on the horizon. In addition to earning a decent yield,
investors also need to keep up with inflation; diversifying into foreign currencies is one way to do
that.
Investing in foreign currencies is probably, well, “foreign” to most of our readers. How do you pick
the right currencies? How do you know if they’re safe?
That’s why I reached out to Chuck Butler, president of EverBank World Markets, for an interview.
Chuck knows as much about foreign currencies as any person I know. He shares some insights on
where to start, what to look for, and some easy ways for you to buy in the US.
Vedran Vuk, our senior research analyst, then shares his insights in What to Look for in a Currency
and gives a few recommendations.
© Copyright Casey Research LLC. Unauthorized disclosure prohibited. Use of content subject to terms of use stated on last page.
He also provides some interesting support for currency diversification in the Data Box and adds a
cash pick for the Money Forever Portfolio.
Sincerely,
Dennis Miller
Twelve Tips for Buying Dividend-Paying Stocks
Many of you have probably filled out one of the “retirement planner” forms available online. Plenty
of tax and accounting programs also have “Lifetime Planner” sections for folks to determine if they
can afford to retire.
These sorts of programs plug certain assumptions into a formula, such as projected inflation rate,
retirement income, anticipated spending levels, and portfolio growth rate. After you add your
personal information, it projects how much money you’ll be able to produce annually during
retirement, and how long it will last.
The first time I ran these numbers, the program said I was good until 116 years of age. At the time,
I believed that if we followed the plan as outlined, my wife and I would never have any real money
worries. We’d be set for the rest of our lives and could proudly leave some to our children to help
with their retirement. How naïve of me!
Things have sure changed a lot since then.
At the time, I’d estimated inflation at 2% and a minimum yield on our portfolio of 6%. In those
days, that was conservative. Inflation was lower than 2%, and you could always earn 6% on a toprated bond or CD.
Many retirees and baby boomers are now rethinking the entire retirement process. CDs and topquality bonds no longer pay enough interest to keep up with inflation.
With these options out of the picture, it’s no wonder the stocks of big, solid, dividend-paying
companies are soaring. Investors hoping to earn a higher return are pouring money into them with
the hope of staying ahead of inflation.
Quite frankly, there are very few other places to invest for current income with some degree of
safety. Dividend-paying stocks are certainly a favorite in today’s economy.
September 2012
Miller’s Money Forever
2
I’m a firm believer that the days of buying a company stock, putting it in a drawer, and never
worrying about it again are over. At the same time, folks contemplating retirement will likely have
long-term relationships with certain dividend-paying stocks.
While working on our special report, Money Every Month, our analysts really showed me how to
sort through hundreds of dividend-paying stocks. I wanted to share some of the tips I learned
during the process.
Tip No. 1: Long History of the Company Paying the Dividend
Many companies pride themselves on a decades-long history of continuously paying dividends. For
many, it’s just part of the company culture. Every year a certain portion of profits is paid out to the
owners of the company, and another portion is retained for growth.
Tip No. 2: Payout Ratio of No More Than 80% of the Company’s Earnings
Per Share
When our team first put together the list of dividend-paying stocks, they listed them by yield.
Naturally, I went straight to the top of the list.
But our analysts quickly pointed out that if a company earns $0.50/share and is paying a dividend
of $0.75/share, it could be in trouble. It’s important to compare the earnings per share and the
dividends per share of any investment candidate.
What if you discover that a company is paying out more than it’s earning?
One possibility is that it’s sold off some assets, a one-time event, and it’s paying out part of the
proceeds in dividends. I recall a time several years ago when Masonite sold off some huge timber
holdings and paid a special dividend.
On the other hand, I also remember a different example, where a company had renegotiated a huge
line of credit with its lenders and was paying out dividends in excess of its earnings. It had basically
borrowed money to pay the dividends. I decided to pass on that opportunity. If you’re considering
investing in a company with an unusually high payout ratio, always investigate.
Tip No. 3: Worldwide Market Presence
The Money Forever team is very concerned about inflation of the US dollar. Companies that do
business all over the world provide something of a hedge against inflation. McDonald’s, Coca-Cola,
Procter & Gamble, and General Mills are a few household names that come to mind.
It may have been good to own Anheuser-Busch back when it was primarily a US company, but
owning Anheuser-Busch InBev now that it has operations in nineteen countries is an even better
hedge against US-dollar inflation.
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Tip No. 4: Stable Product Line
Whether it’s beer, food, oil, or computer chips, the company you’re investing in should have a core
business with a worldwide need for its product.
While I own Microsoft stock for the dividend yield, I was fairly cautious when I bought it. It wasn’t
too long ago that Bill Gates appeared before a Senate committee and testified that Microsoft’s
entire product line becomes obsolete about every three years.
Coca-Cola, Pop-Tarts, bread, oil, and the Pillsbury Doughboy have been around for generations.
As one of our analysts mentioned, you can earn good dividend yields in the technology sector or
financial industry, but you have to monitor them closely. Solid, mainstream businesses that are
constant moneymakers are a better place to start.
Tip No. 5: Lots of Cash
This is why I bought and continue to hold Microsoft. A company’s current-assets-to-currentliabilities ratio is one of the important factors for analyzing a dividend-paying company. Vedran put
it this way:
“For some added due diligence, check the current ratio and the payout ratio. The ‘current
ratio’ is the ratio of current assets to current liabilities. This measures a company’s ability to
meet short-term obligations. If the company’s current ratio is greater than 1, it’s in good
shape. Near 1 is still acceptable. Other important long-term ratios, such as the debt-toequity ratio, are already captured by the S&P 500 credit rating.”
Companies like Microsoft have plenty of cash and can pay their bills with plenty of money left over
to reward their stockholders.
Tip No. 6: The Company Sticks to Its Core Business
During the Internet boom, many companies were swapping stock and buying up businesses all over
the place. To this day, I do not understand why AOL-Time Warner made sense as a business.
It’s one thing when a pharmaceutical giant acquires a smaller drug company that has a new drug
that’s been through the FDA trial process. That makes good business sense. It’s quite another story
when a company like GE decides to buy NBC because it wants to be in the media business.
I much prefer companies that stick to their core businesses, dominate the heck out of the market,
and share their profits with stockholders. Every company needs to keep its competitive edge, but
there’s a benefit to knowing what you’re good at and sticking to it.
