LATVIA / SWEDISH BANKS
The link between the fate of Latvia and the stock price of Sweden’s major banks became even more apparent this week. On Monday, Latvia’s government announced that it had rejected a bailout deal with the IMF, spurring new concerns of devaluation.
In response, investors sold off shares of Sweden’s Swedbank to the tune of a 5% decline. The market sees these two parties as inextricably linked: as Latvia goes, so goes Swedbank.
We also learned that over 50% of Swedbank’s Latvian mortgages are under water, i.e. the value of the home is worth significantly less than the principal balance that the bank has loaned against it.
When this happened in the United States, default rates skyrocketed. I don’t see how this won’t happen in Latvia, especially given risk (certainty) that the country will devalue its currency.
Let me know if you disagree, I would love to debate the analysis.
LITHUANIA
In a related story that shows interesting promise, the government of neighboring Lithuania announced that its economy contracted by a whopping 24% rate from last year. Twenty-four. Not a type-o.
Read More…
Tagged as:
bank accounts,
Eastern Europe,
Gold and Silver
One of the keys to living free is being able to make money… enough to support the lifestyle that you want as well as provide peace of mind for the future.
To me, there are two clear ways to do this; one is by starting a business and generating cash flow through sales. The other is by generating investment income.
I try to talk about both in this missive; I am happy to share my own ideas, as well as different products and services out there that I invest in to make money (or keep more of the money that I earn). Again, these topics are cornerstones to living free.
As I’ve discussed before, I don’t like to take big risks… I take calculated risks to carefully control my downside, and love investing in what I call ‘low hanging fruit.’
We’ve talked about some low hanging fruit already, and one of my favorites is buying cash at a discount… strong, growing companies that are trading for less than the amount of cash they have in the bank.
I recently picked up another one of these stocks, a highly undervalued pharma company, courtesy of Dr. George Huang. Huang is a master at finding these solid pharma companies that are trading at less than cash value, and he writes about them in his FDA Report.
Read More…
Tagged as:
investing
