Is the FED investing in US Equities?

[hakrjak]

Hearing rumors today on CNBC and radio that the FED may be responsible for the current stock market rally. Lending money to banks to buy equities with?

What are everybody's thoughts on this? If this is true, would this make you want to buy equities more or own them less?

IMHO it shows 2 things... a). the FED will do whatever it can to prop up this economy, so you should be confident... or..... b). This currently rally may be a hoax that you'll want to sell out of ASAP....

Thoughts?

Cheers,

- Hakrjak

 

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[MJ DeMarco]

The FED just also bought a shit load of TIPS ...

Personally, I view the rally is nothing but inflation. The dollar is in the crapper, commodities are near highs, and spending continues.

 

[Rickson9]

Hearing rumors today on CNBC and radio that the FED may be responsible for the current stock market rally. Lending money to banks to buy equities with?

What are everybody's thoughts on this? If this is true, would this make you want to buy equities more or own them less?

IMHO it shows 2 things... a). the FED will do whatever it can to prop up this economy, so you should be confident... or..... b). This currently rally may be a hoax that you'll want to sell out of ASAP....

Thoughts?

Cheers,

- Hakrjak

Speaking for myself, I don't really pay attention to CNBC because I don't find any of their information useful. Personally I find the idea that the Fed is moving markets upwards to be unlikely. It also reinforces my opinion that financial news should be considered entertainment.

With regards to selling because of a false bull rally: I don't sell when the markets go up and I don't sell when the markets go down. I also don't pay attention to the converse theories: that market collapses are hoaxes. I buy when the business is cheap by my own metrics.

Again, I can only speak for myself. As a result of my personality and because I have done very well with my style of investing I am biased in favour of the buy-and-forget style of investing.

Best regards.

 

[GlobalWealth]

Not sure about the Fed, but the Treasury certainly is buying equities...

Plunge Protection Team

I tend to agree with MJ that the markets are rallying due to the massive amount of dollars introduced to the economy. You cannot double the money supply without seeing it show up in the markets.

Money is like water, it follows the path of least resistance. And the financial markets are clearly protected by the current administration so investors know where the easy money is right now.

You also have to consider big banks like BAC and C used bailout money to buy equities. This had a massive effect in liquidity thus driving up prices.

 

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[snowbank]

I buy when the business is cheap by my own metrics.

What metrics do you use?

 

[Jonleehacker]

Also, with interest rates being so low, that naturally drives money into the markets because people don't have more secure interest bearing alternatives.

 

[Rickson9]

What metrics do you use?

Hi snowbank, and thanks for the question!

Without having to re-type everything, here are a couple threads that I responded to that outline some metrics that I use.

https://www.thefastlaneforum.com/general-business-discussion/26859-help-me-define-value.html#post137724

https://www.thefastlaneforum.com/introductions-networking/27743-hello-vancouver-canada.html

https://www.thefastlaneforum.com/introductions-networking/27593-hello-canada-long.html

https://www.thefastlaneforum.com/real-estate-residential/27540-what-roi-do-you-look-rental-properties.html

https://www.thefastlaneforum.com/stocks-options-currency-trading/27620-stock-option-primer.html

https://www.thefastlaneforum.com/fastlane-millionaire-stories/27712-stock-portfolio-up-28-ytd-2010-a.html

https://www.thefastlaneforum.com/real-estate-residential/27613-canadians-investing-phoenix-az.html#post138233

I hope this helps!

Best regards.

 

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[snowbank]

Rickson,

Thanks for pointing me to those posts. Couple questions I had after reading:

For stocks, assuming no debt, I want to pay 2x book and 10x earnings or less. For real estate, assuming no debt, I want to pay 5x gross annual rent.

What kind of debt are you referring to when you say "assuming no debt"?

Why have you chosen the numbers you decided to use. Why not 1.5x and 8x or 1.75x and 9x? Why these specific numbers?

