What is Lombardi’s “New Swiss Bank Account” teaser all about?

Sniffing out teaser solutions from Michael Lombardi's "Investing with Michael" letter

By Travis Johnson, Stock Gumshoe, December 4, 2014

Some people don’t realize that marketing for financial newsletters is at least as much about finding successful pitches that will catch your interest as it is about touting the latest and greatest stocks picked by a particular newsletter pundit. They often come up with a new ad to sell their newsletter when they’ve discovered an exciting new pick with a good story behind it …

… but at least as often, they simply continue re-sending the same marketing letter for years regardless of whether the stocks being teased are still the favorite pick of the newsletter editor (and in a few rare cases, we’ve even seen stocks teased in heavy promotional barrages that readers have told me aren’t even in the newsletter’s portfolio anymore). The goal is to get your attention and get you to sign up for a newsletter… so when they find a spiel that works, most of these publishers will milk it until it’s dry.

Today is a case in point — Michael Lombardi runs several newsletters, and for this Investing with Michael letter he’s been promoting his “New Swiss Bank Account” idea very consistently since he first ran the ads (or at least, since our network first detected them). That was in January, 2012, almost three years ago … and I continue to see them every few months.

Including today. And yes, the ad is virtually the same as it was in 2012. He’s still implying that this investment is on par with a “Swiss bank account,” with higher yields, and is backed by precious metals and other natural resources, and that’s still quite an exaggeration in my book. So for this teachable moment we’re just re-running that article.

And frankly, it’s still pretty accurate — the yields on these investments are similar to what they were then, mostly a bit lower now since they’ve gone up in price more than the dividend has been raised… and they’ve been pretty boring. It’s still remotely possible that he might have been teasing the preferred shares of these banks instead of the regular common equity, but I don’t think so — partly because there’s little chance for capital appreciation with preferreds and he teases potential for substantial gains beyond the yield they provide.

Over the last three years they’ve been relatively steady investments. Their dividends have not grown dramatically, and the stocks have not performed spectacularly well (they’re mostly up between 20-30%, ignoring the dividend, in the three years since this article first appeared, which is dramatically worse than the 60-80% returns you would have gotten from a basket of US bank stocks or from the S&P 500 during that time). And they still trade largely as a group, though not in complete lockstep.

But yes, the pitch is the same — want to see if you find it interesting?

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What follows has not been edited, updated or revised since it appeared on January 23, 2012. We’ve kept the original comments appended in case you find them interesting.
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The latest pitch from Michael Lombardi is for one of those “limited to our best customers” newsletters, something he calls Investing with Michael, which seems to mostly be a safety-focused large cap stock picking service. If that’s true then a thousand bucks a year is a bit steep, but certainly not unheard of — and that’s after they have, of course, “slashed” the price for you, their very most special-est customer.

Lombardi says that he’s an “investor, not a trader,” and that this service will supply at least six conservative investment picks per year… along with two special reports.

The report that’s catching the eye of my readers lately is called The New Swiss Bank Account: How Canadian Safe Haven Investments Pay 5.1% Every Year on Top of 44% Returns — so what’s he talking about?

Well, he starts off with a long diatribe about how Canada is the new Switzerland — with a stronger bankings system, better regulations, a pro-business government, great natural resources wealth to back their currency, no ties to the weak euro, etc. etc.

Here’s a taste from the ad:

“Yet, there’s a tiny group of investors who are not worried about the euro, dollar or any other crisis.

“That’s because they have their money safely tucked in the ‘New Swiss Bank Accounts.’ At this moment, they are enjoying safety, privacy, and security, along with Treasury-busting yields of 5% per annum and returns on capital exceeding 44%.

“That’s why …

“The Guardian Declares These Investments ‘The Envy of the World’

“‘This is the last safe country on Earth,’ I explained to a business associate on one of my recent trips to Europe. ‘Nobody is talking about this place, but you won’t find a safer place for your money—not even in Switzerland.'”

More? You asked for it!

“You also get privacy. This nation ranks nearly the same as Switzerland in banking privacy, according to the Heritage Foundation.

