          
          
          
                       THE CASE FOR INVESTING ABROAD
          
          
          Historically, currencies always lose their value
          
               The following quick history of money has a very
          important reason.  It is important to not only have a
          feeling that something is wrong, and that United States
          currency and investments are at risk, but to understand
          fully the reasons why this is so.  It is very important
          to realize that these patterns of history constantly
          repeat, and have done so for centuries.  The current
          political rhetoric of a new administration in
          Washington cannot change the inevitable course of
          history, nor can it reverse the downhill slide that is
          well under way.  Historically, currencies have tended
          to fall as economies weaken.  Over the long run, all
          fiat currencies have become worthless.
               The evolution of money has been a long and often
          difficult process as societies searched for ways to
          develop reliable and lasting systems of commerce and
          finance.
               Over the course of history, money has changed its
          physical appearance as people refined its shapes and
          sizes into convenient and practical forms.  At the same
          time, money's nature has changed.  From the days of the
          Roman gold aureus to the original U.S. silver dollar,
          money's intrinsic worth -- meaning its precious metal
          content -- was a paramount measure of its value. 
          Today, money's value is measured not by its material
          worth in precious metals but by what it can buy -- its
          purchasing power -- a much less secure measure because
          historically all forms of money not based on gold have
          always lost their value.
               The first early attempt at using fiat currency
          failed in the fourth century when the Romans began
          issuing ever-increasing amounts of fiat coins to
          compensate for insufficient quantities of gold needed
          to mint the aureus, which was in demand throughout the
          empire.  Huge budget deficits in the Roman government
          and a loss of confidence in coins caused catastrophic
          inflation that eventually destroyed the Roman monetary
          system.
               Ironically, it was during the post-Roman era that
          the Roman "solidus" became the most enduring coin in
          history, circulating throughout Europe and the Near
          East for more than 700 years.  The solidus owes its
          incredible longevity to its largely unchanged
          appearance and gold content over time, which helped to
          maintain public confidence in the coin.
               While coins remained the primary medium of
          exchange for centuries, during the Crusades people
          sought alternatives as travel become more common.  The
          precursor to European paper money was born in the form
          of "letters of credit" -- promissory notes between two
          parties that generally could not be cashed by anyone
          else.  The use of these letters was aimed at thwarting
          highway bandits who wanted coins, not paper, which was
          impossible for them to cash.
               The Europeans were not the first people to
          discover the advantages of using paper money.  Its
          ancient ancestor can be traced back to about 2,500 B.C.
          to the clay tablets on which the Babylonians wrote
          bills and receipts.  The Tang Dynasty in China issued
          the first known paper money in 650, and the earliest
          piece of currency that exists today -- a Chinese 10-
          kuan note -- dates back to this time.
               Centuries later, in 1273, Marco Polo reported that
          the Mongol Emperor Kublai Khan issued mulberry bark
          paper notes in China bearing his seal and the signature
          of his treasurers.  Marco Polo described the monetary
          system: "All these pieces of paper are issued with as
          much solemnity and authority as if they were pure gold
          and silver...and the Khan causes every year to be made
          such a vast quantity of this money, which costs him
          nothing, that it must be equal in amount to all the
          treasure in the world."  With an overabundance of fiat
          currency in circulation, it is not surprising to learn
          that the Mongol-imposed monetary system suffered
          terrible inflation; eventually the Mongols were forced
          out of China.
               A major step in the development of paper money
          took place in 1661 when the Stockholm Banco of Sweden
          issued the first bank notes, which were private
          obligations of the bank and could be redeemed there in
          gold or silver by the bearer.  Because redemption in
          precious metals was guaranteed, many people had enough
          confidence in the value of the notes to exchange them
          for goods and services.  However, Swedish merchants
          feared that the notes would be bought up by foreigners
          who would redeem them and eventually deplete Sweden's
          gold and silver reserves.  The issue lasted only one
          year.
               In the 17th century, colonists settling in North
          America brought coins with them, but most of these were
          quickly returned to Europe to pay for goods that were
          not produced in the colonies.  This led to a shortage
          of coins, so Indian wampum -- beads of polished shells
          strung in strands -- was widely used as money
          throughout the colonies.  However, when settlers
          learned to counterfeit wampum, it lost its value.
               In addition to wampum, the colonists also used as
          money those items that were staples of the local
          economies because they were always in demand.  For
          example, in Virginia it was tobacco, and in
          Massachusetts it was grain and fish.  Nails and bullets
          frequently were used for small change.
               After trade between the colonies and the West
          Indies developed, Spanish eight-reales coins circulated
          widely.  These coins, known as "pieces of eight." were
          used until 1857.  They were frequently cut to make
          change: Half a coin was "four bits" and a quarter
          section was "two bits" -- a slang expression for the
          modern American quarter.
               The first coin struck in the colonies was the pine
          tree shilling -- which bore a picture of a pine tree --
          in a Boston mint in 1652.  All issues of the coin, even
          those struck in later years, share the claim to have
          been minted in 1652, as a legal precaution in case the
          British Crown decided to enforce its ban on the
          colonists producing their own coins.  Despite the
          efforts of the colonists, the British shut down the
          mint in 1686.
               During the 18th century, again contrary to British
          wishes, hundreds of different types of paper notes were
          printed throughout the colonies.  Those notes, issued
          before the American Revolution, usually were
          denominated in pounds and shillings and made reference
          to the Crown of England for credibility.  Some colonies
          issued too many bills, however, and their value quickly
          sank to small fractions of their face amount, making
          trade between colonies difficult.  Despite the
          depreciation, these bills helped offset economic slumps
          caused by a scarcity of metallic money in an expanding
          economy.
               Before the start of the American Revolution, the
          Continental Congress, facing huge expenses without
          adequate taxing power, authorized a limited issue of
          currency in 1775 -- the first paper currency issued by
          what was to become the United States.  These notes,
          called continentals, were printed from plates engraved
          by Paul Revere to read "The United Colonies" and
          sometimes even depicted colonial minutemen.  They had
          no backing in gold or silver and could be redeemed only
          if and when the colonies became independent.
               In January, 1776, the Continental Congress made it
          treason for people not to accept continentals or to
          discourage their circulation in any way.  In 1777,
          after the Declaration of Independence, the first notes
          bearing "The United State" were issued.  However,
          because people were reluctant to accept paper money,
          well-known revolutionary figures were asked to sign the
          notes to give them credibility.
               For about a year and a half, continentals changed
          hands at close to face value, but this stability was
          short-lived.  Because continentals were issued in
          massive quantities, inflation ensued.  People responded
          by hoarding goods and coins during the war.  In short
          order, continentals became basically worthless.  As
          George Washington commented: "A wagon-load of money
          will scarcely purchase a wagon-load of provisions." 
          The currency's vanishing value led to the expression
          for worthlessness that remains today -- "not worth a
          continental."  The failure of continentals produced a
          deep mistrust of paper money throughout the colonies.
               Nonetheless, the brief period when continentals
          circulated successfully was significant because it
          marked the first time that the worth of U.S. currency
          lay in its purchasing power, as it does today, and not
          in its intrinsic value.
               After the failure of continentals, more than 70
          years passed before the federal government would issue
          paper money again.  However, until then, state-
          chartered banks made up for the lack of a national
          currency by issuing their own paper notes, which were
          obligations of individual banks.  These state-bank
          notes became the dominant form of currency used between
          the American Revolution and the Civil War.
               Each bank designed its own notes, so they differed
          in size, color, and appearance.  By 1860, an estimated
          8,000 different state-banks were circulating what were
          sometimes called "wildcat" or "broken" bank notes in
          denominations from $1 to $13.
               The nickname wildcat came about because some of
          the less reputable banks were located in low-population
          areas and were said to attract more wildcats than
          customers.  People also called the notes broken bank
          notes because of the frequency with which some of the
          banks failed, or went broke.
               Because these notes had varying degrees of
          acceptability and were not always redeemable in gold or
          silver on demand, they often circulated at substantial
          discounts from face value.  These conditions made
          counterfeiting relatively easy and bogus notes
          abounded.
               In 1861, in an effort to finance the Civil War,
          the federal government issued the first paper money
          since continentals.  The demand notes of 1861 were
          popularly called "greenbacks" because of the color on
          their reverse side.  
               In 1862, Congress issued $150 million of legal
          tender notes, more commonly known as United States
          notes, and retired the greenbacks.  These new notes
          were the first that were made legal tender for all
          debts, except import duties and interest on the public
          debt.  Confidence in U.S. notes began to decline when
          the Treasury stopped redeeming them in coins during the
          Civil War to save gold and silver.  However, redemption
          resumed in 1879.
               Even though U.S. notes were generally accepted,
          most paper currency circulating between the Civil War
          and the First World War consisted of national bank
          notes.  This currency, uniform in size and general
          appearance, was issued by thousands of banks across the
          country.  The federal government granted charters to
          these banks under the National Bank Acts of 1863 and
          1864, allowing the banks to issue notes using U.S.
          government securities as backing.  From 1863 to 1877,
          the notes were printed privately, but in 1877, the
          Bureau of Engraving and Printing -- a division of the
          U.S. Department of the Treasury -- assumed
          responsibility for printing all notes.
               During the late 19th century, the U.S. government
          increased its reserve of precious metals by offering
          certificates in exchange for deposits of gold and
          silver.
               In the late 1950s, rising world demand for silver
          as an industrial metal began pushing up its price.  To
          avoid the possibility that the value of silver in coins
          might exceed the face value, the Treasury began selling
          silver from its stockpile in the open market to keep
          the price of silver low.  However, demand continued to
          be high and soon threatened the Treasury's silver
          inventory, so Congress took steps to reduce the amount
          of silver in American coins.
               In 1964, the silver content of half dollars was
          reduced from 90 percent to 40 percent and, in 1970, was
          eliminated entirely.  Silver also was eliminated from
          quarters and dimes in 1965.  
               The elimination of silver from all U.S. coins
          completed the transition of American currency from
          money of intrinsic value to fiat money, the value of
          which lies in its wide acceptability and purchasing
          power. 
               In 1971 the United States made a decision that
          marked the beginning of the end of the international
          system of fixed exchange rates.  America closed its
          "gold window".  Foreign central banks were thus
          prevented from converting their holdings of dollars
          into gold at the official price. For the first time in
          history, the world's principal currencies were shorn of
          all fixed links to the value of any real commodity. 
          Henceforth the value of money - that is, the stability
          of prices - was entirely at the discretion of market
          forces responding to the intentions and policies of
          governments.  Before long, inflation was raging almost
          everywhere.
               Governments throughout history have tampered with
          the link between currencies and underlying measures of
          value.  Whenever wars or other emergencies required it,
          they have become monetary cheats -- fiddling with the
          convertibility of their currencies and at times
          suspending it altogether, raising revenue either by
          depreciating their coins (explicitly reducing their
          weight) or debasing them (secretly reducing the
          proportion of precious metal).
               Since ancient times, whenever private mints found
          that the fees (or seignorage) for weighing, certifying
          and coining their customers' precious metal was earning
          them a nice profit, governments began to monopolize the
          business for themselves.  That way, they found, the
          currency could be more conveniently debased whenever
          their battles for territory demanded extra money.  This
          technology of expropriation (monetary policy, as it is
          now known) took its greatest leap forward with the
          advent of fiat currency. Governments printed
          intrinsically worthless bits of paper, called them
          legal tender, and required their subjects on pain of
          imprisonment to give them goods and labor in exchange.
               For governments, the idea was understandably
          attractive.  They surrounded the process with the
          mystique of sovereignty to make the confidence trick
          more plausible. In many countries counterfeiting was
          not merely fraud but treason.  Similarly, in the
          present debate over European monetary union, it is said
          that the creation of a European central bank would be
          an attack on the sovereignty of the member states. 
          Viewed in a historical perspective, that warrants a
          hollow laugh: the sovereignty in question is the right
          of a government to steal from its citizens.
               The only check on these otherwise excellent
          opportunities for theft was the promise to redeem paper
          money for an asset of intrinsic value, such as gold. 
          For a long time that was a serious inconvenience to
          politicians, because until around the middle of this
          century people thought the promise ought to be kept. 
          By 1971 it had already been badly undermined; the
          closing of the gold window finished the job.  The power
          of the state took another large step forward for the
          time being. 
               While fiat monies may be destined to collapse,
          this depreciation does not occur at the same rate. 
          Some are better than others, and looking at the
          comparative strengths and values between currencies is
          important to preserving your wealth.
               To protect wealth properly, an investor must act
          on his own, know why he is doing so, and not drift
          along waiting for a political solution that history has
          shown is unlikely.  Unfortunately, the current perverse
          welfare state policies of the U.S. government are
          unlikely to be changed until they produce a economic
          crisis.
          