Eastman Kodak, a company that’s now bankrupt, must have realized that digital cameras and
photo-printing on home computers would majorly impact its business. If a company’s core business
is dying, it may be time to move on to another investment opportunity.
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You can always follow a company’s progress and invest if you think it’s going to dominate a new
business venture.
Apple is a good example. Its core business was dying, but it turned itself around. The company
brought back Steve Jobs, invented the iPod, iPhone, and iPad, and boom – it took off once again. I
wonder what’s next?
Tip No. 7: Stock-Price Stability
Benjamin Graham, author of The Intelligent Investor, recommended a portfolio of stocks and highquality bonds. Under his model, you switch part of your portfolio back and forth between the two,
depending on market conditions.
While that may have worked for him, the yield on fixed-income investments today no longer allows
for that. You need to continually remind yourself that no matter how big or stable a company, its
stock price can still fall. Unlike a CD insured by the FDIC, you can still lose some of your principal.
The stock prices of many huge, dividend-paying companies tumbled in the 2008 crash. However,
they were generally less damaged than the total market, and they recovered more quickly. Safety
is one of Money Forever’s main concerns, and you should study the history of any stock you’re
considering, to see how volatile it is during market turmoil.
Tip No. 8: Diversification is Good
Some of the better yields are in sectors that experience more volatility. A prudent investor will
diversify his dividend-paying stocks among different sectors to reduce the overall impact of market
swings.
Tip No. 9: The Company Has a History of Buying Back Stock
It’s a big plus if the company has enough earnings to pay good dividends and buy back stock at the
same time. Having stock appreciation in addition to generous dividends is your overall goal.
Many retirees need the dividend income to live on. At the same time, if your overall portfolio
increases in value throughout the year and stays ahead of inflation, you’ve done very well.
Tip No. 10: The Company Has a History of Increasing Dividends
It’s prudent to check a company’s dividend history to see if there’s a pattern. Many old-line
moneymakers have done very well for their shareholders by increasing their dividends every year.
For example, many long-term Coca-Cola shareholders receive dividends well in excess of a 10%
return on their original investment.
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Tip No. 11: Check the Current Dividend Yield Percentage
There are many good dividend-paying stocks out there, but you should factor in the price of any
company you’re considering.
When our research team showed me the list of stocks for Money Every Month, I quickly looked for
the Warren Buffett favorite, Coca-Cola, and could not find it. They’d filtered out companies paying
less than 3%, and Coca-Cola was below the cutoff.
McDonald’s is currently paying 3.1%, Walgreen Co. is paying 3.1%, and Shell is paying 4.8%. There
are dozens of other good companies with good dividend yields.
Tip No. 12: Set a Trailing Stop Loss
It’s time to remind yourself again that dividend-paying stocks do not offer the safety of a toprated bond or FDIC-insured CD. As a retiree or someone considering retirement, preserving your
investment principal is paramount.
You don’t want to ride a stock down just to see your dividend income eaten up in loss of principal. A
stop loss helps to keep that from happening.
A traditional stop loss uses a fixed price. If you buy a stock for $100 and put in a 20% stop loss on
it, you have an immediate sell order on it if the stock drops to $80.
The sell order is executed automatically by a computer. If you trade online, it’s easy to enter the
stop-loss order when you purchase the stock.
A trailing stop loss is a little more sophisticated; it adjusts the start point every time the stock hits a
new high. This gives investors the potential to lock in some profits and still protect themselves.
Assume that you bought the same stock for $100/share and put in a trailing 20% stop-loss order.
You may end up holding the stock for years, collecting dividends along the way and watching the
stock appreciate.
Imagine that the stock hits an all-time high of $200/share. The trailing stop loss will trigger an
automatic sell order if the stock drops 20% to $160/share. In this illustration, the trailing stop
loss protected your investment, but you still earned a $60/share profit, plus the dividends you’ve
collected over the years.
Our team recommends setting a stop loss for big, solid companies that likely trade several million
shares per day. If you’re investing in startup companies or thinly traded stocks with high volatility,
you’ll likely get stopped out of a stock you want to keep.
When you enter your stop-loss order, make sure to mark it “good until canceled.” My online
brokerage enters every order for the day and then cancels it after the market closes unless I instruct
it otherwise.
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Some online brokerages work differently. Even with a “good until canceled” order, some online
brokerages will cancel the order automatically after 60 days, and you have to reenter it. That’s not
necessarily a bad thing, because it’s a good time to review your investment anyway.
Take Comfort In Having a Plan
There’s comfort in having a portion of your portfolio invested in solid companies that pay nice
dividends. Retirees and folks looking to retire have to be much more active in managing their
money than in the past.
Being a part owner of some of the finest businesses in the world and sharing in the profits is a lot of
fun.
Like most areas of investing, finding the right companies and buying them at the right price are
the major factors. It just takes a little time and common sense to sort through the hundreds of good
possibilities and select the right ones for your individual situation.
International Parking Spots for Your Cash:
An Interview with Chuck Butler
For the cash portion of the Money Forever pyramid, our team is looking for investments that are
safe, provide income potential, hedge against inflation, and most importantly, are liquid. That means
they’re in cash or are quickly and easily convertible into cash.
With those issues in mind, I contacted Chuck Butler, president of EverBank World Markets. It has
some unique products available, and my wife and I have been customers for a couple of years.
I should also point out that I’ve known many folks on the EverBank team for over 20 years, from
the old Mark Twain Bank in St. Louis days. The company has managed to create some interesting
investment opportunities by combining FDIC insurance with products most of us don’t think of as
an insured account. I’ll let Chuck explain.
Beyond Bricks and Mortar
Dennis Miller: Chuck, we’re trying to help our readers allocate a portion of their liquid cash to
provide a safe yield plus hedge against inflation of the US dollar. Can you explain to our readers
how EverBank is different from the traditional bank with a branch on every street corner in town?
Chuck Butler: Sure, Dennis. EverBank was created as a true online-only bank in January of 2000.
Because we’re an online-direct bank, we’re able to beat the bricks–and-mortar banks with deposit
and loan rates.
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EverBank opened their virtual doors with an online brokerage company that did foreign stock
trades in the local markets of 15 countries and foreign government bonds. This immediately set
them apart from almost any bank out there.