“And security. Though relatively tiny in population—with a smaller population than Spain and Poland—you won’t find a more stable and secure nation on the planet. It has a long history of pro-business regimes, from colonialism to independence.

“Not only are these ‘bank accounts’ backed by gold and silver resources, but they are also backed by oil and deposits, timberland, and mineral wealth. You can feel safe knowing your money is backed by precious metals and other valuable commodities.”

He then goes on to “let the cat out of the bag” in case you hadn’t guessed, and clarify that yes, this “New Swiss Bank Account” is something to do with the Canadian financial system. Here’s some more:

“… unlike bank accounts in Switzerland—which are complicated and cumbersome to open—opening a New Swiss Bank Account is easy.

“You put your money into a special ‘bank account’ based in Canada. It’s 100% legal, and can be accomplished using your normal brokerage account (including your online brokerage). It takes only 30 minutes, and you can open a New Swiss Bank Account starting with as little as $49.

“You don’t even have to be Canadian citizen.

“I should also be clear that opening a New Swiss Bank Account is NOT opening a regular bank account at a Canadian bank, such as a savings account. It’s NOT buying a guaranteed investment certificate or certificate of deposit from a Canadian bank. It’s also NOT buying Canadian Treasury bonds.

“These fixed income investments might be safe, but they only pay measly rates of 1.2% to 2.4%.

“Nowhere near the 4% to 5% you’d get from a New Swiss Bank Account. And you’d lose out on the benefits that you get with the New Swiss Bank Account, such as the opportunity to have your investment increase in value. Because, unlike a regular bank account, your New Swiss Bank Account can increase in value, just like a stock….

“New Swiss Bank Accounts are a very special kind of financial instrument, fully backed by Canadian banks, paying yields exceeding 4%.”

So which investments are being teased here? One last clue:

“The top two New Swiss Bank Account companies in Canada today (in terms of biggest current yields). One of these companies will pay you 4.4% and another pays you 5.1%, guaranteed for the next 12 months. I’ll also tell you why I expect these payments to increase in the coming years.”

Well, we toss all that into the mighty, mighty Thinkolator and, considering those clues, have to accept the answer that comes out the other end: these “New Swiss Bank Accounts” are … common shares of Canadian banks.

Not as sexy as we thought, eh? Still, hard to argue with the performance the big Canadian banks have shown since the financial crisis (and, frankly, during the crisis — at least compared to US and many other global banks). And the big five Canadian banks do generally have solid yields, good reputations, and prospects for dividend growth. So what are the “top two” from Lombardi?

Well, it’s pretty clear that he’s picking the top two yielders among the big “safe” banks, so that would be Bank of Montreal (BMO) and Canadian Imperial Bank (CM), both of which yield about 4.7% right now, though 4.4% and 5.1% would have been possible effective yields in recent months (Lombardi’s ads don’t necessarily stick with “up to the minute” numbers in their teasers).

Those are also the two Canadian banks that did worst in the financial crisis, though most of the group trade pretty closely together, and they’ve slightly outpaced some of their peers in the last couple years. You can find lots of articles extolling the virtue of Canadian bank stocks for safety and dividend growth, and for a generally less risky play on the North American financial sector that doesn’t come under all of the same regulatory, housing, and bailout-connected upheaval that causes shares of big US banks to be so volatile.

There are still risks, of course — plenty of folks think Canada is headed for a housing slump, perhaps even a crash (though sentiment seems to be that the overpriced, crash-threatened segments of Canadian housing are localized in a few hot areas), and Canadian banks, though not as global as US banks, certainly are susceptible to the same kinds of macro forces that are making most bankers quake in their boots these days … even if Canada’s economy is more resilient than many. That resilience, of course, does have a bit of cyclicality to it — Canada has both a big manufacturing sector (including lots of auto manufacturing) and a large reliance on oil exports to the U.S. and commodity exports, particularly lumber and agricultural commodities, to the rest of the world. So if the world gets sicker, we might expect Canadian exports to suffer, though they’re not necessarily as directly tied to the health of one economy as Australia is to China, for example.

