Turned out to be a good bet for a while, until our credit crisis became a global disease… and even stellar markets had their corrections.

But now, on the slightest bump up in the dollar, some analysts are now questioning whether emerging markets is the best place for your cash. Some say that U.S. stocks are a better bet than foreign stocks.

What’s really going on is that other major currencies, like the euro and the British pound, are being hit by recession fears and the possibility of more bank write-downs.

The dollar hasn’t really risen that much on its own yet. We’re still seeing poor housing numbers and sky-high inflation. There have been bright spots in the U.S. economy, and I won’t deny that things are starting to look better, but a major shift back to holding only U.S. assets in your portfolio is a big mistake.

There are still some great choices out there in foreign markets, and the number of ways to access them as investors grows every day. Just look at the number of ADRs available for Latin American countries.

And get this: 2008 GDP growth for Latin American countries as a unit has been revised up 0.1% since the first quarter of 2008. Look at these projections for the year:

Argentina: 6.7
Bolivia: 4.5
Brazil: 4.6
Chile: 4
Colombia: 5.1
Costa Rica: 4
Cuba: 6.4
Dominican Republic: 4.9
Ecuador: 2.6
El Salvador: 3.1
Guatemala: 4.4
Honduras: 4.4
Jamaica: 2.3
Mexico: 2.4
Nicaragua: 3.5
Panama: 7.9
Paraguay: 4.2
Peru: 7.5
Uruguay: 5.3
Venezuela: 5

Investors would be fools to ignore some of these growth numbers.

Is it time for U.S. investors to come home to U.S. markets? It’s not for me to say for sure… I’m at least a little wary about this recent uptick in the dollar, and I’d like to see it rise of its own accord before I advocate for more U.S. stocks.

That said, there are deals to be had in U.S. markets, and in global markets for that matter. Without the euphoria of a bull market (or a bubble?) it boils down to fundamentals and value. And that goes for all investments worldwide.

Source: Dollar Turn-around Has Analysts Questioning Emerging Markets

The family had nothing… No utilities. No running water. My “bedroom” had a dirt floor. We ate chicken with rice and beans twice a day.

They wouldn’t accept our money for anything. They were just happy to have something interesting happen… They had some gringos in the village to learn from and talk with.

When we left a few days later, we each placed a $20 bill on our beds. That was $60, total. We wondered if it was the right thing… In this isolated village three hours from Managua, could this family even use U.S. dollars? And then, what was the right amount to leave? Back then, $60 was a month’s pay in Nicaragua! Did we leave too much?

I’m in Nicaragua today, 15 years later, just a couple miles from where I met Alfonso. I asked about Alfonso today. “Alfonso? Oh yes, he is still in the same place. He has a pulperia on the side of the road to Popoyo.” A “pulperia” is a Central American Spanish word for a little corner store. “He’s serving the surfers.”

Good for him! When I first visited in 1993, I came to surf. I believe we were the only surfers in the country at that time. And if teenage Alfonso hadn’t hopped in our car to show us, we never would have found Popoyo Beach – and the amazing surfing waves we’d come for. Today, surfing has boomed in Nicaragua. The Popoyo area is unrecognizable from what it was… It’s gone from literally nothing to a bustling community of surfers. Hotels, restaurants, neighborhoods, high-speed Internet, cell phones… all the comforts of home. Thousands of people surf in Nicaragua now. And Popoyo is still “the” spot.

I returned to Nicaragua in 1998 to look at a massive project called Rancho Santana that some friends were putting together. They wanted to build a world-class beach community like Nicaragua had never seen before. When I arrived at the project, I couldn’t believe it… Rancho Santana was just a couple miles from where I’d stayed five years before. We were three hours away from the Managua airport and had to drive over many bad dirt roads. Yet the big rock cliff of Popoyo was easily visible.

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My friends bought the Rancho Santana property because of the beauty… “It’s like California – 100 years ago,” they said. They had no idea they were in Nicaragua’s prime surfing zone. I ended up buying a lot in Rancho Santana immediately. I built a beach house there – one of the first houses built in Rancho Santana.

The price of the lot I bought is probably now up over fivefold in the 10 years since I bought it. But you know what? Nicaragua is still cheap…

Quite frankly, it was a gamble buying back then… Rancho Santana was just a big dream. There was nothing but a pretty master plan. I figured the rental income could keep the house alive, and I could use the house myself to surf the great waves of the area.

Today, unbelievably, Rancho Santana is all a reality – a community of high-end homes. In fact, this Sunday, the U.S. Ambassador will give a speech at Rancho Santana, pointing to it as one of the great foreign investment success stories of the country. It’s much less risky to buy today, 10 years into it, now that you know it is a success, with nice homes and community amenities in place.

For years, I’ve said, “As long as Americans think of Nicaragua as Russia with palm trees, it’ll be a good buy.”

Yesterday, I talked to one wealthy Nicaraguan, who had fled the country in 1979 when things started to go downhill quickly in Nicaragua. He moved next door to Costa Rica. He told me back when he fled the country, Nicaragua was actually wealthier per person than Costa Rica.

He returned home when the dust settled around 1990. But the damage had been done… In the 1980s, the income per person in Nicaragua fell some 80%. And its reputation was tarnished in the process.

But the country has been a true democracy for 18 years now, since the election of Violeta Chamorro as President in 1990. Today, everyone here understands big projects like Rancho Santana create jobs. They know foreign investment like this is the way to increase income here.

And everyone knows Americans are the main source of that investment. Nicaragua is much different today than my first visit in 1993. Back then, the country had only a few paved roads outside of the towns. It hardly had any cars. And it had nothing like you’re used to at home.

Now – for better or worse – it’s extremely Americanized… I have five bars on my mobile phone, and I’m really in the middle of nowhere. I have wireless Internet access, and I don’t know where it’s coming from. And of course, you have shopping malls with all the American shops, American-style movie theaters, nice hotels, and fancy restaurants. It’s quite a big change.

The most extraordinary thing is the quality of life you can have here for so little money… It’s significantly cheaper than neighboring Costa Rica, though it’s barely any different. And on my last visit, we paid about $5 a day total for cooking and housecleaning, and they did a fantastic job. Many folks whom you wouldn’t call rich have a driver, a gardener, a night guard, etc.

If you’ve read my writings, you know I’ve traveled to dozens of countries. I can go anywhere. And the Pacific Coast of Nicaragua is the place I come back to in the summers. I enjoy an incredibly high standard of living, with excellent weather, cheaper and closer to home than anywhere else around.

It’s not for everyone. But don’t dismiss it. If you want to live like a king, without being as rich as a king, Nicaragua may be the best deal going. Check it out.

Good investing,

Steve

P.S. For more on Nicaragua, read my essay The Hamptons Life, On Less Than $100 a Day. And for more on Rancho Santana, click here

Source: Up Fivefold… But Still Cheap and Undiscovered