Investing at the Bottom of the World

By Dr. Steve Sjuggerud, Advisory Panelist, Investment U
Friday, March 26, 2004: Issue #323

Greetings from what must be the most fantastic place on the planet right now: the Hotel Correntosos in Villa La Angostura, Argentina.

It is 70 degrees… not a cloud in the sky and we’re looking at some of the most beautiful scenery to be found, period.

Although they’re all easily available here, we’re not JUST interested in resorts, fly fishing, and snow skiing. I’m in the middle of a Latin American research expedition with some fellow investors, like my friend and colleague Porter Stansberry. We’re looking for the best investment opportunities we can find “at the bottom of the world.” The good news: I believe we’ve found a few.

Cash Is King – And Deals Are Plentiful

A friend had asked me about real estate and other investment opportunities here. And what I told him is what I’ll share with you today…

In a country where the banks shut down for 60 days not that long ago, cash is king. The opportunities here come down to the fact that there is no access to credit or cash in the country.

I believe the opportunities would be in real estate and mortgages. Mortgages are really hard to come by, and only go for really high interest rates.

As a mortgage lender, you could collect high rates of interest, and if the homebuyer defaults, then you own the property. Not a bad deal all told… until you try and kick them out of your home and run into the Argentine legal system. I don’t know what would happen then…

But most of us aren’t going into the loan business in Argentina, so let’s talk property… 

How About Some Capital Appreciation To Go Along With That Exotic Getaway?

Yet again, cash is king. The right deal might be an apartment in the world-class city of Buenos Aires, where you can buy it cheap, get income for many years, and have the potential for a great deal of capital appreciation.

For the right people to deal with, go to www.argentinahomes.com. These are the folks I’d trust.

Paul Reynolds (the owner) speaks perfect English (he lived in Canada for many years). I’ve seen him at seminars for years, had dinner at his home with his wife and kids, and he did Agora´s deals for their apartments in downtown Buenos Aires. He’s wealthy and has no incentive to screw up his multi-generational family business. A solid guy.

You can buy an apartment cheaply, and you can pay Reynolds to keep it rented and keep it up, so you can get that solid income and capital appreciation. You may be able to haggle down pretty good with a CASH purchase… Some friends of mine bought apartments here a year ago, during the worst of the crisis, and they literally paid with suitcases full of U.S. dollars… nothing else was acceptable!

But Back To The Great Outdoors, Patagonia-Style

Argentina is truly a stunning country. Patagonia, where we are right now, has to be seen to be believed. If you’re into fly fishing, or skiing, or wide-open spaces, this is the place for you. (If you want to do more homework on this area, look up Bariloche or Patagonia on the Internet – there’s tons of stuff available for the casual Internet surfer.)

I’ve got to run. I’ve got to give up my spot here at this Internet cafe on the bottom of the world.

Again, you may not buy an apartment in Buenos Aires, or you may not buy stock in a company down here, but if you can, try to visit… The next few years, while the currency has lost two-thirds of its value, is as good a time as any.

Good investing,

Steve

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