The other banks? The ones you’ll hear mentioned (and which trade in the US) are all large, here they are along with their ticker, their dividend, and their trailing PE ratio and current price/book ratio, all according to Yahoo Finance:

  • Bank of Montreal (BMO) 4.7% PE:12 P/B:1.5
  • Imperial Bank (CM) 4.7% PE:11 P/B:2.1
  • Bank of Nova Scotia (BNS) 3.8% PE:12 P/B:2.1
  • Toronto-Dominion Bank (TD) 3.4% PE:12.5 P/B:1.6
  • Royal Bank of Canada (RY) 4% PE:17 P/B:2.1

(FYI, number six on the list, in terms of size, would be National Bank of Canada, which is far smaller with a market cap near $12 billion and isn’t listed in the US).

BMO and CM, in addition to being the two highest-yielding, are also the smallest (market caps between $30-40 billion, so not really “small”). Each of the banks has different books of business across different provinces to some degree, and the big Toronto standard-bearers (TD and RY) seem to be priced at a little bit of a premium, as you might expect. The variations in Price/book value stand out to me and make BMO and TD look a bit more appealing (TD has also had the best dividend growth among the Canadian banks in recent years, averaging around 8% annually), though it’s hard to delve into the distinctions between these banks without better understanding their balance sheets and geographic exposure … and I’m not going to do that, because digging into bank balance sheets makes my brain heat up so much that my hair starts to hurt. Suffice to say that Lombardi seems to be teasing some big Canadian bank stocks as the equivalent of the “New Swiss Bank Account” … and that most of the laudatory quotes he uses (like that one from The Guardian) are from 2009, when Canadian banks started to really pants the US financials in the rebound.

So what do you think? Do you think these big Canadian banks are still hot picks a couple years after they proved optimistic investors right following the financial crisis? If so, would you also go for the two highest yielders and single out CM and BMO, or do you have other favorites? Let us know with a comment below.


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50 Comments on "What is Lombardi’s “New Swiss Bank Account” teaser all about?"

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Line
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Line

I’d say too late to jump in that train… Unless you want to get slaughtered…
Some insight on the almighty canadian banks:
http://www.zerohedge.com/news/next-domino-fall-canada

jake
Guest
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jake

Buy the stock of these new Swiss banks, the Canadian ones, but don’t open an account in one if you are hoping to escape the eagle eye of the IRS. Both the Royal bank where I bank and my accountant who does my personal income taxes for both the U.S. and Canada has warned that the Canadian banks share information with Canada Revenue and my accountant has warned me that Canada Revenue and the IRS share information.

TEMPLE
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TEMPLE
Gumshoe, thanks as always for your excellent website. Lombardi could also be pitching Canadian bank preferred shares. I’m not sure what Lombardi is talking about when he says it only takes 30 minutes and $49 – even in Canada, we get faster execution and better prices than that. Anyhow, I think you are right on target with respect to housing here, as we have valuations that exceed US valuations at the peak of your bubble, and more debt as well. The strong Canadian dollar is also problematic for the economy, and a correction there makes investing in Canada more risky… Read more »
dennis
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dennis

Gummy. Are you certain he is pitching stocks and not some other bank investment. I no of no stocks that guarantee 4.7 and 5.1 GAURANTEED. Denny

Bharat Shahane
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Bharat Shahane

If one is looking for secure deposits with higher interest rates, I can suggest a number of Indian banks which offer in the region of 8.5% per annum. To date, Indian banks have never defaulted and are very safe, quite unlike US/EU banks. If one is willing to take some risk, banks in Urkaine offer 18% (yep, 18%!) on local curency. Converting hard currency to UAH and back again is not a problem. In the last 2 odd years they too have made good on their promises.

rmuthup
Irregular
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rmuthup

How would one go about depositing in Indian banks? Are there any tax implications?
Thanks,
Raja

Larry
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Larry

I’d also like to learn which Indian banks to invest in AND how to invest.
Please send that info to me at lp115lp@yahoo.com – subject: ‘Investing w/Indian Banks’

Thanks; Larry

N Foster
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N Foster

would like more information on these banks.