There were a series of acquisitions and mergers along the way. In addition, in June of 2000 we
purchased the foreign-deposit book of First Star Bank, which was started by Mark Twain Bank in
1997.
This product set of foreign currencies further differentiated EverBank from traditional banks,
because we were able to issue FDIC-insured deposits in over 20 different foreign currencies to
individual investors.
In 2003 we were bought by First Alliance Bank of Jacksonville, Florida, and they quickly changed
their name to EverBank. Now we’re an online-direct bank along with bricks-and-mortar banking
with a network in Florida.
We believe we have every product that any investor or banking customer would be looking for, and
we call it “the global toolkit.” That’s what’s different. I know you want to focus on our foreigncurrency CDs in today’s discussion. If folks want to learn about our entire product line, they can
simply go to http://www.everbank.com.
Cash in Other Currencies
Dennis: Thanks for the background Chuck. Here is the issue for the day: The Money Forever
philosophy is very straightforward. You should have about a third of your portfolio in cash, not all in
US dollars. You want to have some protection against inflation of the US dollar.
Now, I want to clarify this for our readers. The EverBank accounts are FDIC insured. To me, that
means it’s insured against default on the part of the bank. At the same time, I don’t think there’s any
insurance at any bank anywhere against inflation, whether it’s in US dollars or a different currency.
In other words, your money is insured, but if inflation is eating it away, that’s the risk an investor
takes by holding that particular currency.
By moving your money out of US dollars, you’re hedging against inflation of the dollar. However,
this isn’t as simple as picking a random currency. Other countries have their own problems too.
So how would you pick the right currencies to appreciate against the US dollar so that you’re
hedging against dollar inflation?
Chuck: I tell people to look at a currency as the stock of the country that issues it. If the country
follows the same criteria as a corporation having a good balance sheet – which, when you refer to a
country, would be: debt or surplus; good leadership; ability to attract investment; good exports; and
some good currency yield – then their stock is going to be strong.
If you put those criteria against all the countries in the world, you’ll find that only a handful of
currencies actually meet those criteria most of the time. I call them “Steady Eddy,” and I can list
them for you: China, Australia, Norway, Sweden, Singapore, and Canada.
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Now, if we could just buy German marks, they would also be included. The Eurozone leaders have
decided to allow each country in the union to live the dream. The euro is not in our Steady Eddy
group.
It is important to understand that the euro is the offset currency to the dollar. There have been times
in the last 13 years the euro has been around where things in Europe just did not look very good,
but things here in the US looked even worse. With the euro being the offset currency to the dollar,
the bias to sell dollars remained in the market, and the euro got stronger, even though it had bad
fundamentals.
So it can happen because it’s the offset currency to the dollar. It just depends on which way the
dollar is going at that time. All we hear about in the news these days is Greece this and Spain that
and all their problems, but the euro is still trading a quarter of a cent higher than the dollar. So what
does that tell you about the dollar?
Dennis: It tells me that we better hedge against our own inflation. The US can’t just keep printing
trillions of dollars and not expect inflation.
Chuck: It’s important that you make that point because the Federal Reserve Chairman, Ben
Bernanke, said that he wants to have higher inflation. The reason they want higher inflation is so
our debts can be paid back with inflated dollars. Seniors and savers as a group will really feel the
brunt of those policies.
Dennis: Chuck, let me refocus on our point again about the one-third of the Money Forever
portfolio that we’re keeping in some sort of cash – not necessarily US dollars. Part of the reason
we’re telling our readers to do that is for emergencies or if a really good opportunity comes up that
they want to jump on.
How do we address the issue of liquidity? I know most banks put CDs into three-, five-year time
frames, or more. By doing that you’ve lost your liquidity. How do you get around that?
Chuck: EverBank offers foreign-currency CDs with a minimum term of three months, so that’s
pretty liquid as far as I’m concerned. The maximum term for most currencies is up to one year.
Now, CDs can be rolled and you don’t change your cost basis, so basically you can have a CD with
the shortest term at three months. That’s a lot different than 3-5 years. The three-month option
offers much more liquidity for the investor.
Bundle It Up in a Basket
Dennis: Please talk a bit about your bundled packages.
Chuck: Sure. We call these “basket CDs.” What we’ve done over the years is come up with themes
or ideas that make sense for putting three or more currencies into one CD.
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Now, we did this for a couple of different reasons: First, our customers wanted to diversify into
multiple currencies, but to do that they would need to have a lot of money. Each foreign-currency
CD has a minimum of $10,000, so to buy four different currencies you would need at least $40,000
if you were going to properly diversify into four currencies. We lowered those amounts, because we
were going to put them into one basket CD; and one basket CD has a minimum of $20,000.
Now you get to diversify into four currencies with half the money that you would have had to use
before. The idea is further diversification as a hedge against inflation.
For example, one of our many baskets is called a “Global Power Shift.” It is made up of equal parts
of Brazilian real, Australian dollar, Norwegian krone, and Canadian dollar. Each currency is on a
different continent, and three are from the Steady Eddy list I outlined earlier.
At EverBank, the minimum maturity requirement is three months, and we can do any maturity
after that. To maximize liquidity I suggest doing one for 90 days, one for 120 days, one for 150 days.
By having CDs in foreign currency you are addressing the inflation issue. Once you’re past the first
90 days, in effect you would have a CD maturing every month, and you could be out of your entire
position in 90 days if you had to.
The Fear of Going International
Dennis: I’ve tried to talk to some of my friends about EverBank CDs and foreign currencies. They
have a tendency to roll their eyes, because none of them have any real experience in investing in
foreign currencies.
When Glen Kirsch started suggesting foreign currencies to me, I admit I was very reluctant. One
of my personal beliefs is that every investor should fully understand what they are investing in. I am
well past the point in life where I have blind faith.
When it comes to currencies, investors need to understand what’s going on in the world and how
that relates to the currency market. Is there any easy way for investors to get educated and stay
educated without having to put in five hours a day to be on top of this stuff ?
Chuck: Well, you know, nothing good in life comes easy, okay – but I would say that the easiest
thing they can do is read. I know, that sounds boring; but you know, to get the handful of currencies
that we’ve just talked about, you’re going to have to read and research, which brings you to that
conclusion.
I’d begin with newsletters that cover currencies and economies. I personally write one called the
Daily Pfennig. It’s free and in your email box Monday through Friday, but there are other ones.