          
          Loss of purchasing power -- history of debt in America
          is unique in the world, and dangerous to investors who
          stay only in dollars
          
               The United States has a history of debt that is
          unique.  The psychology of this debt is important to
          the modern investor.  Failing to understand it can be
          fatal, as happened during the 1980s "junk bond" fad,
          when the American investment markets appeared to lose
          all perspective on the matter of debt.  This and the
          savings and loan industry crisis/collapse, were
          symptoms of an uncritical psychology that views any
          level of debt as benign or acceptable.  For any
          investor this is dangerous thinking.
               Many of the original settlers before the American
          Revolution had financed their purchases of tools and
          land by debt.  For a poor man to acquire debt in Europe
          was difficult, usually impossible; no one would lend
          him money as he had no collateral.  In America it was
          easy, because the poor man had the security of his
          labor and, above all, a limitless future.  Land
          purchase by debt, and speculation on credit, were thus
          written into the economic soul of the new nation.  This
          was understandable, given America's special
          circumstances.  And given the conditions of early
          settlement was fully justified.  The early debt was, in
          most cases, paid.  But acquiring debt, borrowing
          against the future, became a national characteristic:
          indebtedness was not only not shameful -- it was almost
          patriotic.  Once independence was gained, financial
          institutions, above all, a plethora of banks, came into
          being to serve Americans who remained quite optimistic
          about their ability to service their debt.
               The government aided and abetted the process.  As
          early as 1800, for instance, the government sold the
          public 320-acre farms but required only a quarter of
          the purchase price down.  The rest was paid out of
          harvest profits over four years.  Much of early land
          legislation during the next century provided for
          credit.
               Congress also encouraged business debt by, for
          instance, providing land free to railroads that could
          borrow enough money from the banks to lay down track. 
          America's 19th century pursuit of her "manifest
          destiny," both in land settlement and in the
          communications revolution that made it possible, was
          essentially launched on credit.
               Pursuing the ideal of independence in the 1770s,
          the Founding Fathers not only created the national debt
          but led the new nation into the worst inflation of its
          history.  By 1780 the $240 million of paper
          "Continentals" it had issued were almost worthless.  In
          1791 the national debt stood at 40% of Gross National
          Product.  In 1835, President Jackson had reduced the
          debt to virtually zero.  This satisfactory state of
          affairs has never been achieved since.
               Thereafter, the debt rose in accordance with
          "national emergencies."  By the end of the Civil War it
          had risen to over $2.76 billion.  By the end of the
          First World War it had risen to $25 billion, and was
          then prudently reduced by about a third during the
          prosperous 1920s.  As a result of the Great Depression,
          however, it rose once more, standing at $48 billion in
          1939.  With the Second World War the national debt rose
          still further, this time astronomically, to $271
          billion by 1946.  But again the dictates of prudence
          began to operate.  Between 1946, its high point, and
          1975, the national debt was reduced by more than half. 
          
               But then, in the late 1970s, a curious thing
          happened.  Without an emergency, without a world war,
          without even the excuse of a severe recession, the
          national debt began to rise again, first slowly, then
          more rapidly.  Since then it has reached a historic
          high.
               That meant a growing proportion of government
          revenues were devoted, year by year, simply to
          servicing the debt, and in turn (since its expenditures
          were not substantially reduced) that meant added
          pressure either to raise taxes or to expand the deficit
          and so increase the debt still further. 
               High-spending congressmen, pursuing aims that by
          their nature are ultimately unrealizable, have proved
          popular with voters locally.  At the same time, the
          electorate as a whole, voting nationally, expressed its
          concern at the country's drift into financial
          profligacy by sending to the White House Republican
          candidates pledged to do something about it.  In
          practice, this led to an impasse: Democratic
          congresses, unwilling to cut domestic spending, and
          Republican administrations, unwilling to raise taxes. 
          Thus the federal government came under the conflicting
          control of both parties, both blaming the other for
          what is, at bottom, a profoundly immoral procedure --
          spending money by borrowing against the future.  The
          result is the deficit and the mounting debt.
               Now this public debt comes on top of a huge volume
          of private debt, which itself is increasing.  The
          United States was created by the judicious use of
          private credit.  But this was balanced by a strict
          regimen of public probity, and the highest personal
          savings rate in the world -- at least until the 1930s. 
               With the election of Bill Clinton, the United
          States is moving ever more rapidly away from the
          traditional American doctrine of individual financial
          responsibility.  A consensus has emerged that it is now
          government's job to provide health care for everyone,
          food for those who don't work, and secure retirements
          for those who do not save.  An enormous burden is being
          shifted onto the shoulders of future generations.  So
          the wrong is not righted.  The folly continues.
               The government is promising to do more for
          everyone when it cannot even afford the activities it
          is undertaking now.  If the deficit continues to grow
          only at the rate it has over the preceding twelve
          years, interests costs will eventually absorb so much
          of the budget it will be increasingly difficult, if not
          impossible, for the government to perform even its most
          basic functions.  And it looks like the growth rate of
          the debt will actually be much higher rather than the
          rate of the preceding twelve years.
               Foreign lenders might be able to help, but if
          their debts continue to rise, foreigners are going to
          become more reluctant to hold dollars, and the status
          of the dollar as an international currency could go the
          way of the British pound sterling, once a major reserve
          currency which has lost 97% of its value in this
          century.  The United States could suddenly find itself
          a second-class citizen in the world economy, subject to
          the same strictures as Brazil, Russia, or other
          countries that have allowed their currencies to become
          unacceptable in world trade.
               A generation of economists, Washington policy
          experts, and publicists have argued that deficits are
          either desirable or don't matter.  Those arguments have
          often carried the day because opposing arguments were
          not heard or were given the short shrift by selfish
          groups hoping to get something for nothing from an
          empty Treasury.  
               As long as the dollar is the accepted
          international currency, America's foreign debt has not
          posed a serious problem.  In fact, because the debt is
          in dollars, when the dollar declines internationally,
          the U.S. debt itself declines.  But by continuing to
          run budget and trade deficits and to rely on foreign
          capital to buy U.S. Treasury bonds and stimulate
          private investment, the politicians could eventually
          incite a revolt against the dollar.  Paying debts in a
          country's own currency is such a tempting privilege
          that it always ends up being abused.  The issuer of a
          widely accepted money starts to consume more than it
          produces, and eventually the holders of its IOUs begin
          asking for a different kind of payment.  This will
          eventually occur if the United States continues along
          its present deficit path.  We could be only a crisis
          away from the death of the dollar as the world's
          reserve currency.  For a long term investor or one
          building a retirement fund, betting your whole future
          on the dollar could be a very risky proposition.
               There are many political arguments as to what to
          do about the mounting national debt.  These arguments
          could drag on without decisive action for years.  If
          you enjoy political debate, you can and should go join
          them.  But if you are also concerned with protecting
          your wealth and those who matter, you must rely on
          personal initiative, not a political solution to rescue
          your future.  Furthermore, if you really want to
          participate in active politics, isn't it better to do
          so from a secure and protected position?
               The only real defense against this loss of
          purchasing power is international diversification of
          your personal investment portfolio.  No other weapon
          can defend against the history of debt in America and
          its consequences.
          