sjaura
Member
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sjaura

Hi Bharat: Can you please give me the info? Which Bank? How to go about it? Tax/ currency change implications? Thanks Suresh

LyJol
Guest
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LyJol

I would like additional information of banking options. (India, Ukraine, etc.)
How does this impact currency exchange, and what plat form do you use to trade?

rp
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rp

If u are of indian origin, go to any indian bank’s website – ICICI Bank (icicibank.com), Citibank, State Bank of India — and you wills e ethe details in the NRI (Non-resident Inia) section – 9.5% tax free,

yves paulet
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yves paulet

What is the Symbol of the New swiss bank account

Websun
Guest
0

There are 5 banks each with their own Symbols, see above:
TD, BNS, CM, BMO, RY

John
Guest
0

I am NOT happy with Lombardi’s service.. They never answer my questions and He puts on two faces.. One of doom and gloom and one of Buy now!!!

Aq
Guest
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Aq

I have the same problem with Lombardi”s he gives the info and asked me to contact him immediately. I did and no one came back to me. I’ve sent another email asking what I paid for but no answer! This is very disturbing!

When I watch the videos it is always – pay upfront!!!!!! tsk!

blufox
Member
12

I bought a decent amount of BMO in March 2009 so I’ve done quite well. I have always liked Canadian investments and about 50% of my portfolio is invested in Canadian companies, mostly on the Toronto exch. BMO hit a peak at 66.50 USD on 4/27/11. As it’s at 60.60 right now, I wouldn’t be a buyer till it dropped somewhere near it’s recent low around 52.50 but, then again, I enjoy bottoms.

Marc
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Marc

Travis, I don’t usually have much use for these “secret plays of the day” but, darn if they aren’t fun to read. Thanks

Virginia Scanlan
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Virginia Scanlan
I watch the HGTV real estate series “Property Virgins” and “House Hunters International.” In my opinion, the cost of homes in Toronto and Montreal is absurd. I don’t know how or why young people are paying $600,000 plus for hideous, old semi-detached houses with three bedrooms, 1 bath, and open plan kitchen, dining and livingroom. These houses are 1,600 to 2,000 sq. ft. I have been watching these programs because I have wanted to invest in Candian banks, and I like to see how prices are changing in Europe, since many Europeans have most of their assets in their houses.… Read more »
Websun
Guest
0

Housing markets are very localized. You pay a premium to live down town. You pay a premium to live near a subway or commuter line, so you can avoid traffic. Once you get into the rural areas, prices are less inflated. Some commutable towns are expanding.
Big cities like Toronto have an over population problem. People live there regardless the price. They pay for the life of the city 🙂 . Compare Winnipeg it has always been the same only rising slowly.

Dan Lehman
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Dan Lehman

Everyone says Canadian banks are healthy but the way they stay making record profits year after year is by nickel and dimeing us to death. That saying should be changed to loonie and twonieying us to death.Don’t forget we are linked at the hip to the U.S. I think that Canada is the land of milk and honey and there are better income investments than the banks up here.

harold
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harold

if you put your IRA in Fidelity You will not pay any canadian tax.

Rebecca Thomson
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Rebecca Thomson

Such as?

Lew
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Lew

Several Canadian stocks look inviting due to their high dividend yields; however, none of the prognosticators ever factor in the 25% – 35% foreign withholding tax that dramatically reduces the actual realized yield. This is especially true if you hold these stocks in an IRA where you cannot take advantage of the foreign tax credit on your tax return. Depending on your tax bracket, you may do better with US stocks generating less yield.

Del Ojo Zafado
Guest
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Del Ojo Zafado
…Hey Abbbbbooooaaaat!!! Duh the tax was 15%. It still is 15% as far I know on any Canadian shares held in US accounts that are not tax sheltered. As explained below with the exception of CEFs almost all with holdings have ended in US IRA accounts for the rest of this year. So CURRENTLY AGGZF has a 6.9% yield or a 5.87 effective yield, VNRCF has a 6.2% yield which is a 5.25 effective yield, and ACAZF has a 7.5% yield which is 6.38% effective yield. But then as far as I know the foreign tax credit has not yet… Read more »
Andy
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Andy

Well being a resident of Northern Alberta and working in the oilpatch there are so many great investments that are making people rich. Check out Sunshine oilsands, they have over 1 million acres of heavy crude and will be using steam assisted gravity drainage. They go public in a few weeks. Or check out Canadian ticker symbol XEG , its a great ETF with major oil players, good growth and dividends.