Diversification applies here also. More than one source of information is even better.
Dennis: Chuck, in today’s environment, the reader can go on the EverBank website, and you’ve got
all kinds of impressive foreign-currency CD bundles. Is there any particular currency bundle that
you might suggest to a reader with a moderate-sized portfolio that they might want to get started
in to hedge against US-dollar inflation?
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Chuck: Yes, there are a lot of them. I would say that the two most popular ones that we’ve had in
the last couple of years have been the Global Power Shift CD and the Pan-Asian Currency CD,
which has the Asian currencies in it.
It doesn’t pay much interest, because interest rates in Asia are pretty much zero all across the board.
It does have Australia in it, which does pay interest.
Basically, you’re getting paid to own Singapore dollars. Their currency is strong, but if you just own
Singapore, you wouldn’t be getting interest. By bundling it with the Australian dollar you have yield
and a good inflation hedge. It’s a good way to do it.
Dennis: Today the best rate for a five-year CD in the US is 1.8% interest. That does not beat the
current inflation rate. Currently a one-year CD pays 0.5% interest.
To set expectations properly for readers, the real benefit of investing in the foreign currencies is
not the different yields, but the benefits from only having your money tied up for 90 days and also
protecting against inflation of the US dollar. Do I understand that correctly?
Chuck: That is absolutely correct. Even when interest rates were normal around the world, we
always explain to people that the interest that’s paid on a currency is like the icing on a cake, if you
will, or gravy.
It helps to add some extra shekels to your balance, but the idea here is that you have diversified
outside the dollar. All a reader has to do is look at the long-term trend of the dollar, and the
direction is down. Hedging against inflation is protecting the purchasing power of your investment.
Paying the Tax Man
Dennis: Please help our readers understand – are there any special tax consequences of doing this?
Chuck: Well, let’s see... I can tell you that I’m not a tax advisor and I don’t play one on TV, nor did
I stay at a Holiday Inn Express last night.
I can tell you that over the years, our customers tell us that they treat owning foreign currencies just
like they treat US stocks. If they hold them for over a year, it gets that type of taxation. If it’s under
a year, meaning you held it and then you cashed out back to dollars within a year, it’s not a longterm gain.
Dennis: So let me make sure that I have this right. Last year my wife received the normal 1099
form from EverBank for her interest earned. We sent it to our accountant and paid taxes on the
interest. As she continually rolls the CDs, she’s not selling and rebuying that currency. Our CPA
explained to us that the taxable event doesn’t take place until she takes her money out of that
currency and brings it back to US dollars. Is that correct?
Chuck: That is correct, yes.
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Dennis: Now, about foreign currency CDs and the FDIC. Let’s say my wife invested $10,000 US
and wanted the CD denominated in Canadian dollars. At the time she buys the CD, the Canadian
dollar is worth less than the US dollar, so she might show a balance of $10,100 Canadian dollars in
her account.
Should the FDIC have to step in, she would get $10,100 Canadian dollars back regardless of the
fluctuations in the currency. Did I explain that correctly?
Chuck: Yes, you did.
Dennis: I know this is far from traditional for a lot of Americans, but the world is changing.
Thanks for taking the time to educate our readers about another way to protect themselves.
Chuck: I certainly agree with your inflation concerns. My pleasure, and thanks for the opportunity.
What to Look for in a Currency
By Vedran Vuk
Making your first diversification out of the dollar can be an intimidating experience – and for good
reason. The only time holding a foreign currency crosses most minds is on a vacation or business
trip. Furthermore, if the dollar is no longer a safe place to store your wealth, then the question
immediately arises: “What place is safe?”
Fortunately, the world of currencies isn’t as complex as it might seem. With a little common sense,
you can easily narrow down your options to only a few. Obviously, the currencies of Ghana or Sierra
Leone are not going to be on the list.
Despite the many countries in the world, there are only a few currencies really worth considering.
The tough part is narrowing down the list from a few good options to the best options. While the
choice between Ghana and Switzerland might be easy, the choice between, say, Switzerland and
Australia is not so clear.
Though the strength of a country’s economy has a lot to do with the strength of its currency, it isn’t
the whole story. Rather than focus on comparing economies alone, we’ll look at three less-obvious
factors supporting a currency’s value.
Factor No. 1: Economic Fundamentals
When government printing presses around the world are running hot, the fundamental
characteristics of an economy can have a big influence on a currency’s value. Does the underlying
economy mostly depend on the service industry, or is it a commodity producer? Furthermore, is it a
net exporter or importer of goods?
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Though the United States produces plenty of commodities, its production isn’t nearly as
concentrated as other places in the world. For example, Canada has considerable gold and oil
production. When these commodity prices are high, the value of the Canadian dollar gets a boost as
well. And since those exact commodities do particularly well against a weakening dollar, we’d rather
hold the currencies with a relationship to the underlying commodity production.
Unfortunately, the commodity relationship can be a little tricky as well. Many nations have what
is known as the “curse of natural resources.” Often places with the most natural resources have
the least-free governments. Think many African governments, a good deal of South America,
and Russia. As a result, the trick is finding a relatively stable country with a strong commodity
connection.
Another important question is whether the country is a net importer or exporter of goods. In some
cases, this doesn’t play a huge role, but in others, it’s extremely important. The best example here is
Japan.
Despite Japan’s near-zero interest rate for what seems like forever, the Japanese yen continues to
appreciate. How is that possible? Since Japan exports so many goods, the demand for its goods –
and as a result the demand for its currency – offsets the downward pressure on the currency from
the low-interest-rate policy. If Japan didn’t have such strong exports, the yen would have been on
par with toilet paper a long time ago.
Factor No. 2: Interest Rates
The significance of interest rates is pretty intuitive. Assuming an equal inflation rate, if Country A
has an interest rate of 4% on its government bonds and Country B has an interest rate of 0%, where
would you prefer to hold your money? Obviously, Country A with its 4% rate. However, if everyone
in Country B sells their currency to purchase the bonds of Country A, Country A’s currency will
appreciate from the demand, and Country B’s currency will depreciate.
As a result, if a central bank increases interest rates, it will push the value of the currency higher. If
it lowers interest rates, the currency will get weaker. With the 10-year Treasury bond at 1.72%, the
Federal Reserve has been weakening the US dollar.