          
          Why invest abroad?  Global diversification increases
          your profits for less risk
          
               Why invest abroad?  Isn't the United States still
          the most stable, free, and prosperous nation on earth? 
          What safer haven could I possibly find for my assets? 
          And if I could, what about convenience?  Where else
          could I find such a diverse range of investment
          opportunity.  Why would I need to own any currency
          besides the dollar?
               You may feel uneasy about putting some of your
          money in a foreign country.  Other things being equal
          between nations, there really would be no reason to
          diversify your investments internationally.  After all,
          you know your own country much better than any other
          country.  You know your laws, your customs and the
          people you habitually deal with, while foreign customs
          seem to be strange indeed.  If you keep your assets in
          your own country, it is much easier to keep an eye on
          them and to get to them rapidly when they are needed.
               But all things are not equal between nations. 
          Some currencies are traditionally stronger and more
          inflation-free than others.  Interest rates vary, as do
          foreign exchange regulations, banking laws, securities
          regulations, and political and economic freedom. 
          Therefore, geographical diversification has become
          necessary for a prudent investor of any nationality.
               Over the past 20 years, capital markets outside
          the U.S. have grown rapidly in size and importance.  In
          1970, non-U.S. stocks accounted for 32% of the world's
          $935 billion in total stock market capitalization.  By
          1992, non-U.S. stocks represented 57% of total world
          stock market capitalization of $9,320 billion.
               For 1993, the world's top-performing stock markets
          were not those of the United States, Japan, or Germany. 
          They were Turkey's (up 111% in U.S. dollar terms),
          Brazil's (up 83%), and Indonesia's (up 29%).  Markets
          in Hong Kong, Singapore, and the Philippines have also
          delivered high-return performances in US dollar terms
          recently.
               U.S. issues represent little more than one-third
          of the world's total market in stock issues, and that
          share is dwindling.  Growth always moves to areas of
          high opportunity and low costs.  That is why growth
          surged, first in Japan; now it is Taiwan, Thailand,
          Singapore, South Korea; in the future it will be in
          Vietnam, even Cambodia.  And Latin America.  Chile has
          been growing at 8% per year, four times faster than the
          U.S.
               Mutual funds offer an easy way for investors to
          get involved in the stocks of foreign companies.  So-
          called international funds invest solely in foreign
          companies; global funds mix in U.S. stocks.  And
          increasingly, the funds are focusing on specific
          countries or regions, such as Southeast Asia.
               Investors can also buy pieces of the foreign
          companies directly, through American Depository
          Receipts, which are traded on U.S. stock exchanges. 
          ADRs, which represent shares of a foreign stock, are
          issued by U.S. banks that take possession of the
          securities.  The banks convert dividend payments into
          dollars for ADR holders and deduct foreign withholding
          taxes.
               ADRs give international investors a little more
          guarantee, because those companies have to meet certain
          accounting standards.  For example, German companies
          that made only limited disclosures have to provide more
          information when moving into the U.S. markets.
          
               
          International diversification provides more investment
          choices, and more potential profits, than investing
          solely in the United States.
          
               If you invest exclusively in the U.S. market, you
          miss the opportunity to share in the potential growth
          of some of the leading companies in the world.  Scan
          the list of products below, and you'll see many
          manufactured by non-U.S. companies that are "household
          names" in America.
          
               Aquafresh                     Beecham
               Baskin Robbins                Allied Lyons
               Burger King                   Grand Metropolitan
               Carnation                     Nestle
               Close-Up                      Unilever
               Dannon Yogurt                 BSN
               Dewars                        Guinness
               French's Mustard              Reckitt & Colman
               Frigidaire                    Electrolux
               Glidden Paint                 Imperial Chemical
               Holiday Inn                   Bass
               Lean Cuisine                  Nestle
               Dunkin' Donuts                Allied Lyons
               Lucky Strike                  BAT
               Mighty Dog                    Nestle
               Panasonic                     Matsushita
               Pillsbury                     Grand Metropolitan
               Purina Dog Chow               British Pete
               Q-Tips                        Unilever
               Ragu                          Unilever
               Sudafed                       Wellcome
               Sunkist                       Cadbury Schweppes
               Tetley Tea                    Allied Lyons
               Travelodge                    Trusthouse Forte
               T.V. Guide                    Newscorp
               Valium                        Hoffmann-La Roche
          
               As you are probably well aware, a diversified
          portfolio gives you the opportunity to enhance your
          overall return while reducing risk.  So it's only
          logical that going beyond your border to invest would
          produce the same results.  Trends in foreign stock
          markets generally do not always correlate highly with
          bull or bear market cycles in the U.S. stock market. 
          While one or more foreign stock markets may at any time
          be moving in the same direction as its U.S.
          counterpart, longer-term correlations are low.  This
          means that diversifying beyond a single market, such as
          the U.S., should reduce the overall volatility of your
          stock portfolio over time.  In addition equity markets
          in one or more foreign countries almost always
          outperform U.S. stocks each year. 
               Some American investors dismiss investments in
          overseas companies as risky, but they are living in
          yesterday's world.  Many overseas investments are more
          conservative than their U.S. counterparts.
               For example, Swiss drug stocks typically have a
          price-to-earnings ratio less than half that of U.S.
          companies.  (Dividing a share's price by the company's
          earnings per share is a basic way to compare stock
          prices.)
               Think of brand names known worldwide for
          investment potential.  Companies such as Coca-Cola,
          Boeing, Disney, Ford, Citicorp, and Philip Morris are
          so multinational that they are not dependent on the
          U.S. economy, which is one of the things an investor
          would like to achieve.
          
          International stock markets have historically
          outperformed the U.S. market over the long run and have
          the potential to do so in the 1990s.
          
               In the 10 years ending in 1992, the U.S. stock
          market provided an annualized total return of 16% --
          one of the best performances of any 10-year period in
          its history -- but 12 other equity markets around the
          world performed even better when measured in U.S.
          dollars.
          
                    Annualized Total Returns 1982-1992
                    Hong Kong                25.5%
                    Belgium                  25.4%
                    France                   23.1%
                    The Netherlands          22.1%
                    Spain                    20.9%
                    Austria                  20.3%
                    United Kingdom           17.9%
                    Sweden                   17.6%
                    Switzerland              17.0%
                    Norway                   16.5%
                    Germany                  16.4%
                    Japan                    16.4%
                    United States            16.0%
                    Australia                15.3%
                    Denmark                  14.4%
                    Italy                    14.3%
                    Singapore/Malaysia        9.5%
                    Canada                    8.9%
          
               Many feel that U.S. stock markets are currently
          overvalued.  Even though stocks have soared overseas,
          many are still undervalued.  The price/earnings ratios
          of many foreign stocks are still extremely low compared
          to the ratios common in U.S. markets.
               Taken as a group, foreign stocks will generate
          higher returns than U.S. stocks in some years, but not
          in others.  The important point is that U.S. and
          foreign markets do not often mirror each other. 
          Therefore, combining U.S. with foreign stocks cushions
          the investor's overall stock portfolio against the full
          impact of potential down markets in one country or
          another.
          
          
          The rapid growth of capital markets around the world
          has created abundant opportunities for fixed-income
          investors.  
          
               Worldwide bond market capitalization today is
          greater than worldwide equity capitalization.  And non-
          U.S. bonds now account for more than half of the value
          of the world's bond markets.
               A global debt portfolio allows you to pursue
          attractive returns in a variety of markets.  Over the
          past eight years, many foreign government bond markets
          have generated higher returns than the U.S. government
          bond market.  Of course, there are special risks
          associated with global/international investing,
          including currency risks.  We'll discuss this in more
          detail later.
               The world's top-performing bond market has
          historically varied from year to year.  In the years
          from 1977 through 1993, the U.S. was the top-performing
          market only in 1981, 1982, and 1984.
               Global diversification makes just as much sense
          for bonds as it does for equities because economies and
          bond markets tend to move independently from country to
          country, and bond prices and yields in overseas debt
          markets show a low degree of correlation with the U.S.
          market.  As a result, diversifying internationally
          among fixed-income markets may help reduce overall
          volatility.
               U.S. interest rates have declined dramatically
          over the past three years, which means many foreign
          bonds now provide higher yields than U.S. bonds. 
          Furthermore, many non-U.S. markets offer the potential
          for higher prices if interest rates fall in those
          countries.  Of course, interest rates are in a constant
          state of flux, and there are no assurances that foreign
          bond yields will remain higher than U.S. bond yields. 
          In many European countries, they have already gone down
          a great deal.  Some still have far to go. 
          
          Diversification abroad provides protection against
          government intrusion into the economy
          
               Today the U.S. economic outlook is bleak.  The
          cyclical disinflation of recent years should not
          obscure the possibility of resurgent inflation.  This
          could be the terrible consequence of the staggering
          budget deficits and the monetization of this debt
          through expansionist Federal Reserve policies.  This
          history of currencies section has already shown you the
          historical inevitability of collapse of all currencies. 
          International diversification protects one from being
          solely committed to one currency.
               To all of this, politicians of whatever party or
          ideological perspective will respond in the same
          predictable manner.  First, they will enact exchange
          controls to prevent assets from moving to a safer, more
          inflation-proof country or currency.  Then, with
          private wealth frozen within the country, they will
          embark on an orgy of taxation and confiscation measures
          against the hostage assets in a vain effort to bail out
          the bankrupt federal budget process.
               This describes precisely the sequence of events
          during the last great U.S. inflation and in virtually
          every nation of the world which has ever suffered a
          hyperinflation.  To assume that it cannot or will not
          happen again is to ignore all the evidence of history.
               What then can we do about it?  It is important to
          be a good citizen, but it is equally important to be
          practical when planning for your family's future. 
          Unfortunately, it is not likely that politicians will
          cut back on ruinous welfare state policies until forced
          to do so by an economic crisis.  In a choice between
          imposing predatory taxes on you and losing votes from
          the growing dependent population, what do you think the
          politicians will do?  Probably not the responsible
          thing.  More likely than not, they will raise taxes and
          debauch the dollar.  That will be the easy way out for
          the politicians.  There is only one practical solution
          open to independent investors: get a portion of your
          wealth safely diversified abroad, while you can.
          
