 G'day fellow investors. Today we're going to discuss an often overlooked part of an investment strategy and what is often overlooked are currencies. Nobody really looks at the long-term impact that currencies have on a portfolio and can potentially have. However, I really believe that the world will change in the next 10-20 years and especially the financial environment we have been living in in the last 40 years will shift to something new and to a new environment because of the economical global and macro trends that are going on. So it is extremely important to at least have some exposure to different currencies and especially to the best potential currencies in the world. And we're going to dig into what impacts the strength of the currency and how can we take the best advantage of that with our long-term investments. If you look at the SAP500 you might think you are well internationally diversified but you are 70% exposed to the United States, US dollar and then 40% international. However, you have to see where does the business come from those 40% international as we saw in other videos that 20% of the SAP500 are just 10 companies. So it's a lot of Europe, a lot of Euro, a lot of Canada. So you have to see how that fits your portfolio. Nevertheless, let's see what impacts the strength of a currency. Of course, the first impact is always demand and supply but that varies in the short term and in the long term is affected by economic performance, current inflation, expected future inflation, differences in interest rates, capital flows and then of course sentiment. Especially sentiment is what affects currencies in the short term. And there is a big difference when investing into long-term trends and currencies and short-term trends. Long-term I talk 5, 10, 20 years, short-term everything shorter than 5 years. If I would know where currencies will go in the next day, two days, five days, months then I would be extremely rich. So be very careful with those who tell you how to invest and how to trade currencies because those who really can't do that, they don't need additional capital and they certainly don't need anybody seeing what they are doing and sharing what they are doing. So be careful there. In the long term, we can prepare ourselves a little bit. Now let's start with economic growth. I have used my 1000 researchers, all the economic brain power I had to make up this table. We have come out with this table. Sorry I didn't do it. I took Ray Dalio's and Bridgewater's economic research to get the table but as we can use it for free, thank you Ray Dalio who shares this with the hope that it impacts policy decisions and political decisions in the long term to make this a better world. Nevertheless, we can still use it for investments and they have put a table about 20 countries and see which ones will perform better by looking at 81 economic indicators from productivity to depth. According to Dalio, two thirds of economic growth is related to productivity in the long term, one third to debt. So we have India is winner for the next 10 years, China, Mexico, Argentina, Thailand, Singapore, Brazil, Korea, Russia and then we have the developed world, United Kingdom, US, Australia, then Hungary, France, Germany, Japan, Canada, Spain, Italy and Greece. As you can see, the top countries are emerging market countries, the bottom countries are developed countries and this is where I think the shift will come in the next 10, 20, 40 years. As India, China are growing as those countries are developing, the financial world will slowly shift too. When that happens, the impact on the currencies will be very, very significant. As always, if you live in Europe, Japan, Canada, I didn't know it was such a bad situation in Canada. The United States is already much better so Europeans should really look to diversify towards United States currencies, United Kingdom, take advantage perhaps of the Brexit, Australia and then really look at emerging markets and how to diversify into emerging markets. If you are in the US, avoid Europe of course and then again look into emerging markets. I have here made a table to see inflation. We know the economics, let's see the inflation rates. In all the developed countries and bottom countries that we mentioned in the previous table is very low and what's very significant interest rates are below the inflation rate, which means central banks are still heavily stimulating the economies. However, in the emerging market countries the situation is opposite. China inflation 1.9, inflation outlook 5 years from the IMF, OACD and other sources is 2.5 and the interest rate is 200 basis points higher. So those countries emerging market countries are tightening their monetary policies in relation to the inflation rates. So those markets look much healthier than the developed world and this has to have an effect also on their currency values in the long term. Now the question is how to invest? You might think okay let's put into some ETFs and who cares? Again that's not the best idea. All those emerging markets fluctuate a lot during time. Sometimes some markets are cheap, sometimes they are expensive and that changes pretty quickly if you look it from again a long-term span. So if you go and diversify I would prefer to diversify into those markets that are currently not in favor and take advantage of their cheapness. Let's look at this fundamental global map if you type in starcapital.de you will get all that fundamental data of global markets and you can see that European markets are relatively cheap because due to their fundamentals but that is because of their negative outlooks. So I would be careful when investing in Europe. However we can see that in general China is very cheap, has a score of 9, 1 out of 40 here which is very good. Brazil has a score of 11 out of 40 again very good from a fundamental perspective and Russia is the top leader with a score of 3. So Russia is still the cheapest emerging market and we have seen above has a good economic outlook for the future. On the contrary India and the Philippines are too expensive for a fundamental perspective. So you should really look for international diversification but buy it when it's cheap. Buying something like that when it's cheap will really create cheap cheap opportunities to diversify and excellent long-term investments. So Russia, Brazil, China those are also the markets that we are focusing on this channel and will be digging deeper into investment opportunities in those countries. If your home currency weakens in relation to some other currency by 50% over the next 10 years that could have a huge positive impact for you if you are well diversified into emerging markets that will see their currencies strengthen that will give you a stronger dividend yield because of higher interest rates and positive interest rates in relation to inflation thus there is a positive gain there. So really I think that now especially as the dollar is still strong it pays to look abroad for investments. Thank you for watching I'm looking forward to your comments and I'll see you in the next video.