This is one reason that currencies such as the Canadian dollar and the Australian dollar have gained
against the US dollar in recent years. Canada’s 10-year notes yield slightly more than the US at
1.85%, and Australia’s 10-year notes yield far more at 3.05%.
Factor No. 3: Central Bank Direction
A central bank’s philosophy and interest rates are inseparable. Since central banks are largely
responsible for setting interest rates, currency traders always try to predict their moves.
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Every central banker has his own personality. Some are more cautious of inflation, while others tend
to focus on unemployment. Furthermore, traders pay close attention to a central bank’s credibility.
If a central bank promised to fight inflation but then did nothing to stop it at the first sign of
inflation, currency traders won’t forget this inaction. The next time around, they will be less likely to
believe in the central bank and as a result will discount the currency.
A central bank’s credibility can get so bad that currencies will continue to fall despite the central
bank taking appropriate actions to fight issues such as inflation. In some ways, this has been
happening in the Eurozone, with governments rather than central banks.
Spain and Greece have promised austerity measures and have even carried out many, but their
credibility is so damaged that the market discounts their actions anyway. Similarly, once a central
bank’s reputation is ruined, it’s tough to repair it.
Right now, the Federal Reserve is credible, but not in a good way. Ben Bernanke has promised to
keep rates near zero until mid-2015, and the market is holding him to his word. However, for our
criteria, this is strike two for the US dollar.
Not only are our interest rates near zero, but they also aren’t expected to rise anytime soon. Every
currency trader knows that, so they’re not putting a whole lot of faith into our currency. The US
dollar has only retained any strength as a result of flights to safety from Europe’s problems, but on
days when the economic waters are calm in Europe, the dollar immediately starts sliding.
We want to invest in a currency whose central bank has some intention of raising rates, not one
whose central bank has promised to beat them into the ground for another couple of years.
Currency Options
Finding a strong and stable economy with these three factors can seem like an intimidating task,
as few countries seem to fit all of the characteristics. Oftentimes, a country will be doing really well
in one or two categories but will be a complete failure in others – for example, Brazil and South
Africa.
Both countries are linked to the commodities; however, Brazil’s central bank doesn’t have a lot of
credibility on the world market. Even though it has been raising interest rates, the country has a
long history of inflation problems. If inflation creeps up again, the markets aren’t confident in the
central bank’s ability to stop it. South Africa has higher interest rates, but the political and economic
future of the country is uncertain. Nonetheless, we’ve narrowed down the choices for you to three
currencies worth putting in your portfolio:
Norwegian Krone (NOK)
In the US press, Norway is often both praised and vilified as some sort of Nordic, socialist utopia,
depending on the political persuasion of the writer. However, is this an accurate perspective on the
country?
September 2012
14
On the one hand, yes. Norway has a large amount of government regulation and taxation, but at
the same time, the country is hardly fiscally irresponsible. In the US, big-government supporters are
labeled as the proponents of “tax and spend,” but it’s a bit different in Norway. If the country had its
own slogan, it would be “tax, spend, but also save something for tomorrow.”
For example, consider the country’s sovereign wealth fund. Instead of recklessly spending every
nickel the government takes in, it reinvests a portion of its funds into bonds and equities around the
world. As the Norwegian government is the majority owner of Statoil (the national oil company),
it uses the company’s profits to build the sovereign wealth fund, which provides for the country’s
future pension and retirement obligations.
At today’s exchange rate, the sovereign wealth fund is valued at $625 billion. This is a huge
difference from the US’s Social Security pay-as-you-go system, which essentially saves nothing for
the future.
However, remember another key difference between our retirement obligations and theirs – the US
population is 300 million, while Norway’s is a mere 4.7 million. That means that the fund has saved
about $133,000 per person.
Not only is Norway’s fiscally responsible sovereign wealth fund attractive, so is what’s fueling those
savings – the oil and gas industry. Along with its vast oil supplies, Norway is the second-largest
supplier of natural gas for Europe, standing behind Russia.
September 2012
15
Since the fiscal situation of the country is tied to oil and gas, the currency is inseparably linked to
those commodities as well. While high oil prices can’t solely drive the Norwegian krone higher,
they can strongly influence the currency. Furthermore, other fundamentals in the economy are
encouraging as well. Norway has a positive current account of $70 billion, meaning that the country
exports more goods than it imports. And on top of that, the unemployment rate for 2011 was only
3.3%. Can you really ask for more?
Well, there’s one part of the equation where there’s room for improvement: the central bank and
interest rates. Up until recently, the Norges Bank (the Norwegian central bank) was one of our
favorites. After the 2008 crisis, central banks around the world cut their short-term benchmark
rates down to record lows – including our own Fed taking rates to a range between 0% to 0.25%.
Several years down the road, the US is still stuck with ultra-low rates.
However, the Norges Bank never cut rates quite as far, only taking them to 1.25% at the lowest.
And as soon as the worst of the crisis was over, the Norges Bank was one of the first central banks
to move interest rates higher. In fact, by 2011 the key benchmark Norwegian rate had reached
2.25%. Unfortunately, the Norges Bank’s recent actions have headed in the opposite direction,
taking interest rates down to 1.5%.
September 2012
16
So why did Norway cut rates so sharply after raising them? Essentially, the high-rate policy was
working too well. With the Swiss franc no longer acting as a safe-haven currency, investors sought
a new safe-haven currency on the European continent. As a result, they began selling the euro and
piling into the krone. Since Norway is a big exporter, the government was afraid that the krone
would over-appreciate and in turn hurt the Norwegian economy. So, in order to combat overappreciating the krone, the Norges Bank has been slashing its rates.
This is something that we’ll definitely continue to watch closely, but we still feel the benefits of the
krone outweigh its negatives. Though the Norges Bank doesn’t want its currency to get too strong,
it’s still going to remain a good currency to hold.
In comparison to the European Central Bank’s rate of 0.75% and the US Federal Reserve’s 0-0.25%
rate, Norway is way ahead at 1.5%. Furthermore, the central bank only cut rates as a result of doing
too well. Since it isn’t lowering rates to produce a stimulus and it was one of the first central banks
to bring rates higher, we’ll give it the benefit of the doubt here. This central bank has its head on
straight.