          Exchange controls could hit without warning
          
               When exchange controls take effect in any country,
          there is typically little or no warning.  Most people
          don't realize that the U.S. already has legislation on
          the books, authorizing exchange controls, ready for
          implementation by the president by executive order at
          any time.  The International Emergency Economic Powers
          Act (Title II of Public Law 95-223) is a little-known
          act passed without fanfare during the week between
          Christmas and New Year's, 1977.  It gives the president
          complete power to "prohibit any transactions in foreign
          exchange," including "the importing or exporting of
          currency and securities" (Section 203a), in order "to
          deal with any unusual and extraordinary threat, which
          has its source in whole or substantial part outside the
          United States."  (Sec. 202a).  This act thus could
          prohibit all exchanges of currency, even wire transfers
          to other countries.  
               It has already been used by every President since
          it passed.  Carter used it against Iran, Reagan against
          Russia, and Bush against Iraq.  But it could easily be
          used against any and all countries.  
               The growth of American investor's Interest in
          global and international mutual funds is popularizing
          foreign investments in ways that may invoke such
          controls.  And these U.S.-based mutual funds are the
          very ones that are most vulnerable to controls, since
          they hold the money for tens of thousands of individual
          investors.  In the right circumstances, it would not
          even be that difficult to order these funds to
          liquidate and repatriate foreign holdings -- an edict
          that would be difficult or impossible to enforce
          against individual investors with direct foreign
          investments offshore.
               Another forgotten law on the books is the Interest
          Equalization Tax Act.  There is no reason for it to
          have been forgotten, but most investors (and many
          Americans seem to have short memories.)   It is only 20
          years since gold was legal for Americans to own, and
          the same length of time since the Interest Equalization
          Tax was lowered to zero.   And that is the key -- it
          was lowered to a temporary zero rate, not abolished or
          repealed.  First enacted in 1964, it put a 15% tax on
          all purchases of foreign securities.  It could be
          raised again at any time, and this time it would also
          affect all purchases of U.S. mutual funds investing
          internationally.  These did not exist in 1964, but they
          do now -- they are very vulnerable.  Such a tax would
          not affect their existing holdings, but what happens to
          a fund that can only hold its existing securities, and
          cannot replace them with other foreign securities?  The
          whole management aspect of the fund is destroyed.  The
          inability to manage would be likely to cause a run on
          all of these funds, with forced liquidations to meet
          redemptions causing distress sales of portfolio
          holdings -- and/or a suspension of redemptions.
               Within Western Europe, exchange controls have been
          lifted completely in most countries.  All European
          Union (EU) members are required to permit free
          movement of funds within the EU.  Some of the countries
          outside the EU still maintain some form of control,
          particularly Austria, Sweden and Norway.  Exchange
          controls also exist in most of the developing world and
          in the former East Bloc-that-was, where there are plans
          to lift them over time.
               It would be ironic if the United States were to
          impose hindrances on the free flow of money just as
          other countries are coming around to a liberal
          position.  Some of the recent measures taken by
          American authorities in the supposed crackdown on
          insider trading and drug dealing come perilously close
          to introducing exchange controls on Americans.
               Confidence in American financial institutions
          continues to erode.  A 1989 study by American Banker
          revealed that more than 30% of respondents said they
          had less faith in the system than in previous years.
               Could the U.S. financial crisis of the l990s
          result in the same kind of deflationary collapse that
          brought on the Great Depression of the 1930s?  The
          answer is a clear yes -- especially if the Federal
          Reserve miscalculates on the scale that it did 60 years
          ago. 
          
               It has been hard enough to convince individuals to
          look outside the conventional investment media of
          stocks, bonds, and life insurance for financial safety,
          but the idea that it might also be necessary for them
          to look outside the borders of the U.S. for capital
          protection is more than many Americans can comprehend.
               Of course, many Americans who came of age before
          and during the Cold War are reluctant to think of
          investing abroad.  This is a natural consequence of the
          fact that the U.S. was the world's economic leader
          during the third quarter of this century -- as a
          sprawling continental economy.  Because the U.S. was so
          vast and so rich Americans were not obliged to turn
          abroad in search of investment opportunity as investors
          from Britain and the other European empires had been
          obliged to do.  The U.S. dollar was the strongest
          currency in the world during most of this century. 
          America had a long history of protecting the property
          of individual citizens.  The revolutions and wars that
          laid waste to other nations, and destroyed the savings
          and investments of their citizens barely touched
          American shores.
               And most important of all, for the first 150 years
          of American history, the individual was able to keep
          the major part of whatever he earned, either from his
          business or from his investments, without fear that the
          state would confiscate his gains.  In total freedom, he
          could move his capital in and out of the country,
          without the permission of government.  In other words,
          the American investor kept his investment in his own
          country because of both the opportunities and the
          safety.
               Today, growing numbers of investors are convinced
          that the U.S. is no longer the land of safety or
          opportunity that it was.  A few of the more astute
          investors are overcoming their resistance to the idea
          of having their wealth kept thousands of miles away,
          across oceans and borders.  There is a growing flight
          of U.S. capital abroad.  But still, up until now, only
          the most adventurous of U.S. investors has actually
          taken the time and effort to look into the
          opportunities abroad.  The great majority remain
          ignorant of both the reasons for taking their capital
          out of the country and the mechanisms by which to do
          it.
               There are many countries today that fight their
          own domestic economic problems by holding their
          citizens' wealth hostage.  The battle by citizens to
          overcome these restrictions is documented by occasional
          news stories of important people being caught in the
          act of "smuggling" their own money across borders to
          safer havens.
               But just as citizens export their wealth to avoid
          its confiscation, so governments work diligently to
          close the escape routes.  Foreign exchange controls,
          currency controls, credit controls, and taxes on
          foreign holdings are devices created by the politicians
          to either freeze wealth within their jurisdiction (so
          they can take it when they want it), or to discourage
          people from diversifying abroad.  As the flight of
          capital continues the tendency is for the laws to be
          tightened and the severity of the penalties for capital
          export to be increased.  The propaganda machine of
          government is turned on fully against the "rich"
          speculators who are escaping with assets that "should
          rightly belong to the nation."
               Whatever happens, you want to be prepared in
          advance, and global investing is a superb hedge against
          any contingency.  The knowledge that a portion of your
          wealth is waiting for you, where nobody can touch it
          but you, creates a sense of security, and a freedom
          from fear.  That's something you can't put a price tag
          on.
               But if you are a person of substantial wealth, it
          has become necessary, perhaps even crucial, to have
          some of your assets in another jurisdiction to hedge
          against adverse political developments in your own
          nation.  That way, you can watch events at home unfold
          with the security that at least some of your property
          is outside the easy reach of greedy politicians.
               In 1928, U.S. Supreme Court Justice Louis Brandeis
          wrote that "the right to be let alone is the most
          comprehensive of rights and the right most valued by
          civilized men" (Olmstead vs. U.S.).  The irony of that
          statement is that Justice Brandeis was writing a
          minority opinion in the case, and his opinion has been
          in the minority, among bureaucrats and politicians,
          ever since 1928.  In the Olmstead case, the 5-to-4
          majority gave the FBI permission to wire-tap suspected
          gangsters, and such wire-tapping is now widely
          considered to be a legitimate activity of government
          agencies.  
               By 1971, with the passage of the misnamed "Bank
          Secrecy Act" in the U.S., government access to private
          banking transactions became almost total.  This law
          commands banks, among other things, to microfilm all
          checks over $100.  The Bank Secrecy Act actually wipes
          away any pretense of privacy in banking transactions. 
          The U.S. government has virtually deputized the banker
          to enforce federal policies instead of the customer's
          wishes.
               The government does everything it can to control
          your financial life given the limits of technology. 
          Notice how often you are asked for your Social Security
          number, even for non-financial applications.  When you
          apply for any kind of loan or credit application,
          notice the breadth and depth of information which goes
          on your record -- some of it having nothing to do with
          finances.  On your federal 1040 form each April, notice
          the information being requested in detail.  A complex
          return may include many pages of special schedules,
          listings of all companies paying you dividends, all
          banks paying you interest, etc.  It seems the
          government doesn't just want our money.  They want to
          know every detail about your life.
               This financial information is kept in public and
          private files all over the nation.  The IRS computer
          has every detail of your tax forms over the years.  The
          private credit files contain all the information you
          put on loan or insurance applications (health history,
          etc.).  All your former employers have files on you. 
          You would be amazed at the paper trail you have created
          by a lifetime of filling out forms.
               Back in 1928, when Justice Brandeis eloquently
          expressed what the majority of Americans (if not
          justices) believed, there was a great heritage of
          privacy and independence in America.  The 19th Century
          was the Era of Rugged Individualism.  People did not
          share personal or financial information with their
          neighbors, or even their children.  At the time,
          "Silent Cal" Coolidge was President and he exemplified
          the closed-mouth Yankee virtue of silence when he said,
          "I've never been hurt by anything I didn't say."  And
          that says a lot.
               Today, it is not uncommon to hear light cocktail
          banter about how much an investor has in T-bills, Swiss
          francs, bonds, etc., or to brag about one's "secret
          Swiss bank account" to a near-stranger, who just might
          be an undercover federal agent or informer!  We often
          hear people divulge their salary and outside income to
          anyone who asks, or broadcast the value of their real
          estate, cars, or other possessions.  The virtue of
          holding financial information in confidence has
          apparently been eroded badly since the days of "Silent
          Cal."
               In his novel, Cancer Ward, Alexander Solzhenitsyn
          presents an interesting imagery about what government
          reporting looks (and feels) like:  "As every man goes
          through life," he writes, " he fills in a number of
          forms for the record, each containing a number of
          questions.  There are thus hundreds of little threads
          radiating from every man, millions of threads in all,
          and if these threads were to suddenly become visible,
          the whole sky would look like a spider's web.  They are
          not visible, they are not material, but every man is
          constantly aware of their existence."
               It is possible to begin cutting away some of those
          threads, or at the very least to limit the number of
          new informational threads being attached to us.  We can
          all begin giving out less information about ourselves. 
          It's possible to conduct financial matters without
          using checking accounts, which are microfilmed, or
          credit cards.  You can use cashier's checks, traveler's
          checks, money orders, or cash.  There are many ways to
          keep your financial affairs more private, including
          having an offshore bank account and trust.
               If you compare the practices of your U.S. bankers
          to the practices of offshore bankers, it will become
          obvious to you that foreign bankers respect your money
          and your privacy, while U.S. bankers usually do not. 
          This is one of the reasons that U.S. banks have
          attracted only a small share of business from savvy
          foreign investors.  None of the top 25 banks in the
          world is now a U.S. institution.
               America's economy will get worse before it gets
          better.  Today there is a large and violent dependent
          population who demand that politicians protect them
          from falling living standards.  But governments cannot
          deliver on this expectation.  They are more bankrupt
          than ever before, and likely to become more so.  The
          impact of information technology will result in tens of
          millions of low-skilled service workers being made
          redundant in the next few years.  This will lead to a
          further shortfall in tax revenues, and more demands
          upon politicians to redistribute income from an empty
          pocket.
               A crisis looms ahead.  Desperate for money,
          politicians will raise taxes, impose exchange controls
          and institute other policies designed to confiscate
          wealth wherever they find it.  No doubt, they will
          attempt to dilute the value of your capital through
          inflation.  And as investors turn to gold as a
          protection against inflation, you can expect history to
          repeat itself.  The authorities in the United States
          confiscated private gold holdings in the depression of
          the 1930s.  They may seek to do so again in the
          depression of the 1990s.
               Now, with the Clinton administration, we have both
          a president and a Congress who firmly believe in the
          redistribution of wealth as a social goal.  It is
          important to keep in mind that these goals and
          attitudes are going to be with us throughout the
          Clinton administration -- it is not enough just to
          focus on whatever proposals might currently be pending. 
          Already, in the debates on the various estate tax
          proposals, members of Congress are being heard to say
          things like "people shouldn't be allowed to take it
          with them -- it must be distributed to society."
               To quote Harry Browne, the famous author of
          numerous books on investing:  "Never keep all your
          wealth in the country where you live.  Keep part of
          your assets hidden and beyond the government's reach." 
          Only then, he writes, will you "know you own something,
          somewhere, that the government isn't going to get its
          hands on."
               We can't pretend to know exactly what nasty
          surprises the government has in store for us next, but
          Doug Casey, noted contrarian and editor of Crisis
          Investing, put it very well when he said that "one of
          the fixed points in the cosmos is the stupidity and
          malevolence of government."
               Most nations of the world eagerly welcome foreign
          capital, offering tax advantages and favorable interest
          and exchange rates to woo investors' capital from other
          nations to their own.
               Sending a portion of your capital outside your own
          nation requires that you sharpen your awareness of a
          whole new set of economic and political indicators. 
          Each nation has different regulations, taxes and
          exchange restrictions, not to mention the limitations
          on personal freedoms of speech, assembly, religion and
          petition of grievances.  It makes sense to compare
          nations as carefully as you compare brokers, bankers,
          bond ratings or any other investment you make.
          