Is there an easy way to search for companies that fit your criteria? In other words, is there any type of program that can bring up companies that fit your metrics or do you have to individually go through any/every company to see if it does manually? Or are you able to plug in your criteria and be fed a list of possible companies that you will then go through?

I noticed you're investing in very well known companies. Strategically speaking this seems like there would be more +ev(expected value) plays available based on your investment strategy of buying long term for value since you're going to be buying at a higher premium than say, an unknown company with the same exact financials.

Based on your buying metrics have you considered investing in private companies rather than public companies? If you're paying 10x for a public company and can get private companies for 3-5x, why not buy private?

How much due diligence do you do before buying a company? Let's say a company fits your metrics, what are the next steps you're taking to determine if it's a company you're going to buy.

Pretend I'm a smart 5th grader. Can you take me through the process of buying a company the way that you buy it? Example- First, go to this site and open up X...... here is how we determine if the company fits our metrics..... now we go to x and do y, and then we need to know z, etc...

 

[Rickson9]

Great questions! I'll do my best to answer. Also keep in mind that my website listed in my sig has a number of end-of-year reports that I pump out annually that may help answer some of the questions in more detail!

What kind of debt are you referring to when you say "assuming no debt"?

I'm looking for a debt/equity of 0 (I have been known to tolerate 0.1). For example Fossil Watches has equity of a couple billion dollars but has total debt of $8M.

On the balance sheet I'm looking for no long-term debt obligations of any kind.

I will accept short-term revolving lines of credit.

Why have you chosen the numbers you decided to use. Why not 1.5x and 8x or 1.75x and 9x? Why these specific numbers?

Excellent question. The answer is that your suggestions are equally valid. I use 2x book and 10x earnings or less because those are the thresholds that I decided based on 1) my personality and 2) on my readings. Many investors indeed have more stringent criteria that are best suited for them.

Is there an easy way to search for companies that fit your criteria? In other words, is there any type of program that can bring up companies that fit your metrics or do you have to individually go through any/every company to see if it does manually? Or are you able to plug in your criteria and be fed a list of possible companies that you will then go through?

When I was a teenager there was no internet so I had to go to the library, pull out the huge Value Line books and go through them sheet by sheet.

A subscription to Value Line is tens of thousands of dollars a year, but anybody can get it for free at the library.

Value Line

With the internet, I can now use the following free screens:

Yahoo! Finance

CNBC

I noticed you're investing in very well known companies. Strategically speaking this seems like there would be more +ev(expected value) plays available based on your investment strategy of buying long term for value since you're going to be buying at a higher premium than say, an unknown company with the same exact financials.

It is possible. I invest as much based on math as I do on knowing my personality. I am only comfortable investing in companies with market capitalization between $500M and $2B. Other investors have different comfort levels. There are a million ways to make a million dollars.

Also keep in mind that when I bought thousands of shares of Fossil stock, it was a $500M company and wasn't very well known. The same can be said of the rest of my portfolio; except for Berkshire Hathaway (that was a mistake).

Based on your buying metrics have you considered investing in private companies rather than public companies? If you're paying 10x for a public company and can get private companies for 3-5x, why not buy private?

I have approached private companies. From my limited experience, sellers of private companies make their income statements and balance sheets look a lot better than reality. They may advertise prices at 3-5x net profit, but going through the income statement reveals this to be unrealistic. Similar to flat numbers such as real estate 10% cap rates where the seller forgot or excluded needed expenses. Private companies are the wild west. I have no problems with it, but I wouldn't recommend it to the novice.

It's very possible to do very well buying private companies and I am open to the idea. It's just easier on the stock market where everything is audited, there is at least 10 years of public information, owners hold huge blocks of stock, and I can choose which income statements and balance sheets are the easiest for me to understand.

I also like the idea that I don't have to run the business. I am a very (very) terrible as an entrepreneur. I tried doing this in my 20s and although it went very well by providing my initial grubstake, I hated it. It is a lot of hard work being an entrepreneur and it doesn't suit my personality.