Over the long run, we expect it to keep raising rates. Those things said, take some precautions. If
you choose to diversify into the krone through the EverBank certificate of deposit, stay in the threemonth maturity CDs. In case the Norges Bank keeps cutting rates, we want to be able to react
without being locked in for six months or longer.
Canadian Dollar (CAD)
Most of us had our first introduction to currency fluctuations through product labels. Often, a
product would have two prices labeled on it – the US-dollar price and a higher, Canadian-dollar
price.
Unfortunately for the US dollar, those days are long gone. In fact, such a comparison these days
would result in the dollar being the lower currency. Currently, it takes about $1.01 USD to purchase
$1 Canadian (CAD). In the past year, the Canadian dollar has gotten as strong as $1.05 CAD/
USD.
Besides the currency, Canadians are staying ahead in a number of other categories as well. For
example, their unemployment rate was down to 7.3% in August, while ours is still nearly a whole
percentage point higher at 8.3%.
While the US had GDP growth of 1.7% in 2011, Canada raced ahead at a pace of 2.5%. Though
Canada’s balance of trade was only a positive $1.2 billion, it’s amazing in comparison to the 2011
US trade deficit of over half a trillion dollars. But what really interests us is Canada’s connection to
natural resources – oil, natural gas, and in particular, gold.
As the chart below from Statistics Canada shows, GDP from mining and oil and gas extraction
has exceeded its pre-crisis levels. With commodities holding value in a world of paper currencies,
Canada has an edge over economies with fewer natural resources.
September 2012
17
Though high commodity prices can influence the Canadian dollar, they can’t solely guide the
currency. That’s one reason why the Canadian dollar has been strong in recent years, yet hasn’t
completely shot through the roof like gold and oil prices.
While the economic fundamentals are great, we’re a bit lukewarm on the Canadian central bank.
Initially after the crash, we had high hopes for the Bank of Canada. After cutting rates all the way
down to 0.25%, the central bank began rapidly increasing them to 1%. At first, this got currency
traders really excited, as the Bank of Canada stood out as a stable country lifting its rates from
emergency levels. Unfortunately, this excitement didn’t last. In policy meeting after policy meeting,
the central bank has kept rates the same since.
September 2012
18
In an environment where other central banks are pushing their rates downward again, it’s hard to
complain about one that raised rates and then kept them there. Nonetheless, this inaction doesn’t
encourage confidence in higher rates around the corner.
Canada’s reason for keeping rates even is similar to Norway’s conundrum. If Canada continued
raising rates, the Canadian dollar may get too far ahead of the US dollar. Since the US is Canada’s
primary trade partner, this would be bad news for exporters.
If the Bank of Canada really wanted to, it could raise rates, but it probably won’t do so yet. What
we see unfolding in the next few years is the Canadian central bank staying one step ahead of the
Federal Reserve. If the Federal Reserve raises rates, so will the Bank of Canada. If the Fed keeps
them the same, the Bank of Canada will keep their rates the same.
With the Canadian dollar shadowing the Fed’s rate hikes, it will remain one step ahead of the US
dollar for an extended period of time. This policy might not leave a lot of room for appreciation, but
I’d rather be in the currency a step ahead than the one a step behind.
Furthermore, the Fed’s QE3 with additional money-printing may push the Canadian dollar higher
despite the central bank’s best-laid plans.
The Australian Dollar (AUD)
The previous two currencies discussed are good diversification tools, but each likely has an upper
bound to its appreciation. Since their central banks are deeply concerned about exports, they won’t
let the currencies get sky high. In the case of the AUD, the upside is potentially much greater. The
AUD hasn’t just gained inches on the dollar – upon occasion has blown it out of the water in the
past few years.
September 2012
19
If you start looking at the Australian dollar toward the end of 2008, it had nearly doubled. That’s
not a completely fair evaluation of its performance, considering that the US dollar had recently
experienced major flights to safety. However, even looking back to 2007, $0.80 USD could purchase
one Australian dollar. Today, it takes almost $1.04 USD to purchase one Australian dollar. At one
point, the exchange had reached as high as $1.10.
While the Australian dollar has good upside potential, it does come with some additional risks.
While its economy is closely tied to commodities including gold, it is inseparable from China’s
demand for goods and resources. If China slows down, the Australian economy will suffer.
Though Australia often has a trade surplus, its balance of goods and services recently went negative
by $247 million AUD. With 27.4% of Canada’s exports going to China, Australia’s exports are
feeling the effects of slowing conditions in Asia. Nonetheless, a $247-million deficit is microscopic
in comparison to our own problems.
Australia also bests the US in a number of other areas. The country’s real GDP growth last year
was 2.0%, a little higher than our own, and the unemployment rate was a low 5.1% in August 2012,
outperforming both Canada and the United States.
Besides the economic fundamentals, we’re fans of the Reserve Bank of Australia, the central bank
of the country. These guys love raising interest rates and are considered the trailblazers for interest
rates among developed countries. Nonetheless, the central bank has recently lowered rates to offset
economic sluggishness in the rest of Asia, but given the Reserve Bank’s track record, we’re pretty
confident in its desire to raise rates again as soon as possible.
September 2012
20
During the low point of the crisis, the central bank had set rates no lower than 3.0%. Think about
that. At their lowest point, the Reserve Bank of Australia had higher interest rates than the majority
of countries do several years later. Not only did the central bank maintain a reasonable floor for
rates, it also kept the emergency period short and began almost immediately raising rates.
Remember that these higher rates aren’t just about currency valuation. If you’re holding an
EverBank CD denominated in Australian dollars, you’ll get a higher interest rate as a result of the
higher rates. While we’d preferably like to see the Reserve Bank of Australia heading for higher
rates, its reputation is strong. We’d be outright shocked if its rates approached US levels or as a
matter of fact, even Norway’s or Canada’s.
Putting Currencies in Your Portfolio
As you think about putting currencies into your portfolio, make sure to look at them through the
lens of diversification. We’re not aiming to make risky and leveraged futures bets on currencies
here. Instead, we want something to give diversification away from the dollar, to help maintain our
purchasing power over time. If these currencies went up over 10% within a year, of course we’d be
overjoyed, but what we’re really looking for is a place to put our cash while earning a little interest
and making a few percentage points on appreciation. This strategy is a part of your cash reserve; it is
not a speculation.