Donna Miller
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Donna Miller

Do you know which banks have the largest percentage of home mortgages and the greatest exposure to the euro? I really appreciate your column. Thanks.

Donna Miller
Guest
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Donna Miller

Nothing is marked?

Big.Jim
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Big.Jim

I bought BMO a few months ago on the recommendation of Stephen Leeb’s The Complete Investor. It has essentially treaded water since then: bought at $59.56, now at $60.17. At least it’s not down.

Del Ojo Zafado
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Del Ojo Zafado
As per my other posts we can see that BNS and RY are spanking BMO on the 6 month chart. RY and BNS up nearly 10% in that period and BMO up only “aboot” 4%. BNS with the 3.9% and RY with the 4.1% yields respectively lagging a bit behind BMO’s 4.8% yield, but BNS and RY with the way outperformance on total return. I have a “wish” limit order for RY . You never know when we will get another flash crash, or market low as achieved last Oct. The market is judging BAC as insolvent as based on… Read more »
MyWealthyOptions
Guest
0

Banks seems interesting play this year. I like US Bank, GS, MS, WFC, and JPM. I am just not comfortable buying an European bank. What is your opinion? Mostly, I am believe in gorilla trading and exist quickly which shows up on my blog. It will be good to know from banking experts if bank sounds like a good long-term profitable option.

Please visit my blog at mywealthyoptions.blogspot.com. I offer new position alerts and track them to closure. Any suggestions are welcome!

james
Guest
0
james

IF YOU GET BURNED, Ripped off, taken advantage of on an investment, CONTACT CLIENT FIRST LLC AT http://WWW.CLIENTSRFIRST.COM

kbamfield
Member
0
kbamfield

anyone know about this gold fountain inc

Mormon Mike
Guest
0
Mormon Mike

I made 30% last month on Bank of America. Is that the New Monaco?

Del Ojo Zafado
Guest
0
Del Ojo Zafado
As far as Indian banks the HDB has been having a great 2 month run but then so are the US markets. I believe the with holding on Canadian corporations in IRAs has been suspended pending the sorting out of the technicalities of the tax treaty with the US. So until Jan 2013 those of us holding Canadian corps (LLCs) in our IRAs are not being with held at all. There are some exceptions for LPs, REITS, and CEFs, some of which are still being with held in US IRA accounts. The tax changes pending are to resolve the conversions… Read more »
Del Ojo Zafado
Guest
0
Del Ojo Zafado

It is not just bank accounts they are shy of opening for US citizens they really get nervous if you ask to open a safe deposit box. You might want to put a hundred gold Maple leafs in there, to save weight get a few hundred palladium maples as well instead of the silver ones? Stuff that would never show up on your US tax return but in case they add a space or line for you to declare your holdings not just your gains, they are going to want to know about that.

Robert Hawk
Guest
0
Robert Hawk
What I have seen of the pitch Mr Lombardi makes, its simply a marketing tool much like the selling of Orgreenic cooking pans. Once they get hold of the unsuspecting buyers credit card then there is trouble ever getting off their list. I have read several complaints concerning their tactics toward customers. They run you around and badger those who want to back out of the purchase using their 100% money back guarantee. Just sounds like someone running a scam to me. Look folks we are going to experience financial disaster in the up coming months and years, its biblical… Read more »
Jeffrey
Guest
0
Jeffrey

Why go offshore when some US banks offer you 6% on CDs you hold for 5 years on accounts of $25,000 or more? case in point http://www.MedawarBank.com If you withdraw any sooner the penalty is a declining drop in interest rate to usually around 4% (still an incredible bargain!)