With my stock investments I am seeking a partner - somebody that has my interests at heart and has a history of success. I ride the coattails of individuals who are good at, and actually like running a business.

How much due diligence do you do before buying a company? Let's say a company fits your metrics, what are the next steps you're taking to determine if it's a company you're going to buy.

Pretend I'm a smart 5th grader. Can you take me through the process of buying a company the way that you buy it? Example- First, go to this site and open up X...... here is how we determine if the company fits our metrics..... now we go to x and do y, and then we need to know z, etc...

Good question! Again, this can be found on my web site, but in general I would check for 10 years of operating public information. Why 10? That's just another personal preference.

Morningstar used to provide 10 years of information (now they only provide 5). You can still get 10 years of information, but you need to pay. I don't pay for any information that I can't get for free elsewhere, but here's the link:

Morningstar

Now I have to dig deeper on the internet by visiting the EDGAR SEC database.

EDGAR

I also visit the company web site to read all the annual reports that they have. I may also call the company to have them send older annual reports.

When I was younger I also called the investor relations number and told the person who answered that I currently owned ten thousand shares, was thinking of doubling my stake, and would like to have some questions answered. A few times I was forwarded to the CFO and once I was forwarded to the CEO/owner. That's another good way of getting information that isn't in the quarterly or annual reports.

This all requires a bit of time, but for me, investing doesn't require much speed. In 10 years, the stock market is usually in a bull for 7-8 years and in a crash scenario for 1-2. In my brief experience I usually get 8 years to research what I want before a crash hits. When the crash eventually hits, I'm just shopping for what I want. When the next bull market comes around, my investments compound tax deferred and I go back into hibernation - shopping for the next crash.

The problem that I have now is that I have (thankfully) experienced so many crashes in my brief time as an investor that I have more opportunity than I have money. Since starting to invest in the 90s, I have experienced:

1. Canadian real estate crash (1995)
2. Tech stock market crash (2002)
3. Credit crisis stock market crash (2008)
4. U.S. real estate crash (2007-current)

This means that I have experienced and taken advantage of 4 crashes in 15 years. The bad news is that this number of crashes is unusually frequent and has caused a fast draw down of cash. The good news is that investors like myself have many opportunities to make a lot of money.

I hope this helped!

Best regards.

 

[snowbank]

I am only comfortable investing in companies with market capitalization between $500M and $2B. Other investors have different comfort levels.

Why is this? What is the difference between a company with $100m and $500m? Why is risk is greater because of the size difference?

owners hold huge blocks of stock

great point. how much do you factor this into buying decisions, or is it miniscule?

also, if an owner is buying or selling a lot of shares does this effect your strategy, by thinking of buying more shares if it's still good based on your metrics if they are buying more, or thinking of selling despite the fact your play is long term hold if they are dumping a lot of stock?

When I was younger I also called the investor relations number and told the person who answered that I currently owned ten thousand shares, was thinking of doubling my stake, and would like to have some questions answered. A few times I was forwarded to the CFO and once I was forwarded to the CEO/owner. That's another good way of getting information that isn't in the quarterly or annual reports.

Awesome.


Enjoying the info Jim, thanks for taking time to share.

 

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[Rickson9]

Why is this? What is the difference between a company with $100m and $500m? Why is risk is greater because of the size difference?

Good question! I can't say that I had a logical rationale for this. At the time $500m was a nice small round number that seemed to capture enough prospects that had 10 years of public data.

With regards to risk, I never quantified the difference in risk between a $100m and $500m company.

great point. how much do you factor this into buying decisions, or is it miniscule?

All the stocks I hold must have a strong shareholder who is able to influence the company in a way that benefits me as a fellow shareholder. I do not trust non-shareholder CEOs to make decisions that are in the best interests of the company and their shareholders.

also, if an owner is buying or selling a lot of shares does this effect your strategy, by thinking of buying more shares if it's still good based on your metrics if they are buying more, or thinking of selling despite the fact your play is long term hold if they are dumping a lot of stock?

