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| Investing Abroad for US Dollar Based Individuals I spent the last weeks of the summer of 2003 traveling through Scandinavia, Holland and Switzerland. The business trip started in Copenhagen as a guest speaker at the Jyske Bank Investment Conference. The trip ended with a visit to the "Gnomes of Zurich." I would like to tell you about my conversation with one of the gnomes, Rob Vrijhof. Rob is a friend who was introduced to you over the years through the ASI Information Line. I would say he is an "old" friend, but now that I turned 60 years of age it seems that most of my friends are "young" friends. Rob is the Managing Director of the Swiss asset management company, Weber Hartmann Vrijhof and Partner (WHVP). His clients are mainly from North America, and he has a special feel for the needs of Americans and Canadians. I value his opinion and was interested in knowing his outlook for international markets during these difficult times for the North American investor. First, Rob explained that he normally has clients who invest with him up to 40% of their investable assets outside the US and outside the US dollar. The goal of his client is wealth preservation and they look for returns of between 8-12%. His present asset allocation for his clients is 30% in stocks, 30% in bonds, 30% in cash and 10% in precious metals. Rob believes that the US dollar is still overvalued. The Euro has risen against the US dollar from about .82 cents to $ 1.18. Presently, it rests at about $ 1.10 and will remain strong as long as it stays above the $ 1.05-$ 1.06 level. He does not believe that the Euro will break the all time highs of $ 1.19 this year. But, next year may well be another story. The foreign currencies he presently likes besides the Euro are the three commodity currencies, the Australian, Canadian and New Zealand dollars. He does not like the British pound because it is too strong against the Euro. Eventually, when the British convert from the pound to the Euro, the pound will have to be devalued. Rob has recently increased his clients’ positions in European stocks in general and specifically in Germany, Holland and Switzerland. He is still in a defensive posture with Swiss stocks such as Novaritis, Ciba, and UBS. In Germany, it's Alliance and Deutsche Telekom while in Holland it's Aegon, Phillips and Royal Dutch. Also, he likes what is happening with Asian stocks. However, he does not invest in individual stocks, but prefers investing through mutual funds. A way to participate in the potential run up of the Chinese renminbi is through the Hong Kong "Red Chips." He suggests the Julius Baer Far East Mutual Fund, or for investments in Japan, their Japanese Mutual Fund. Rob never believed in the deflation argument. Instead, he believes inflation is coming back, and he has been reducing his position in bonds. He has had his clients in short term Euro, Australian and New Zealand bonds. The longest bond he presently holds is no longer than 2006. Rob is definitely not a "gold bug" and in fact has not been bullish on gold for 18 years. However, that has changed, and he is bullish on gold bullion and gold stocks purchased through the Bank Vontobel Gold Mining Basket. He has seen the inverse relationship between the fall of the US dollar and the rise of gold. I brought Rob a "Bull" beanie baby to evidence his conversion from a bear to a bull. For more information about Rob's international investment outlook, contact him by email at whvp@active.ch. |