          
          Investing abroad protects against government intrusions
          into private financial matters
          
               Officials of the U.S. Drug Enforcement Agency are
          trying to get bank authorities in other countries to
          cooperate in a new scheme to collect information on
          senders and recipients of bank transfers.  The idea is
          to prevent money laundering, which is the movement of
          the proceeds of crime into legitimate banking circuits
          through a foreign account that cannot be tracked.
               When profits from the drug trade are used to buy
          more drugs, there is no need to involve legitimate
          banking circuits or make wire transfers; cash is an
          acceptable mode of payment.  It is also the way drug
          lords acquire cars, yachts, gold chains, art, and even
          real estate.
               When the criminals have made so much money that
          they can no longer spend it or reinvest it in the drug
          business, however, they want to be able to buy stocks
          and bonds, life insurance, and legitimate businesses. 
          For this they need bank accounts, checks, and bank
          drafts.  You cannot deposit large amounts of cash into
          a U.S. bank without a record's being kept, so drug
          dealers are inclined to use foreign banks.  The Drug
          Enforcement Agency seems to think that wire transfers
          are also being used by drug dealers.  Therefore, the
          DEA is trying to monitor all such transfers.
               The fight against drug dealing seems to entail
          trying to collect all information about movements of
          funds between the United States and accounts abroad. 
          Of course, this information yields more than just what
          American criminals are up to, and therein lies the
          problem for the honest investor.
               Data on wire transfers could determine which
          Americans hold overseas accounts to check on whether
          they are reporting their existence (as is required by
          law if $10,000 or more is held abroad).  This same
          information could be used to check up on American
          holdings abroad to enforce tax laws, inheritance laws,
          bankruptcy rulings, or the results of malpractice
          suits.
               U.S. officials are focusing attention on private
          banking, which means large transactions on behalf of
          wealthy individuals internationally.  The key to the
          U.S. effort to crack down on money laundering is the
          Anti-Drug-Abuse Act, which requires that the U.S.
          Treasury negotiate with other countries to establish
          financial-information exchange agreements and encourage
          them to adopt bank reporting rules for U.S. currency
          transactions or ones originating in the United States. 
          If the Treasury reports that a country is not
          negotiating in good faith, the president is required to
          deny banks of that country access to the U.S. payments
          system.
               In addition, at the 1989 economic summit of the
          industrialized democracies, world leaders pledged
          cooperation to fight international movement of drug
          money.  The Group of Seven (G7) countries (the United
          States, Britain, Japan, France, West Germany, Italy,
          and Canada) subsequently held meetings about how to
          proceed in this.  Two G7 countries, Britain, Canada,
          are tightening their own laws on money laundering.
               In the Bank for International Settlements, which
          is the central bank for central banks, the U.S. Federal
          Reserve in January 1989 won agreement from the
          governors of central banks of the Group of 10 (G10)
          countries to make it harder for people to deposit cash
          in banks in their jurisdictions.  This is called the
          Basel Statement.  (The Group of 10 consists of the
          United States, Britain, Canada, Japan, France, West
          Germany, Italy, Sweden, Belgium, and the Netherlands.
          Switzerland, which used to be an observer, is now a
          full member, so the Group of 10 is made up of 11
          countries.)  The Basel Statement marks a major
          departure for G10 supervision, which hitherto involved
          international exchanges between supervisors rather than
          matters regarding details of individual depositors. 
          Hitherto, the G10 had followed the so-called Cooke
          Principles (defined in 1983 by a committee headed by
          Peter Cooke, chief banking supervisor of the Bank of
          England), which specifically provided for recognition
          of banking secrecy.  Now central banks will exchange
          information on individuals any central bank thinks are
          involved in money laundering.  Bank secrecy does not
          apply in these cases.
               The Anti-Drug-Abuse Act was passed by a Congress
          facing election pressure to get tough on drug dealers. 
          The law tightened currency-transaction reporting rules
          for financial institutions and gave the Treasury power
          to demand additional information in some cases.  This
          may include reports on transactions smaller than
          $10,000 for any 60-day period, which can be
          indefinitely extended.  The bank will have to provide
          the name, birthdate, and Social Security number of each
          customer.  Subsequent laws have done things like
          require reporting of money orders over $3,000, and
          reporting of cash receipts by car dealers, boat
          dealers, and other businesses.  Furthermore, the bank
          is not allowed to tell customers why this information
          is being requested.  A new $15 million database center
          has been created by the U.S. Treasury to deal with the
          data.  The Financial Crimes Enforcement Network
          (Fincen) will collect banking and personal data on cash
          movements among all financial institutions in the
          country and details of all wire transfers and all
          transactions involving sums in excess of $10,000.
               Furthermore, banks are required to report
          "suspicious activity" even if large currency
          transactions are not involved.  For example, the banks
          must use their judgment in reporting large increases in
          activity or a host of foreign transfers right under the
          $10,000 limit.
               It is expected that the fine-tooth-comb reporting
          rules will target areas suspected of drug dealing, such
          as New York and Los Angeles, as well as areas where
          drug smuggling is felt to take place, such as Florida,
          Arizona, and Texas.  Funds originating in target areas
          are more likely to be reported upon.
               In theory, the controls are on cash deposits. 
          There is a likelihood that banks will also be forced to
          keep track of large cash withdrawals.  These too are
          liable to be considered "suspicious."  If you want to
          deal in cash, you should consider moving your account
          to an area not subject to this kind of scrutiny. 
          Perhaps Ohio or North Carolina.  Also, remember that
          very little record is kept of cash withdrawals made
          through automatic teller machines or by using credit
          cards.
               Thus far, most foreign bank authorities have
          resisted the effort to set up a generalized system for
          reporting transfers originating in the United States or
          deposits of cash above a certain size.  What they are
          insisting on is a specific request from the U.S.
          authorities about funds originating in the account of
          someone who is under suspicion and proof that a court
          order has been issued in the United States to subpoena
          such information for good cause.
               In fact, some bank specialists think the new
          surveillance is not intended merely to track drug
          transactions.  The Treasury is also the parent of the
          IRS and in charge of administering reporting
          requirements on overseas bank accounts held by
          Americans.  So the motive may be to make money
          movements harder and more costly.  It can be argued
          that such rules are intended to dissuade residents of
          the United States from moving their funds overseas even
          for legitimate purposes.  Although the United States
          does not have exchange controls, it does have an
          increasingly onerous set of reporting rules.  And lest
          we suffer from short memories, it is only recently that
          American laws were changed to permit investments in
          gold and foreign securities.  During President
          Johnson's administration we even were threatened with
          "temporary emergency" exchange controls on foreign
          travel.
          
