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The stories in this book are all true. Its author has been held up at gunpoint at night on a road in Guatemala, and shot with a machine gun in the chest and shoulder in Vietnam. He’s come close to dying of thirst in the Sahara and freezing to death in the Himalayas. He’s contracted malaria and typhoid fever in Ethiopia. and hepatitis in India. There have been accidents involving motorcycles and automobiles. He’s had close calls involving lions (twice), elephants (three times) and a rhino (once).

He’s visited over a hundred countries; seen revolutions, famines, wars, and panty raids - feasted in palaces and fasted in caves. He’s discovered paradises, been saved by dolphin, hopped freight trains, danced with an 108-year-old woman, swam with sharks, frequented opium dens and whore houses, and met a man capable of revealing God. In the pages of this book you’ll meet the queen of the Ecuadorian prison system, a swami from Katmandu who makes his living picking up large stones with his penis, yak herders, tunnel rats, 300 pound go-go girls, deep sea divers, drug dealers, Indonesian princes, stock car drivers, beanheads, Bolivian miners, powder monkeys, hookers and saints.

Between the stories the author gives advice to would-be travelers, describes six tropical paradises where you can live comfortably on five hundred dollars a month, and includes his personal lists of the best things in the world.

When in America Mr. Linnemeier lives quietly with his long-term partner, Marcia Anderson, in a small Indiana town. He claims to have abandoned most of his previous vices, and has the stated aim of dying peacefully in bed at ninety five. In his own words, “I’m not the kind of person that men automatically defer to. I don’t usually make women’s hearts beat faster when they see me across a crowded room". That’s the point: You don’t have to be remarkable to live a remarkable life. If you’d like to lead an adventurous life but feel that you’re too young, too old, too poor, or too tied down with responsibilities, then read on.

Living Internationally #1

Often when I talk with someone about how I've lived my life they'll reply, " Sounds like fun but I can´t do it because of my family/mortgage/career/age or whatever. Also there´s the issue of money--how do you support yourself? None of these factors are insurmountable. In fact they can be opportunities.

Let´s start with kids. Maybe your kids are in the midst of school.

By now I´ve been to over 100 countries and circled the Earth quite a few times. Circling the globe makes for a good trip since there´s no need to backtrack. In one of my favorite around the world trips I left America with my wife and 1 year old child. Six and a half years later we arrived home with more money than when we left. By the age of 7 my son was up to speed for entering the 2nd grade. In addition he´d gotten to know 40 cultures. He could tell you about the birds of Kenya, rug designs in Turkey, Hindu deities, Chinese ink drawing and a million other things.

Raising children on the road is so much easier than at home. I know this sounds funny to anyone who´s taken a 2 week vacation with their kids in America and found it an exhausting exercise. Let me explain.

First an observation. People in the 3rd world are crazy about kids. They can´t get enough of them. Whenever economists look at the size of families in the 3rd world they always look at it in economic terms--more helping hands, support in ones old age etc. This may have some validity, but in my opinion the main reason they have so many kids is because they like them. Besides, children aren´t so burdensome since everyone shares in child raising. The whole village raises a kid.

For several months on the trip I was referring to, my family and I lived on the tiny island of Lamu off the coast of Kenya.

For 2 or 3 hours in the morning my wife and I went through Jacques´ formal school lessons. Then he´d take off on his donkey Suzy for the rest of the day and hang out with his pals. Sometimes they´d be at our house but more likely they´d be fishing, swimming or whatever. Walking through our little village I found that I knew relatively few people by name but my son knew everyone---they loved him, he was welcomed everywhere.

When kids are real young, nannies are a tremendous help. The girls have had so much experience taking care of their little brothers and sisters that they're experts. It just takes the strain out of having kids, which is so much a part of parenting in the US and Europe.

Let´s talk about schooling for a bit. Home schooling is not as difficult and time consuming as you might think. I´ve used The Calvert School in Baltimore, also a secondary school program operated by Indiana University. One time I just coordinated with Jacques' regular school in Indiana. All this requires lugging a lot of books around and sending lessons back by mail to be graded by a teacher. These are then returned with grades and comments. This was 10 years ago. By now there must be dozens of internet possibilities which would make everything much simpler.

Traveling with kids means traveling slower and seeing things in far greater depth. Children will connect you with the locals in a way that nothing else will.