Marta Gomez
Guest
0
Marta Gomez
I agree that my investment goals must change to more fluid and universal currency. does anyone have any knowledge of companies that sell Commodities that they would like to suggest to me. I am really interested in focusing solely on this type of investment! I would greatly appreciate anyone’s advice, lead and/or even opinions on this topic. Thank you greatly! I just read this webpage today because I received an email from Mr. Lombardi. In which he is pitching all about the “New Swiss Bank Accounts” of Canada. And before coughing up my hard earned money over to him. I… Read more »
Terry
Guest
0
Terry

Dave:
Eight months later it is still being peddled. Thankgoodness for sites like this one.
Terry

Dave
Guest
0
Dave

This pitch is being resurrected today via the “Investment Contrarians”. Looks mostly unchanged.

Anthony
Guest
0
Good Day, All, Especially, Robert Hawk!!!!1 Hi Robert, What you say is Correct!!!!! Michael is just using his Investment Contrarians as bait to extricate our hard earned money from our wallets!!!! and Tout his products!!!! Polititians are the Highest paid non hard working liars world wide!!! They come out of the wood work as and when election time is coming near!!!! To lie ,cheat , and no delivery on their promises! The Investment Advisers are no better if they give you the wrong advise and you lose all your money no recourse!!!!!! Do your own research!!!! Trust no one on… Read more »
Jane Barlow
Guest
0
Jane Barlow

Shifting Gears: I would appreciate knowing your thoughts on two small companies that have done very well in 2014, Simulations Plus (SLP) and Profire Energy (PFIE). I own SLP and am tempted to add more shares and also to buy PFIE. Thanks, in advance, for your input! Irregular Jane

Opposeablethumb
Irregular
971

Sell!

Frank
Guest
0
Frank

Speaking as a Canadian, what a lot of bull. I bought all the Canadian banks during the 2008-9 meltdown, with 10% trailing stops, and was stopped out on some recently, with only TD and BNS left. The market for banks in Canada is saturated. They are mostly going into the US and foreign countries for growth. A rise in interest rates for a whole generation of people who have never known any rates not below the historical norm will be a disaster. Buy with trailing stops, and remember, everything goes in cycles.

who noze
Guest
0

when it comes to banks LOOK AT SANTANDER SAN SPAINS LARGEST BANK SAN NOTE THEY ARE ALSO IN LATIN AMERICA 8BUCKS P.S. THEN there is lyg in good, old englandthey expect to pay a dvnd soon aromnd 5 bucks p.s. THESE ARE BLUE CHIPS COMING BACK

jagsahota
Member
0
jagsahota

Bharat,
Indian currency has gone against you 30%+ in last 5 yrs.. how do you expect to hedge that risk?

vivianlewis
Member
167
vivianlewis
the Canadian bank common I like best is Bank of Nova Scotia because it is the least Canadian of the lot, being the most international with its business via Scotiabank in Latin America and the Caribbean. Of course going to those places with a local bank is scary but Canada does have regulations and reporting requirements. It is less exposed to either mortgages in Canada or the US market than other of the big 5 Canada banks. Its yield is marginally lower but its profits are safer. Indian bank accounts can only be bought by non-resident Indians (NRIs) people who… Read more »
Ove J.Aspen
Guest
0

Why not Invest in Norwegian/Scandinavian Bank/Insurance Companies like DNB and GJENSIDIGE which are High Yielders and must F ollow Norwegian Capital Performance laws.These 2 companies are Solid like The Rocky Mountains.Being a shareholder in my venturecompany O.J.Aspen Oil Ltd (London) had given you 25 prosent dividend.There are still shares to be bought.Chief Broker O.J.Aspen

Missionary Dickd
Guest
0
Missionary Dickd

Whoever suggested investing in Ukrainian banks with 18 per cent return in local currency has not been to Ukraine lately. Their currency has suffered dramatic inflation and is likely to be highly unstable for years to come. We have lived and operated a mission in Kiev, Ukraine for over 23 years. Keep your money in U.S. dollars while living or investing in this country.

Ron buffett
Guest
0
Ron buffett

I have owned bro for at least 20 years. It has been a very good investment I would recommend.

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