          The Securities and Exchange Commission
          
               The Securities and Exchange Commission (SEC) is
          not any more mindful of the borders of the United
          States than is the Treasury.  Of course, it too likes
          to collect data, and that is the main focus of its
          extraterritorial push through the newly created Office
          of International Affairs.  The SEC has agreements with
          Britain, Switzerland, Japan, three Canadian provinces,
          Brazil, the Netherlands, and France.  These try to
          ensure the "transparency and security" of international
          markets.
               Transparency means that information should be
          available about companies and trading; security means
          that investors are protected against fraud, insider
          trading, and manipulation.  In theory, this is a good
          idea.  In practice, however, the Europeans are already
          having second thoughts.
               The Dutch have one of the oldest stock markets in
          the business, and they have a very long relationship
          with U.S. markets.  The first American bonds issued
          outside the country were sold during the American
          Revolution to Dutch investors.  Several Dutch
          companies, notably Philips (Norelco in the United
          States) and Shell, actually have their shares directly
          listed by the New York Stock Exchange.
               What is worrying to the Dutch is that the SEC is
          now demanding documentation and reporting from these
          companies that exceeds what the Dutch themselves
          require.  (The Amsterdam "Beurs" is self-regulated, and
          there is no equivalent of the SEC at all.)  It is thus
          far asking for this information politely.
          
          Enforcing U.S. court orders abroad
          
               The Europeans noticed that the SEC wants to have a
          U.S. court order work in another country.  Some years
          ago, a grand jury in Miami ordered a Bahamian branch of
          the Bank of Nova Scotia to hand over bank statements of
          a defendant accused of evading payments to the IRS.  It
          is against Bahamian criminal law for a bank to disclose
          information about a customer without his consent; in
          this case, the customer did not consent.
               Unfortunately, the Bank of Nova Scotia had a
          branch, assets, and staff in Miami, subject to
          sequestration and possible imprisonment.  So the order
          was complied with after it had fought this outcome
          right up to the U.S. Supreme Court (in 1983).
          
          Compulsory waiver
          
               In the past decade, the courts allowed something
          called a "compulsory waiver."  Because most foreign
          laws contain a provision on bank confidentiality, the
          SEC started using subpoenas to bring parties before a
          court.  Then the court would order that they should
          consent to disclosure of their affairs.  If consent was
          not given, they could be imprisoned indefinitely for
          contempt of court.
               This procedure was used regardless of the Fifth
          Amendment, which provides that no person shall be
          compelled to be a witness against himself.  The U.S.
          Supreme Court in re Grand Jury Investigation (Doe v.
          US) "Doe II" ruled in favor of the SEC.  In effect, the
          ruling concluded that no Fifth Amendment violation
          existed because producing bank records was not
          "evidentiary" -- meaning that the individual is not
          being asked to testify against himself in violation of
          the Fifth Amendment.
          
          "Consent" may not mean consent
          
               Consent given in response to the threat of
          indefinite imprisonment hardly sounds like consent,
          which is defined as "voluntary agreement" by most
          dictionaries.  The issue came up again in SEC v. Wang
          and Lee at New York's Second Court of Appeals.  The SEC
          was investigating alleged insider trading and trying to
          recover vast sums of illegal profits.  The agency got
          New York District Court orders freezing Lee's assets on
          June 27, 1988, which purported to be effective
          worldwide.  These orders prohibited any financial
          institution's holding the assets of Lee and/or 35 other
          named individuals (said to be his accomplices) from
          allowing these customers to withdraw or deal with the
          money said to have been gained through insider trading.
               The bank affected was Standard Chartered, which
          operates a branch in New York and which had deposits
          totaling $12.5 million from Lee and his various parties
          in Hong Kong.  Ten days later, Lee's lawyers in the
          Crown Colony demanded payment of all money in the
          accounts in question.  Disobeying the New York court
          order made the bank liable to sequestration of its
          assets there, imprisonment of its staff for contempt of
          court, and other harassment.
               Meanwhile, the Hong Kong courts ruled that they
          did not regard the U.S. court order as valid.  A series
          of further orders were slapped on Standard Chartered to
          convert all of the deposits into U.S. dollars and pay
          the total to the New York court.
          
          Diplomatic protest
          
               The British government filed a diplomatic note of
          protest in Washington.  The British Foreign Office, the
          Bank of England, and the British Department of Trade
          and Industry tried to protect the bank by filing amicus
          curiae briefs in the appeal.  Other such briefs were
          filed by the New York Clearing House Association, the
          Institute of International Bankers, and the New York
          Foreign Bankers Association and were subscribed to by
          the British Bankers Association, the Canadian Bankers
          Association, the Committee of London & Scottish
          Bankers, the Hong Kong Association of Banks, and other
          bodies.
               The way the U.S. court had acted in issuing the
          orders, the British diplomats, government officers, and
          bank supervisors argued, was likely to lead to less
          respect for the law.  The amicus brief said, "The
          nature of the concern is that conflicting orders of
          courts of different jurisdictions affecting the same
          parties and the same subject matter cannot both be
          obeyed, so that the law of the country, the order of
          whose court is not obeyed, must necessarily be weakened
          and brought into disrepute."
               The brief also noted that there was no way the
          bank could fulfill its duty to its client under Hong
          Kong law and also meet the New York court orders.  "In
          the case of a bank it would often be the case that it
          would have branches in both of the jurisdictions in
          question, and so would be subject on the one hand to
          civil liability and on the other hand procedures for
          monetary penalty and imprisonment of its staff for
          disobeying the order of the court."
          
          Persecuting innocent bystanders
          
               The amicus brief also pointed out that the staff
          members of the bank, innocent of any wrongdoing, were
          subject to imprisonment and penalties, which is unfair. 
          It also noted that international "comity," the rules of
          polite conduct between nations, was being violated by
          the New York court.  "The difficulties of innocent
          third parties might be avoided and the comity of
          nations preserved if it was accepted that no such court
          would make orders with extraterritorial effect on
          parties against whom no substantive relief was sought,
          unless subject to the endorsement of the foreign court
          in question."
               The final result was a standoff.  In the end, the
          SEC agreed to an out-of-court settlement with Lee et
          al.  Lee "voluntarily" agreed to transfer the funds to
          New York.  Standard Chartered won a moral victory, as
          its costs were provided for, and it avoided having to
          pay out the $12.5 million twice.  But the District
          Court orders were not overruled, and no decision was
          made about their validity.
          
          Contempt for the law
          
               One result of the ham-fisted behavior of the
          courts, the SEC, the DEA, and the Treasury has been
          that other countries refuse to cooperate in cracking
          down on money laundering even when the indications of
          it are clearest.  By taking a broad-brush approach,
          American regulators are clearly hoping to catch
          violators of U.S. tax and securities law who are not
          drug smugglers at all.  By doing so, however, they are
          in fact making it easier for European banking centers,
          which want to ignore their efforts to do so.
               In the Swiss Federal Banking Commission
          investigation of the use of two Swiss banks by a pair
          of suspected Lebanese money launderers, the final
          report determined that no additional banking
          regulations were needed.  The laundering operation,
          which ended in mid-1988, transformed a total of nearly
          $1 billion (SFrl.4 billion) delivered in cash (bank
          note) form to the banks in Switzerland.  It was turned
          into deposits in 300 banks outside Switzerland and into
          precious metals investment.
               The Swiss simply decided to do nothing about their
          law (which one U.S. bank regulator called "as full of
          holes as their cheese") precisely because there was so
          much pressure from the United States to impose
          quantitative rules, which go against the Swiss grain. 
          The Swiss, in common with other banking centers
          dedicated to secrecy, will reveal client-account
          information if criminal charges have been brought. 
          They are not prepared, however, to operate a reporting
          system based on amounts (i.e., telling an official
          about any transaction worth over $10,000) as in the
          United States.
               Italy, which has become a channel for "dirty
          money," is treading very cautiously.  Although a
          Socialist politician, Rino Formica, has called for the
          lifting of Italian banking secrecy entirely, mainstream
          Italian officials point out that, in practice, Italian
          banks do not offer secrecy comparable to that offered
          over the border in Switzerland
               However, in parts of Italy, notably Sicily, cash
          is king, and one way to crack down on drug money may be
          to require that those dealing with their banks on a
          cash basis be identified.  One proposal being
          considered by the Italian authorities is that in the
          future anyone undertaking a cash operation involving
          more than 10 million lire be required to identify
          himself.  Ten million lire is $75,000, a rather
          considerable amount compared to the $10,000 used by
          American banking regulators.  Thus far, the measure has
          not been enacted into law.  Bluster and blunder by the
          DEA make it more remote.
               Here is what one European banker had to say in May
          1990 about the Drug Enforcement Agency effort.  The
          interviewer was John Doherty (who is managing editor of
          Private Banker-International, published in Dublin,
          Ireland).  The place was Vienna, Austria, a country of
          banking secrecy.  The speaker was Dr. Fritz Diwok of
          the Verband Oesterreichische Banken und Bankiers, a
          bankers' organization:
               "In common with other countries, we believe we
          cannot react when we receive a list of 1,000 Panamanian
          names, starting with the general and director of the
          airport, then their girlfriends, and then their
          relations, with no indication as to whether these
          people have committed a crime."
          