OK, now let´s talk money. How do you get the wherewithal to start and continue traveling? First an important principle: Work in rich countries , spend in developing countries. How to find out how expensive a place is? Get a hold of a Lonely Planet Guide to the place you´re interested in, then page through it checking prices for hotels, meals ,etc. The cheapest countries in the world are India, Indonesia, Nepal, Guatemala, Egypt, Ecuador, and Cambodia. Most middle class Americans could probably retire to any of those places whenever they feel like it. Why knock yourself out doing something you don´t like till your 65 so you can live in Florida in a trailer when you could be in a villa with a cook nanny and gardener on the shores of magnificent Lake Atitlan in the healthful climate of the Guatemalan highlands?

So how do you put the initial bundle together? Say you´re making $40K/yr. Just pretend you just got demoted to $30K/yr. Lots of people live on that. In a year you´ll have $10K--that´s a lot of money where you´re going.

A second principle: You have a skill that millions of people around the world are dieing to learn. You are fluent in what has become the international language--English. There are schools in virtually every non- English speaking country in the world desperate for native English speakers to teach students. Pay is especially good in Korea and Taiwan, but good everywhere ,at least by local standards. Incidentally, wages up to $85K earned outside the US are tax free.

You should be able to get a job strictly on your status as a native English speaker. A college degree will increase your salary as will a 3 week TESL (teaching English as a second language) course.

OK that´s one way to make money as you travel--there are many many more. I met an American guy once who made his living ($500/ night) putting on live sex shows in Japan--the mind boggles.

A very wealthy man was once asked the easiest way to make a million dollars. His response---find a country where something costs $2 and another country where the same thing costs $1. Then negotiate the sale of one million of them. It´s tougher than it sounds but the principle is valid. The Economist magazine has, what it calls the" Big Mac Index" in which the price of a standard commodity--the Big Mac is computed in dollars for all 228 countries where our famous burger is sold. Last time I checked it the most expensive BM in the world cost$4.58 (Switzerland) while the cheapest was in Indonesia ($.78).

The gap between wages is much larger. Minimum wage in India is $1/day. For what it´s worth, I made a considerable amount of money buying Indian software companies when they first listed on the NASDAQ. I´d seen how smart, educated and motivated those guys were. I knew that with the internet they would be able to compete head to head with software companies in silicon valley and I knew the differential in wages. That kind of knowledge is worth something.

OK, so you´ve got a house with a mortgage. This may be an opportunity not a problem. Can the property be rented for a positive cash flow while you´re gone? It could be a source of income. Of course, you´ve got to have someone you trust to run it--that´s essential. Any necessary coordination can be done by internet. Cyber cafes are ubiquitous in the 3rd world. Even if there is just a neutral cash flow it may be worth it since you´re still paying it off and it should be appreciating in value.

If rent won´t cover things consider selling it and buying something else when you get back.

When you get home and settled you might want to consider leaving your house as a rental and buying something new which in turn could become another rental on your next trip. Down payments and interest rates for owner occupied homes are lower than rentals and after you´ve lived in a house for a year it can be used as a rental. Check with your CPA or attorney about this but I think it´s a good strategy which eventually could set you free financially.

Six Tropical Paradises Where you can Live for $500/month

You have to buy the book if you want to find out...