INSIDERS selling has no impact on my strategy. As a result my holdings have remained unchanged for long periods of time.

If a big shareholder started buying significant amounts of stock it would pique my interest. An example would be Jim Jannard of Oakley. He started buying 250k shares almost weekly so I bought alongside him. Oakley was swallowed by Luxottica a couple years later. This also happened with Jay Schottenstein of American Eagle. Having said this, I've noticed that these guys buy cheap; sometimes cheaper than me, but they always buy big.

If a big shareholder dropped their stake significantly it may influence me. That hasn't happened yet, but I think that that would give me pause.

INSIDERS movement always takes me back to my readings of Peter Lynch when I was a teenager. To paraphrase, he said that there were a million reasons that an INSIDERS sells, but only one reason that they buy.

I hope this helps!

 

[CommonCents]

Look up POMO and TOMO, permanent and temporary open market operations. The fed buys up agency debt, mortgage backs etc from dealers and I wonder where that cash goes?

There is plenty written about other arrangements between central bank members and affiliates doing equity instrument/derivative/ETF etc... purchases.

There isn't much of an arms length between the big boys. Bill Gross of PIMPco recently slipped and revealed his advanced knowledge of what the Fed and Treasury are up to. Ooops. He or El Arian could be the next Sec Treas, how convenient.

 

[snowbank]

I'm looking for no long-term debt obligations of any kind.

I know that you do the same with real estate, and are buying properties with cash. You seem to understand numbers and value well, so why do you choose to do this(buy cash only) if you know you are buying an undervalued property? With your investment strategy(buying below value and holding long term) you are capping your gains, and not maximizing your potential returns. Since you aren't worried about the short term of the market(which we're obv agreed on) as long as you have capital to cover any variance you might experience(big repairs needed, extremely long vacancies, etc...) it's extremely +ev to leverage and buy more undervalued properties because of your positive cashflow + getting the appreciation when the market brings back the value and you decide to sell someday. Let's say you'd be able to get loans for as many properties as you'd want to buy, and that banks gave the same attention to investors getting a loan as they did to cash buyers, why wouldn't you continue to buy more properties since it'd make mathematical sense to do so 100% of the time? I know from your posts you follow Buffett very strongly and he is anti-leverage, but in this scenario you'd be leaving a lot of money on the table if you weren't leveraging. I'm very curious about this since you understand value and numbers so well, it seems like if you know the RE market you're investing in and can buy undervalued properties, that you'd want to capitalize on it as much as possible rather than putting a ceiling on it.


Another question I had was, what made you choose residential properties over commercial? Why buy lots of green houses instead of 1 red?

 

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[Rickson9]

I know that you do the same with real estate, and are buying properties with cash. You seem to understand numbers and value well, so why do you choose to do this(buy cash only) if you know you are buying an undervalued property? With your investment strategy(buying below value and holding long term) you are capping your gains, and not maximizing your potential returns. Since you aren't worried about the short term of the market(which we're obv agreed on) as long as you have capital to cover any variance you might experience(big repairs needed, extremely long vacancies, etc...) it's extremely +ev to leverage and buy more undervalued properties because of your positive cashflow + getting the appreciation when the market brings back the value and you decide to sell someday. Let's say you'd be able to get loans for as many properties as you'd want to buy, and that banks gave the same attention to investors getting a loan as they did to cash buyers, why wouldn't you continue to buy more properties since it'd make mathematical sense to do so 100% of the time? I know from your posts you follow Buffett very strongly and he is anti-leverage, but in this scenario you'd be leaving a lot of money on the table if you weren't leveraging. I'm very curious about this since you understand value and numbers so well, it seems like if you know the RE market you're investing in and can buy undervalued properties, that you'd want to capitalize on it as much as possible rather than putting a ceiling on it.

I must say snowbank, you ask really (really) awesome questions! I say this because many of these questions, run through my mind constantly!