          
          Investing abroad is neither immoral nor unpatriotic
          
               Should you support the government's efforts to
          keep your money captive within borders on the basis
          that it is patriotic, good for the nation, ethical, or
          moral?  No.  In fact, you are doing your country a
          favor by helping to secure and enlarge your investment
          capital.  No matter which country you call home, you
          are more likely to invest the ultimate proceeds of your
          estate to the benefit of your fellow countrymen. 
          Therefore, the only real question is whether you have
          the capital to invest, or whether you allow that
          capital to be blocked and perhaps ultimately taken away
          by politicians.  Only by placing your money in a sound
          offshore platform can you guarantee that compound
          interest will be allowed to work for the benefit of
          your country and not against it.  A wealthy Englishman
          who is a client of Lord Rees-Mogg offers this
          compelling example of what is at stake.
               British tax law, which is far more enlightened
          than U.S. law, does not impose income tax on British
          citizens not normally resident in the United Kingdom. 
          This enables British citizens to accumulate wealth more
          easily than Americans.  What is the difference over a
          lifetime in having investments compound offshore free
          of tax rather than onshore, where the British
          government would take 40% of any profit?  It is
          enormous.  Taking the actual return achieved over the
          past decade on his portfolio -- an annual 20% gain --
          about what George Soros has averaged since the 1960s --
          Lord Rees-Mogg's friend found the startling result.
               The untaxed portfolio was 1200% larger than the
          taxed portfolio.  It was the difference between having
          $8 million after 40 years and $100 million.
               When you think about that, it raises a frightening
          question of who will own the world's wealth in 30-40
          years.  The answer is that little of it will be owned
          by Americans.  Because European, Latin American, and
          Asian investors, particularly the Chinese, overwhelming
          compound their profits in offshore centers where they
          are not taxed, most of the world's money will
          inevitably gravitate into their hands.  Investors in
          low-tax or no-tax jurisdictions will control the wealth
          and make the investment decisions that will determine
          the economic destiny of the next century.   If those
          investors are mostly European, Chinese, or Latin
          American, the only result to be expected is that
          Americans will be shut out of the economic future --
          just as other people without capital are shut out
          today.
               If taking your money offshore allows you to
          achieve even a slightly higher rate of return -- thus
          allowing compound interest to work more for you than
          against you, you could be helping to secure a better
          future for future generations of your countrymen --
          perhaps including your own children and grandchildren. 
          The lower the after-tax return you realize on your
          investments today, the weaker America's competitive
          position tomorrow.
               Asset protection through the use of international
          financial strategies and diversification requires
          considerable initiative, alertness, determination, and
          dedication.  Not that it doesn't pay.  Sad to say, the
          net gain from each hour dedicated to protecting your
          wealth is almost certain to be higher than the net gain
          from an hour of productive employment.  Thanks to
          "progressive" taxation, this goes double for someone in
          a high federal tax bracket, especially for residents of
          high tax states like New York and California. There is
          also a psychological dimension that must not be
          neglected.  Most people derive a "clean" feeling from
          making a living through their work, but feel that there
          is something "dirty" about "scheming" to reduce their
          taxes.
               Heavy taxes, whether used to provide luxury for a
          ruling elite or to support welfare schemes, always have
          the effect of penalizing individual initiative and
          productivity, reducing investment capital and thus the
          resources required for economic growth, reducing the
          standard of living, and forcing individuals to hide
          things, both activities and incomes, from the
          government and from one another.  Heavy taxation is,
          therefore, a danger to the future of the high-tax
          countries. 
               Internationalizing assets assumes at the outset
          that the investor has assets that are available for
          investment.  It also assumes that a viable means of
          doing so exists in the contemporary scheme of world
          business; and ideally, a plan exists that includes
          short- and long-range investment goals. 
               The morality of taxation changes with the times. 
          Prior to World War I, when taxes were comparatively
          low, though certainly not popular, most workers and
          small businessmen were exempt from the controversy by
          virtue of low incomes.  During times of national
          emergency, particularly during and directly following
          World War II, tax avoidance was frowned upon even by
          those who were looking at larger tax liabilities each
          year.  But as progressive tax rates brought taxes
          higher and higher each year in highly industrialized
          and populated nations, the attitudes of taxpayers
          underwent a gradual, but definitive change.
               Today, even the individual worker for whom the tax
          system is supposedly designed, can see that a tax
          system in which higher income brackets produce
          progressively higher tax rates is stultifying to
          individual initiative and productivity.      Investors
          feel not only duty-bound but morally obligated to use
          the legal tax avoidance measures available to them. 
          Whether the tax loss to the nation is through using
          domestic tax shelter strategies, or through the use of
          an international financial center, the avoidance
          principle is exactly the same.  From a purely pragmatic
          viewpoint, legal tax avoidance by an investor may be
          simply a means of economic survival for himself and his
          family. 
               The "losers" in this business of tax avoidance are
          presumed to be the heavily industrialized, heavily
          populated, and heavily taxed countries of the world. 
          If two nations could personify this description, they
          would be the United States and Great Britain.  Yet the
          attitudes of these governments toward tax avoidance is
          ambivalent to say the least.  The United States, for
          example, actually established itself as a tax haven for
          foreigners by not imposing a withholding tax on
          interest paid to foreigners on their U.S. bank
          deposits, and allowing foreigners to buy, hold, and
          sell U.S. securities without incurring a capital gains
          liability. 
               There are, of course, economic reasons to justify
          these tax rulings (a reversal of the ruling on interest
          paid on bank deposits would remove billions of dollars
          from U.S. banks.)  This being the case, we can say that
          there is no external threat to tax avoidance from free
          world nations.  The United States, the United Kingdom,
          and Switzerland are all involved in the business of
          providing a haven for foreign investors to protect
          their assets.  The citizens of each frequently use the
          other for international diversification, and none is
          likely to try to put another out of business.
               The arguments that apply to taxation apply even
          more strongly to asset preservation through
          international diversification.  Much of the growth in
          China today is being funded by Chinese investors in
          Hong Kong who got their capital out of China during the
          communist takeover, and are now providing the funds to
          restore capitalism to their country.
               Preservation of wealth often involves a timely
          decision to move capital from one place, or one form,
          to another.  Many times capital would have been lost,
          if it had not been wisely redeployed as circumstances
          changed.  Capital is always under political threat when
          it is in a minority.  The periods of greatest risk are
          times of public disorder when many are impoverished, or
          losing income, and only a few are wise enough or lucky
          enough to preserve their wealth.
               In 1931, Britain went off the gold standard.  At
          that time, investments in gold coins could be bought
          for 100 pounds which would now sell for 50,000 pounds,
          while government bonds could have been bought for 100
          pounds which would now sell for 30 pounds.  Yet in
          1931, government bonds were thought a safer investment
          than gold coins, and were the only investments allowed
          for most trustees.
               This shows how families can very rapidly be
          reduced from prosperity to poverty.  The difference
          between two investments in one lifetime could easily
          amount to one investment rising 12 times as fast as
          inflation while the other falls to no more than one
          percent of its original purchasing power.  Take the
          experience of what happened in one generation in
          Britain as a likely model for what lies ahead for North
          America.
               A government wrestling with economic decline is
          almost driven by the logic of the political system to
          destroy capital.  Allowing it to destroy yours is not a
          rational path to prosperity or security.  To whatever
          extent the politicians succeed in overtaxing your
          wealth, they are likely to waste the money in counter-
          productive income redistribution.  The more you feed
          the crocodile, the bigger it grows.
               The one clear answer is self-protection.  But how? 
          The rest of this book will show that there are ways --
          perhaps none of them perfect -- but apparently just as
          legal and prudent as less imaginative ways of investing
          your capital.
               If you want to gain a good understanding of how
          the government views tax havens, University Microfilms
          International, through its Books On Demand program, is
          now making available Tax Havens and Their Uses by
          United States Taxpayers by Richard Gordon.  Frequently
          referred to as "The Gordon Report," this was a 1981
          U.S. Treasury Department study prepared at the request
          of Congress.  It gives considerable detail and examples
          of the uses of tax havens.  It is available from
          University Microfilms for $67.30 softbound, or $73.30
          hardbound.  Out of print for over a decade, anyone
          interested in tax havens who has not studied the work
          will find much still useful information in it.  Copies
          can be ordered through booksellers, or directly from
          University Microfilms International, 300 North Zeeb
          Road, Ann Arbor, Michigan 48106-1346; telephone 800-
          521-0600 or 313-761-4700.  The UMI catalog number of
          the book is AU00435, and UMI accepts Visa or
          MasterCard.
               Today, even the major firms that had no
          international involvement are heavily promoting
          international investments.  Merrill Lynch has created a
          series of global and international funds, including the
          Merrill Lynch Developing Capital Markets Fund, Merrill
          Lynch Dragon Fund, Merrill Lynch EuroFund, Merrill
          Lynch Latin America Fund, Merrill Lynch Pacific Fund,
          Merrill Lynch Global Allocation Fund, Merrill Lynch
          Global Bond Fund for Investment and Retirement, Merrill
          Lynch Global Convertible Fund, Merrill Lynch Global
          Utility Fund, Merrill Lynch International Holdings,
          Merrill Lynch Short-Term Global Income Fund, and the
          Merrill Lynch World Income Fund.  And this long list of
          funds is now being mass marketed to Main Street
          America.
          
          
          Having some of your assets offshore -- in an offshore
          bank account, money management account, or revocable
          annuity -- will also provide a degree of protection
          against creditors and lawsuits. 
          
               By the time a claimant receives the proper
          authority to access your assets, in many offshore
          jurisdictions you could have the account moved to
          another jurisdiction.  The claimant may give up on
          those assets rather than continue to chase them.  Some
          types of foreign assets -- particularly some
          annuities -- cannot be seized by creditors at all.
               Asset protection is a hot topic these days, nearly
          a fad.  Which means that you need to be extremely
          careful -- the waters are full of sharks.  There are
          things that you can do to protect yourself, but you
          don't necessarily need a shark with "attorney at law"
          after his name to charge you from $10,000 to $75,000 to
          do it.  But if you assets are large enough, that price
          might be cheap.
               Seminars on asset protection are being held across
          the country, usually to try to sell the wealthy on the
          need for immediate (and expensive) protection.  Many of
          the techniques are valid -- many are not -- and they
          can work just as effectively for the non-millionaire
          with assets to protect.  Because America's civil law
          has become a lottery in which vast judgments can be
          lodged against anyone for unpredictable reasons. 
          Simply having visible wealth in America is an
          invitation to trouble.  Consider:
          
          * Inadequate insurance
          
               A doctor works all his life to provide competent
          and effective care for his patients.  A surgery leaves
          a patient crippled.  No surgeon is 100% successful, but
          the jury in the malpractice suit awards the plaintiff
          $15,000,000, an amount greater than the policy limits. 
          Or worse, the insurance company fails and there is no
          protection.
          * Partnerships
               A law firm is having its monthly partners meeting. 
          They send out for lunch.  Most want pizza but one wants
          a pastrami sandwich.  Their secretary decides to go
          pick it up.  Unknown to the twelve partners this person
          has a horrible driving record.  On the way back the
          secretary runs into a group of pedestrians.  The police
          arrive.  The secretary eats the pastrami and the
          partners are sued.  A judge decides that they are
          liable as the secretary was performing an act for the
          partners in her ordinary course of employment.  The
          jury, sympathetic to the victims and enraged by the
          driving record awards $3,000,000 in damages.  As
          partners all of the lawyers are jointly and severally
          liable.  In effect, the jury has awarded the plaintiffs
          three condos, two sail boats, three houses, nine cars,
          and twelve installment notes.
          
