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July 27, 2010
Alert 57-2
The Austrian Advantage
How the lessons learned during a trip to Munich, Salzburg, Melk, Dürnstein and Vienna can benefit you.
Austria is a special country, celebrated for its beauty, history, culture, wine, charm and superb quality of life. Less well-known is that Austria is an excellent base from which to take advantage of the investment opportunities within Austria, as well as Western and Eastern Europe.
For ten days last May, I led a small group of ten North Americans on a five-star tour of Austria. In addition to the pleasures of visiting one of the most beautiful countries in Europe, we kept our eyes and ears opened for investment opportunities.
If you were to ask most investors about banking in Europe, the first country they would think of is undoubtedly Switzerland. And for good reason: That tiny land-locked country has been a banking and investment center for over a hundred years. Austria is not as high-profile as Switzerland. Instead, it is a low-profile place that offers many of the same benefits as Switzerland, but at a lower cost.
We traveled there to learn about what I call the Austrian Advantage. Because of convenient airline connections, we started our tour in Munich, Germany. The people of Munich are more like the easy-going Austrians, rather than the stern Prussians to the north.
From Munich, we traveled by coach to nearby Salzburg, where we stayed at the famous Hotel Goldener Hirsch. The following day we took a short trip to the Schloss Fuschl in the "Sound of Music" lake region for the first of three seminars we would hold during our trip.
We learned about the history of Austria from Fritz Satran, a native of Austria and president of our travel coordinator, AESU Travel. This now small country was once the center of the great Austrian-Hungarian Empire. Fritz's presentation was followed by one on alternative investments by Geoff Anandappa. Geoff is the investment portfolio manager of Stanley Gibbons Ltd., the legendary stamp company that is known as “the philatelist to the Queen” because of its royal charter.
Stanley Gibbons traces its roots in London back to 1856. Geoff told us that rare stamps have been appreciating at an average of 10-15% per annum for the past several years. Many individual holdings performed much better than this; returns of 40% or more per year are not uncommon. This record has convinced many investors to include a select portfolio of rare stamps in their portfolio. For more information about Stanley Gibbons, simply click here.
I also addressed the group. In my remarks, I spoke about the need to diversify internationally. And not just with such traditional assets as stocks and bonds, but alternative ones as well, such as precious metals and foreign currencies. Our oft-repeated advice is simple: Don't keep all of your assets in one country, one currency, or one investment. Also, the best place in the world to find a partner to help manage and protect your assets is Europe; more specifically, Austria.
From Salzburg, we traveled to the famous Melk Abbey, located high above the beautiful Danube River. From Melk, we took a cruise down the Danube, through the wine-growing region of the Wachau Valley, until we arrived at Dürnstein.
We disembarked and moved into the historic and luxurious Hotel Schloss Dürnstein. We enjoyed a wine tasting that evening in one of the castle’s elegant rooms, as well as a fascinating talk about investing in wines in general and the world-renowned white wines of Austria in particular.
The following day we traveled to Imperial Vienna, where we stayed at the five-star Hotel de France. One evening before dinner at the Palais Coburg, we toured the cellars of the largest wine collection in all of Austria. Another highlight of the trip was a seminar at a private bank, where we learned about investments from a European perspective.
An officer of the private bank spoke about the outlook for the markets from a European perspective. Then Rahim Taghizadegan, head of the Institute fuer Wertewritschaft, a private research institute affiliated with the Vienna Business University, spoke with us about the history of the Austrian School of Economics and how knowledge of its precepts can make us better investors.
During our time in Vienna the Euro was declining in value, which was good news for us as travelers. The Greek crisis was in the headlines and the Euro had fallen to around $ 1.22. For the first half of 2010, the Euro was down against the U.S. dollar by about 15%. The talk was that the Euro was heading to parity. The Euro bottomed out at about $1.18 and has since gone up again.
I give you this background because expressed at the seminar was the opinion that Greece should abandon the Euro (or, the European Union should abandon Greece). In fact, there is much sentiment in Europe that all of the so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain) should leave the Euro and return to their legacy currencies.
I could not disagree more and don't believe this will happen. Why? Because such a move would hurt the strong Euro countries like Germany and France as well or even more the PIIGS countries. Their foreign debt would then be even higher expressed in a devalued sovereign currency of their own and repayment of the Euro debt would become even less feasible. Don’t forget, Germany and France and now even the European Central bank have purchased the debt of the weaker European countries. There would be chaos on the continent for both the strong and the weak countries if the European Union were split asunder.
Finally, one of the delegates on the trip gave a presentation about art as an investment. Mrs. Phyllis L. lives in Dallas and Paris and has been in the art business for many years. She told us that art, like rare stamps, is a long-term investment. Plan to hold for at least five years. Unless you are a knowledgeable collector yourself, you should probably use a professional to guide you and assist in your purchases.
I found it interesting that delegates who travel the world with me are willing, even eager, to share their expertise with other members of the group. Many times I’ve seen new acquaintances blossom into long-term friendships. This is one of the many advantages of traveling to new places with a like-minded group.
Luckily, I will be returning to Austria this fall, as one of the speakers on a tour the Oxford Club is sponsoring. Their itinerary will be similar to the Austrian Advantage trip that ASI just conducted. The dates are November 26-December 4, 2010. If you are interested in learning more about it, please click here to send me an email. I’ll see that all the pertinent information is sent to you.
I definitely want to encourage you to put Austria near the top of your “must visit” list. You will love its culture, its history, and its awesome beauty. But don’t overlook the investment opportunities it offers as well.
Austria is not only a nice place to visit. It’s a great place to have your assets grow, too.
LiveStrong,
Michael Checkan
If you would like a personal introduction to one of Austria’s most reputable private bankers, or if there is anything else we can to do to assist you with your international diversification of assets, please let us know. Click here to send me an email or call me at 1-800-831-0007 or 301-881-8600.
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