EverBank Currency Options
EverBank offers two options for diversifying into our currencies of choice: opening individual
certificates of deposit in each currency; and choosing a basket of all three. All of the options are,
as Chuck Butler mentioned, FDIC insured. The simplest option is to purchase a basket of the
currencies. EverBank has one with all three of our currencies, called the New World EnergySM
Basket CD.
The basket is comprised of one-third Australian dollars, one-third Canadian dollars, and one-third
Norwegian krone, and pays an 0.83% annual percentage yield (APY) for the three-month CD.
There is a $20,000 minimum investment. The downside is a lack of flexibility. If one of the three
currencies starts performing poorly, you can’t sell one without getting rid of them all.
The other option is choosing accounts in individual currencies. At the moment, the three-month
APYs for the Canadian dollar, Norwegian krone, and Australian dollar are 0.25%, 0.25%, and 2.0%,
respectively. However, the drawback here is the minimum $10,000 per currency. While you can
spread yourself across the three currencies with more flexibility, the minimum investment for doing
so is a sizeable $30,000.
Regardless of your specific choice, we recommend sticking with three-month to six-month CDs.
With longer-dated CDs, you give up a lot of flexibility in exchange for very little yield.
If the fundamentals of a currency change, you want an easy way to reverse your decision. As the
interview noted, if you want stick to your currencies after a CD matures, you can simply roll it over
without paying the small conversion fee for switching back into dollars after closing an account.
September 2012
21
To help you get started learning about these three currencies and how they have fared against the
US dollar, see EverBank’s helpful information pages for Canada, Norway, and Australia.
Other Currency Investment Options
Though we like the EverBank’s CDs, they do come with some drawbacks, primarily the minimum
investment fees and liquidity issues. Regardless of the strength of our currency choices, CDs still
lock you into a decision for at least three months.
However, with an exchange-traded fund (ETF), you can buy and sell the currencies any time during
market hours through your brokerage – a big plus in terms of liquidity. Furthermore, ETFs require
no minimum purchases, making it easier to diversify portfolios of all sizes.
Despite the advantages of ETFs, they are not clearly the better choice, as there are still some
tradeoffs to consider. First of all, a Norwegian krone ETF is not currently available. iShares should
be releasing one shortly; until then, we advise going the EverBank route. When iShares releases its
krone ETF, we’ll let you know about it.
Second, currency ETFs can have a lot of fine print attached to them. Usually, ETFs hold currency
futures contracts, rather than simple cash denominated in a different currency. We want cash
diversification, not speculation into the forex market. As a result, most ETF options don’t work for
us. However, we have found two funds from Guggenheim that meet our demands.
Guggenheim CurrencyShares Australian Dollar Trust (FXA)
What separates FXA from other currency ETFs is that the shares represent interest-earning
Australian dollars held in a JPMorgan Chase deposit account, rather than futures contracts. FXA’s
interest rate is equivalent to the Reserve Bank of Australia cash rate – the same rate shown above in
the chart within the Australian dollar section. The rate can go up or down depending on the central
bank’s decisions.
At the moment, the fund pays 3.19% with a 0.4% expense ratio; on net that’s 0.79% more than the
EverBank Australian dollar CD. Furthermore, that difference doesn’t include the small EverBank
fee for converting back into US dollars.
So it’s a sealed deal, right? FXA is more liquid, has no minimum purchase, and offers a higher
interest rate. Well, there’s one difference worth considering – FDIC insurance.
We called Guggenheim to ask whether the trust’s deposit account held in London had any sort
of FDIC-style insurance. The person we spoke with didn’t know right off the bat and had to call
someone himself. Apparently, not many people have asked this question. They should be, as the
London account does not have any FDIC-style insurance. Is this a deal breaker? Not necessarily.
Is the chance of JPMorgan Chase failing high? No. Is it possible? Yes. With FXA, you are taking
on more risk in this regard, but you are getting nearly a whole percentage point higher interest for
doing so.
September 2012
22
Guggenheim CurrencyShares Canadian Dollar Trust (FXC)
The Canadian Dollar Trust (FXC) works just like its counterpart FXA, with the deposit also held
at the JPMorgan Chase London branch. However, FXC isn’t quite as good a deal. FXC pays a rate
equal to the LIBOR rate for the Canadian dollar – currently just 0.49%. After the 0.4% expense fee,
there’s almost nothing left. In this case, the EverBank CD would pay 0.16% more than FXC. In the
case of the Canadian Dollar Trust, you’re actually paying for the liquidity here, while also lacking
FDIC insurance. Nonetheless, it’s still an option for those who demand instant liquidity.
Putting Currencies in Our Portfolio
From these choices, there is not necessarily a best option. It depends on your personal need for
liquidity and the size of your portfolio to meet the account minimums. However, in our Money
Forever portfolio, we’ll be tracking each of the individual-currency EverBank CD accounts.
The FDIC insurance available on EverBank accounts was the tipping point for our decision. For
those making their first steps into the foreign-exchange market, the FDIC insurance gives you one
fewer thing to worry about.
The New World EnergySM CD basket is also a good option, but we’d rather track the individual
currencies just in case we change our minds on a single currency in the future. In our portfolio table,
we’ll keep track of a single dollar invested in a three-month CD since this issue.
Plan A
Reader Courtenay W. asked:
I see you have added a fifth question to your list for evaluating investments: “Is it easily
reversible?” Can you expand on what that means and why you added it?
Thank you for your question. I’m impressed that you caught the addition. I will start by sharing the
entire list:
1. Is it a solid company or investment vehicle?
2. Does it provide income?
3. Is there a good opportunity for appreciation?
4. Does it protect against inflation?
5. Is it easily reversible?
These are uncertain times for investors. There’s a major election coming up and a lot of turmoil in
the world. One of the tests for decision-making is risk analysis. If you make a decision and it can be
quickly reversed, there’s much less risk than if it is set in stone.
September 2012
23
The currency issue convinced me that we should add the fifth question. It’s prudent to have a
portion of your cash outside of US dollars if you’re worried about high inflation.
Many pundits are now telling readers that no matter how safe Treasury bills are, buying a 10+-year
Treasury is a bad idea. The risk of inflation versus the yield is much too high.
For some speculative stocks, you may make the opposite choice. A potential investment may be
high risk coupled with low trading volume, which makes buying and selling a lot of shares more
difficult. The investment is not easily reversible. At the same time, if the potential reward is doubling
or tripling your money, you may well choose to invest a small portion of your capital anyway.