A Lazy Man's Guide to Real Estate

I like real estate investing since real estate has a very strong tendency to appreciate over time, can be leveraged, and even has tax advantages. For an initial investment (so long as you intend to live somewhere for 3 years) buying a home can hardly be beaten. One caveat - as a rule of thumb the rent you can get monthly if you were a landlord ought to be about 1/100th the total cost of the house. Another way to look at it is, if you bought the house and were using it as a rental, could you get close to a neutral cash flow? Places like San Francisco fail these tests miserably. I'd be wary of markets like that. They're more likely to be housing bubbles as well.
Let's get to the basics.
Suppose you buy a $100K house for 10% down and the house increases in value by 5%. What was your profit from appreciation? Since the house is now worth $5K more and you had only $10K invested you made 50%!!! Furthermore, you have payed off at least a little of your loan, you've been able to deduct the interest on the loan from your taxes and you're even allowed to deduct depreciation on the house. What's more, you've had the fun of owning your own place, planting some trees and flowers, fixing it up the way you like it. It's one of life's little joys. For all those reasons, buying a home is a pretty incredible deal.
I can't emphasize enough that you should always look for real estate that is likely to appreciate.
How do you do that? Avoid things like condos out in the suburbs. Look for things that can't be duplicated - locations that can't be duplicated. Look for areas where there has been steady appreciation in prices. Anything next to any water is good, be it ocean, lake or stream, people love to be near water - so will you. Utah is good. Anywhere boomers will want to retire is good. Any town that has just instituted very rigorous zoning is VERY good.
Here's another strategy - one that I've used. I'd buy a home (as an owner occupied house interest rates are low, as are down payments). I'd live in it for 2 years, rent it out then take a leisurely trip around the world. When I got home I'd have a rental with a cashflow that was paying the mortgage on the first house. But now I'd be in need of a home again. I'd purchase a second one, repeat the entire process, leave for another extended trip etc. Now I'd have 2 rentals.
I repeated this 4 times. By this time inflation had begun to help me. All the mortgages were the same, (Never buy a variable one) but the houses had gone up in value, as had the rents. If rent prices appreciate at 5%/yr for 14 years, rents will double (it doesn't take 20 years - don't forget the power of compounding). You no longer have a neutral cash flow, you have a strongly positive cash flow. You might want to refinance a house or two that has increased in value (hopefully) and has been partially payed off by your monthly payments to the bank and get money out of the houses for other investments.
All this works only if : A. You buy houses suitable as either rentals or homes B. You keep them rented. C. You have someone reliable to collect rent, take care of maintenance etc. (agencies that specialize in this sort of thing tend to be pricey- just get some individual who's reliable) D. You buy houses that increase in value. E. Inflation continues (worldwide and throughout history deflation has been quite rare).
Some landlords do all their own repairs, yardwork, plumbing, etc. You make more money that way, but it's not my style. If the tenants tell me the toilet is broken I believe them and call a plumber. When old renters are moving out I pay them $100 to show the house to all prospective new renters. When someone telephones me to say that they like the place and want to sign a lease, I ask them to come by, put down their damage deposit and sign a lease.
I've got a standard 20 page lease that I've never read completely through. I have them sign it but then tell them, "Just pay the rent, be friendly and don't wreck things - everything else we can work out." That tends to work out just fine.
Finally, when you're ready to sell your houses, you can do it without any capital gains taxes if you live in each succeeding house for 2 years before selling it. No capital gains on selling your home.

Stocks I like 1/08/08

In general, I like Asia, don't like US stocks (US tech stocks can be great if you know something the market doesn't know yet, but presently I don't have any insight here), and don't like the dollar.
I put 20% trailing stops on everything I buy to avoid market meltdowns and bad stock choices. It takes emotion out of the mix which is always useful. It lets the winners run and cuts the losers - a good guiding principal. I've got a lot of Chinese exposure. Everyone knows 2 things about China. Number One: It's the future. Number two: There will be some major corrections along the way. I don't believe in market timing (though Schaeffers Early Morning Market Report that is posted an hour or so before the market opens every morning seems to get the first hour or so of trading right more often than not). But I'm hoping that my trailing stops which sell various stocks if they drop to a price that I have previously determined will keep me from getting burned too badly.
I'm presently in:
MR - Privately owned Chinese medical equipment maker. They've got an inherent price advantage in an industry with high profit margins. Apparently have strong R and D. The P/E ratio is quite high (around 60) which gives me pause.
HRBN - Chinese heavy electrical equipment maker with a more reasonable P/E.
EWY - Korean ETF - a play on the entire Korean market. I like Korea because the country is very high tech with an Asian work ethic and better demographics than Japan
EWM Malaysian ETF - a play on the entire Malaysian market.
BUHPF - Bumrungrad Hospital A hospital in Thailand (and a few other places) that gives world class doctoring for 20% the preposterous amounts we pay in the states. Price hasn't gone anywhere this year but it still might. Big disadvantage - you can't buy it in America as an ADR so I have to have Schwab buy it through a Thai broker - ergo, lots of extra costs, buying and selling.
DOO - A fund that buys the 100 highest dividend paying foreign stocks. Seemed like a good hedge in a market that could go anywhere.
EDU - Chinese private education stock with a sky high P/E. A market leader in this area just sounded like the right place to be.
I'm about half in cash as I don't have strong attitudes about where things are going.
I'm in the process of trying to open a Vietnamese stock trading account in Hanoi. You can only open an account when you're physically there.
It's the wild west. Who knows if you can trust the accounting. Much of the "profit" companies make is by investing in other companies stock. That sounds like a house of cards. I'm looking for companies that are. A. Non state owned B. Show substantial profit generated by the business itself C. Market leaders.
I'll keep you posted.