          * Directorships
               It used to be an honor to be a director of a bank,
          savings and loan or prominent business concern.  Today
          there are over 2,243 directors of banks and savings
          institutions being sued.  One hospital failed and the
          IRS sued its community advisory board for unpaid back
          taxes.
          
          * Simple Ownership
               A land speculator bought a parcel for subdivision,
          held it for one week and sold it to a developer. 
          Later, after houses were built, a homeowner who was an
          environmental engineer noticed an old buried drum.  It
          contained a deadly toxin.  The Environmental Protection
          Agency held the site to be a "superfund" site.  The
          largest law firm in the world, Uncle Sam, began an
          action against the landowners.  The suit brought in the
          land speculator.  Although the total invested was only
          $100,000, the inferred liability exceeded $30,000,000. 
          Under the law this can never be discharged.  The
          corporate builder and corporate developer collapsed
          leaving the individual land speculator to carry forever
          his modern scarlet letter.
          
          * Joint Ownership
               Mom with the best of intention deeded her house to
          joint ownership with her son.  She intended to avoid
          probate, taxes, etc.  Unfortunately, a tax shelter that
          he participated in resulted in an unfunded tax
          liability of $75,000.  The son was a little down on his
          luck at the time of the tax levy.  IRS can seize and
          sell the house according to the United States Supreme
          Court.
          
          * Inferred Liability
               A woman answers a knock at the door and lets the
          IRS agent into her house.  the IRS agent gives her a
          bill for over $100,000 of back taxes, penalties, and
          interest with her ex-husband's name.  Apparently he was
          a little creative with his filings, while she simply
          signed their joint return.
          
          * Inadequate Corporation
               Almost everyone knows that you may use a
          corporation to shield liability from its shareholders. 
          Unfortunately most people fail to follow all the rules
          about keeping the corporate papers and procedures up to
          standard.  A good attorney has an excellent chance of
          penetrating the "corporate veil" and going directly to
          the officers', directors' and shareholders' pockets.
          
          * Charitable Adventures
               It is a sad but true statement that the prudent
          person today should refrain from serving in any
          responsible capacity for a charitable organization. One
          of the largest items on the national Boy Scouts' annual
          budget is their legal expense.  Two scoutmasters take a
          number of boys camping.  Boys will be boys, and not all
          scoutmasters are always perfect.  The scoutmaster who
          was not at the lake while his partner allowed rough
          play to cause a drowning may be held equally liable as
          he accepted responsibility for all of the children.
          
          * Childhood Dreams
               You are so proud of your child.  She has
          progressed well in school and been responsible in all
          her habits.  For a seventeen year old, she is
          remarkable.  She does, however, like rock music.  While
          returning from the grocery with your salad fixings her
          favorite new song is played on the radio.  She turns up
          the volume on your expensive car stereo.  Way up.  She
          does not hear the siren of the rescue vehicle
          overtaking her to pass.  The ensuing wreck leaves a
          trail of havoc that leads right into court.  Your
          insurance company settles the first case for policy
          limits leaving you high and dry on the other cases. 
          Being responsible for her until emancipated, you are
          left holding the bag for her accident judgments.
          
               You can fill in many other examples from the
          newspapers or the experiences of people you know.  If
          you do not keep some of your assets beyond the reach of
          U.S. courts you are courting financial ruin.  This book
          gives you the background needed to begin the process of
          lawsuit and asset protection.  It is not designed as a
          tool to prevent one from paying his normal and ordinary
          debts.  But the extraordinary and unintended financial
          calamities that can occur too easily in our litigious
          world can be defended against with these techniques.
               Asset protection is just one of the reasons for
          international diversification of your investments. 
          Even with no asset protection issues involved, the
          international diversification is important from an
          economic viewpoint.
          
          
          Understanding the investment risks
          
               Higher returns and greater diversification are
          compelling reasons to add foreign securities to your
          portfolio.  But before you consider any type of
          international investment, it is important to understand
          the risks that accompany the added benefits.  In the
          short term, international stocks may fluctuate in value
          more than U.S. stocks, due to currency fluctuations as
          well as political and economic events.
               Foreign securities are purchased and traded in the
          currency of the home country.  This means when you buy
          foreign stocks, your U.S. dollars must be converted
          into the local currency; when you sell, the currency is
          then converted back into U.S. dollars.
               As a result, movements in the local currency
          relative to the U.S. dollar also bring changes in the
          value of your foreign investment.  When the dollar
          weakens, your foreign investment increases in value;
          when it strengthens, your investment drops in value. 
          If, for example, your Japanese stocks rise 12% and, at
          the same time, the U.S. dollar moves up 4% against the
          yen, your net gain is only 8%.
               The reunification of Germany.  The collapse of the
          Soviet Union.  Civil war in Yugoslavia.  The past few
          years have provided ample evidence that many
          governments are considerably less stable than the
          United States.  And, political instability clearly
          affects investment values and share price volatility.
               Economic events can also have a greater impact on
          the value of foreign stocks than on U.S. stocks.  This
          is because many economies are less diverse than that of
          the United States.  For instance, a poor coffee crop
          would cause greater damage in Brazil's overall economy
          than a poor orange crop would to the U.S. economy.
               In deciding which category of international
          investment is right for you, consider which best
          matches your risk tolerance.  Generally speaking, the
          broader the geographical area you invest in, the less
          risky it's considered to be.  The more targeted the
          investment, the greater the growth potential -- and, of
          course, the risk.  For example:
               * If your objective is to diversify your portfolio
          but you're uncomfortable with high volatility, you
          might consider a broadly diversified managed
          international portfolio, or a mutual fund.  This type
          of investment also has appeal for investors who do not
          have enough time to regularly monitor the international
          markets.
               * If your primary interest is growth and you're
          willing to take more risk for potentially higher
          returns, then you may want to choose a targeted
          investment that focuses on a specific region, country,
          or emerging market.  These investments are also
          attractive to investors who prefer to track individual
          markets and events more closely.
          
          
          Don't do illegally what you can do legally
          
               One of the problems of global investment strategic
          planning is the naive fool who breaks laws without
          thinking through the consequences.
               For example, as a consultant, I once had a call
          from a certified public accountant in a major American
          city, who said he had a number of clients who wanted to
          establish "secret" bank accounts in the Cayman Islands. 
          He said his clients were paying all of their taxes, but
          were very concerned with secrecy, and wanted to be
          certain that the U.S. government would not learn about
          the accounts.  
               He became greatly offended when I explained to him
          that all of his clients were crooks.  I explained in
          detail that no U.S. citizen (or resident) could have a
          "secret" bank account, because it is a felony to fail
          to immediately notify the government of the existence
          of the account.  The penalties for such secrecy at that
          time were far worse than any possible tax offense --
          today the penalties have been increased so severely
          that no American should even contemplate such a
          violation.  One bribed bank clerk (perhaps for a mere
          $100) in a so-called secrecy jurisdiction could put the
          client in prison for 10 to 15 years under new mandatory
          minimum sentencing laws.  There are numerous legitimate
          ways that a U.S. citizen can make foreign investments
          without running afoul of these draconian laws.
               The most dangerous fools -- to themselves as well
          as to everyone they deal with -- are those individuals
          who fail to understand the serious implications of
          their actions.  They deal with lawyers, accountants,
          and/or bankers as if there was nothing legally wrong
          with their actions, and then seem startled when the
          family accountant or banker facing many years in prison
          testifies against them, because he was dragged into
          something he had no intention of being a part of.  Or
          worse, they wind up blurting out their incriminating
          intentions to a lawyer or accountant who immediately
          notifies the authorities, frequently setting a trap for
          them.  (Remember, lawyer-client confidentiality does
          not apply to stating an intention to commit a crime,
          and the lawyer is legally obligated to report it.) 
          Many U.S. professionals today (perhaps fearing a
          possible set-up by authorities) venture on the side of
          caution and immediately report such approaches.  This
          is no secret -- it has been recorded in many, many
          court cases, but the naive clients continue to get
          convicted.
               The penalties for most of the bank secrecy and
          money laundering crimes (money laundering includes
          moving unreported cash, even if you are the legal
          owner) are several times the penalty for armed bank
          robbery.  
               Most of these people would never consider
          committing a bank robbery, and if they were to plan
          such a crime they would choose their partners with
          extreme care, and full awareness of the consequences by
          all parties concerned.  Yet they think nothing of
          committing financial crimes with far more serious
          penalties, and cavalierly involving others, as if it
          was a big joke and nothing to be seriously concerned
          about.
               There are enough legal means to accomplish the
          same ends that nobody needs to commit these crimes.
          
          Be prepared
          
               At any point in time, there are always some
          potential catastrophes waiting in the wings.  Most
          never occur.  The ones that beat the odds, however, are
          the ones that really clobber us.
               That's why you should take reasonable precautions
          now to diversify your savings abroad.  After all,
          taking steps to guard against the unexpected is what
          prudence is all about.  This guide will show you
          exactly what to do and who to contact to help you do
          it.
          
          
          
          