And just like chicken soup to cure all ills: “What’s it hurt?”
With SLW +27%, NEM +22%, HES 13%, and SQNM +12%, it’s “so far, so good” in our portfolio.
While it’s tempting to bag some of those gains, the Federal Reserve just unleashed another round
of quantitative easing last week, i.e., money-printing. Given this recent move, you will need the
precious metals exposure in your portfolio now more than ever. It’s exciting to see quick returns, but
the time to sell isn’t right.
Other picks are also in black, and a few of them are collecting dividends: HES $0.10; NEM
$0.35; and SLW $0.10. In case you forgot, Silver Wheaton’s (SLW) dividend is based on 20% of
its operating cash flow. Hence, as a result of the quarter’s better performance, the dividend made
a jump from 9 cents to 10 cents. Also, remember that if gold stays above $1,700 for the quarter,
Newmont’s dividend will adjust to a little over $0.42. Hence, we’re raising its projected yield in the
portfolio table below.
Intel Corporation (INTC)
Intel is the only company lagging behind in our portfolio. What’s going on?
As we mentioned in our Income-Producing Stocks special report, 64% of the company’s revenues
come from the Asia-Pacific region. With the area slowing down a bit, Intel is necessarily being
pulled down as well.
The firm recently announced that it expects revenues of $13.2 billion for the third quarter, give or
take $300 million. This is around an 8% drop from previous estimates.
We still like Intel: this is a macroeconomic problem, not a company-specific problem. But with
that said, we’ll be watching the situation carefully, especially now that the Australian dollar is also
in our portfolio with its own link to Asia as well. Despite the setback, we’re keeping Intel as a buy
recommendation, and for those looking at the stock for the first time, the yield of 3.9% looks even
better than before.
September 2012
24
Rec
Recommendation Stats
Buy Baker Hughes Incorporated (BHI)
Price on Rec (8/13/2012):
Buy General Mills, Inc. (GIS)
Buy Hess Corporation (HES)
Buy Intel Corporation (INTC)
Buy Newmont Mining Corp. (NEM)
$47.99
Dividends
Total Received $0.00
Projected Yield: 1.2%
$38.50
Low Risk
$38.96
1%
$49.09
Low Risk
$55.49
13%
$26.69
Moderate Risk
$23.31
-13%
$46.92
Moderate Risk
$56.96
22%
Buy Silver Wheaton Corp. (SLW)
Price at
Gain/Loss%
Publication
Moderate Risk
$50.10
4%
Moderate Risk
$30.68
$38.92
27%
$24.96
Low Risk
$26.80
7%
$3.56
High Risk
$3.99
12%
Projected Yield: 0%
Buy Everbank WorldCurrency CD - Australia
A Dollar Invested on (9/17/2012):
$1.00
Low Risk
$1.00
0%
Buy Everbank WorldCurrency CD - Canada
$1.00
Low Risk
$1.00
0%
Buy Statoil ASA (STO)
Buy Sequenom, Inc. (SQNM)
September 2012
25
Rec
Recommendation Stats
Buy Everbank WorldCurrency CD- Norway
$1.00
Price at
Publication
Low Risk
$1.00
Gain/Loss%
0%
Dividends
Data Box
By Vedran Vuk
Continuing with the theme of our issue this month, let’s look at a few more graphs related to
currencies. First, we’ll compare US interest-rate policy to those of our three currency picks above.
Then, we’ll take a swipe at the dollar’s competitor for the spot as the world’s reserve currency, the
euro.
The US Offers Rock-Bottom Interest Rates
September 2012
26
The chart above shows the short-term benchmark interest rates used to control monetary policy. By
pushing down short-term rates, central banks pull down rates throughout the economy.
First, look where rates were in early 2008. Even back then, the Australian and Norwegian central
banks held rates way above the dollar. Their reputations for higher rates than the US long preceded
the crisis.
Also, the chart reveals the character of the Bank of Canada. As the Federal Reserve was cutting
rates in 2008, the Bank of Canada practically shadowed the Fed’s every move. That’s one reason
currency traders became so excited when the Bank of Canada began raising its rates. This move
meant that it wasn’t going to wait for the Fed this time. That initial enthusiasm has somewhat
subsided, but nonetheless, Canada’s interest-rate policy remains preferable to the US’s. The same can
be said of Norway and Australia as well. Even though their rates have shifted slightly downward
lately, they’re still way ahead of the Federal Reserve’s disastrous, savings-killing policy.
NOK, CAD, and AUD Serve as Good Diversifications Against the Euro
Not only have our three currencies fared well against the dollar, but they’ve also done well against
the euro. The euro relationship is particularly important for currencies such as the NOK.
Whenever Europe gets beaten up, the NOK is pulled down with the euro. However, the euro will
tend to fall more against the dollar than the NOK falls against the dollar. Norway’s resilience to
trouble in the rest of Europe is reflected in its gains against the euro.
September 2012
27
The CAD and AUD have gained even more than the NOK against the euro, two reasons being
their physical and economic distance from Europe. The Canadian dollar did a little better than the
Norwegian krone, but the Australian dollar – with most of its trade exposure to China and the rest
of Asia – just blew the euro away. While the Australian dollar is exposed to a slowing China, it’s
certainly less exposed to a slowing Europe than our other choices.
There’s one more takeaway here. The euro was strongest against these currencies during the 2008
crash. Similarly, the dollar’s strength spiked against the NOK, CAD, and AUD at the same time.
However, those sudden gains for the US dollar were temporary. As soon as investors calmed down
and flights to safety ended, the dollar returned to a downward slide.
End Notes
I really looked forward to working on this month’s issue. Prudent investors should indeed keep
around one-third of their portfolio in cash, but the old ways of investing don’t provide any kind of
yield, nor do they offer much safety from inflation. We have to do things differently.
On September 13 the Fed announced another round of currency printing and stimulation. The
market reacted predictably. Understanding the need to diversify out of currencies that have potential
for high inflation is only half the problem. The other challenge is finding good alternatives that give
you the inflation protection you are looking for.
Vedran did a terrific job of explaining many good options, both the positive points and the risks
involved. His addition to our portfolio of the EverBank FDIC-insured currencies provides a great
tradeoff of liquidity, yield, and safety.
September 2012
28
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September 2012
29

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