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Word on the Street in Nicaragua

By Dr. Steve Sjuggerud
Friday, November 10, 2006

"Sandinistas Retake Nicaragua," I wrote to you earlier this week. I was honest with you in my assessment about the new president, Daniel Ortega.

I ended the story by saying, "I wish I could tell you 'everything will be fine,' or even that it won't be fine. But I can't tell you either... because I don't know. Nobody does. Markets hate uncertainty, and it looks like we'll have uncertainty for a while with Ortega in power in Nicaragua.

"And while a kindler, gentler Ortega is the hope, his historical track record is to be feared. I will let you know more as I learn more and talk to friends down there. For now, I'm holding and hoping... just where I don't want to be..."

I've finally heard from a few friends - notably Mike Cobb from Gran Pacifica and Tommy Gordon from Rancho Santana. I have had consistently good experiences with both outfits.

Tommy Gordon said:

"Things will be fine here in Nicaragua with Ortega as its president...

"Now, there is a different Nicaragua in a different world than the last time he was president. There is no Soviet Union providing money and arms. Even if he wanted to, Ortega doesn't have the power to resurrect controversial policies like military conscription, private property confiscation, and censorship of the press. He doesn't control the National Assembly or the army.

"Mr. Ortega's ability to enact radical challenges is severely hampered by the National Assembly, which remains divided between four parties. To rule, he must reach agreements with the two conservative parties. Since he was in power last, the president's power has been curbed by constitutional changes pushed through in recent years, giving the assembly more say over cabinet positions.

"Unlike during the last presidency of Ortega, the Sandinistas are very involved in the tourist industry and land development. They are aware that it is to the benefit of everyone in the country that the economic policy will remain pro-foreign investment and non-interventionist. No one wants to put at risk the economic gains of recent years.

"Of course, there is no guarantee anywhere in Central America, but the picture of Nicaragua is a lot brighter than you have painted it."

Thanks, Tom. Well said.

Mike Cobb of Gran Pacifica told me nearly the same thing...

"Mr. Ortega is serious about his commitment to promote foreign investment and tourism. We anticipate public relations issues in the immediate future, but they'll largely be perception based... Remember too that the presidency is weaker due to laws passed by Oretga himself, and that the assembly has four major parties and should become a moderating force."

Now that we have a bit more to go on from Americans "on the streets" in Nicaragua, it appears that Ortega could turn out to be "kindler and gentler" after all.

I have been traveling to Nicaragua for more than a dozen years. I built a home there in the late 1990s. And I'll likely be building another one there soon. I have a good deal of experience in the country. But I am no expert. All I can do is share my honest thoughts, even if they're not what you want to hear.

I want to say thanks to you, as readers, for recognizing that. Right after the election, one reader wrote in and told me, "Thank you for having the courage to post your comments on Nicaragua today in your DailyWealthemail."

Nicaragua's coastline is beautiful. And property there costs a tiny fraction of the price of similar property in California or even neighboring Costa Rica. If Tommy and Mike are right, folks bold enough to invest there now should do extremely well. I'll keep sharing what I learn with you, as I learn it.

Good investing,

Steve

P.S. Tommy Gordon asked me when my next surf trip will be... The answer is, "This summer, of course - if not earlier!" As I explained in the August 14DailyWealth, Nicaragua is my version of the Hamptons, and I hope it will be for years to come with my family.





Market Notes


THE BEST TRADE IN 2006 GETS EVEN BETTER

We expected a rally, but this is getting ridiculous...

In the August issue of True Wealth, Steve described an incredible contrarian buying opportunity in stocks. As measured by the American Association of Individual Investors, 58% of individual investors expected the stock market to fall over the next six months. He told subscribers this:

"The last two times individual investors felt this strongly that stocks would fall in the coming six months, stocks roared. I believe that, on a reward-to-risk basis, this may be our best True Wealth opportunity of 2006. I suggest you put a good amount into this trade."

Putting a good amount into stocks back then has been an incredibly profitable trade. The leveraged mutual fund Steve recommended has climbed 24% since that issue - a huge return in such a short time.

Trading against the crowd... the True Wealth Way


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