I'll try and write down some of the ideas around the topic of leverage that play tug-of-war in my mind and help clarify for those who may be a bit newer to investing. I'll also try and stay away from as many numbers as possible.

1. Leverage would significantly increase the return on equity (ROE) on my investments. For those who are unfamiliar with this term, ROE is simply net profit divided by equity in the asset. For example, a $40k property bought with cash has $40k in equity. If it generates $4k a year in profit this is an ROE of 10%.

If I took a $20k mortgage on the property my equity would drop in half. If my profit dropped in half, the ROE would remain the same at 10%. However, although a mortgage would increase my monthly/yearly costs, it wouldn't drop my profit by half. This would boost my return on equity since the calculation for this is net profit divided by equity and since equity falls by a big amount (half), the entire fraction increases in size.

This is a compelling reason for putting a mortgage on a property.

2. I specifically didn't seek a mortgage in Phoenix, AZ because I know for a fact that my cash offers have been beating out higher bids that had condition upon financing. The seller of a condo will take a $40K all cash offer than take a flyer on a $45k bid that had a condition upon approval of an FHA approved loan or mortgage.

Many times the seller wants to get out as soon as possible. Cash is fast (hey that actually rhymes). With my cash offers I really have a lot of negotiating power.

However, this doesn't conflict with #1. I could always slap a mortgage on the property after for the aforementioned reason.

3. As you mentioned re: Buffett,
"I do not like debt and do not like to invest in companies that have too much debt, particularly long-term debt. With long-term debt, increases in interest rates can drastically affect company profits and make future cash flows less predictable."

"If you're smart, you're going to make a lot of money without borrowing." This has been true for me.

In closing, I need to resolve if I want a higher ROE per property and more properties or a lower ROE, less properties but more predictable future cash flows.

Another saying that comes to mind is that leverage is silly and even sillier if you already have money!

I have yet to make a firm decision. However, having said that, in my investing I have always tolerated a debt/equity ratio of 0.1 so I may take on some leverage, but probably not as much as others. Again, like investing, assumption of debt should suit your personality. If an individual drinks more alcohol than they can personally handle, bad things happen. In both cases (alcohol and debt) I need to know my limit and stay within it.

Another question I had was, what made you choose residential properties over commercial? Why buy lots of green houses instead of 1 red?

Another fantastic question! I looked at commercial properties in Canada. As you can expect, they were overpriced. Going to Phoenix, AZ was new for me. I had never invested outside my city, let alone my country. I needed to find something that wasn't big enough to hurt me, but could show 'proof of concept'. These tiny 2 bed 2 bath condos were perfect. Everything about them was small - realtor fees, inspection costs, repairs, etc. It was something that I could easily sink my teeth into without causing significant indigestion if things went wrong.

If I wanted to go bigger I felt that I could always package the condos together and sell them to move up into something larger. As a Canadian I don't know if I would be able to qualify for a 1031 exchange.

 

[snowbank]

In closing, I need to resolve if I want a higher ROE per property and more properties or a lower ROE, less properties but more predictable future cash flows.

Ya, I mean, it really comes down to what your goals are. If your goal is to make the most money you can, the optimal play by a substantial margin is to leverage. If your goal is to get good, no risk, long term returns going all cash is obv. fine. When you have an edge in a game, it's usually the correct play to push that edge to maximize profits, and you can still minimize risk if you use bankroll management and buy right, which you already do. That's why I'd think for you it would be even easier decision since it's not like you'd be speculating for appreciation, you'd be buying cashflowing assets with built in equity. Theoretically the more you buy, the lower your variance is going to be, so buying a higher quantity won't increase your risk of ruin if you're using metrics that keep you safe and use correct bankroll management for the amount of assets you acquire.

Assuming you do these things, your potential downside is extremely limited since you're buying for value, and long term gains.

I have no idea what type of capital you're working with, but let's use a hypothetical example:

Let's pretend someone had $1m in cash available to invest.

If they decided to buy all properties cash- based on the deals you're buying it'd look something like this:

28 properties purchased
Let's assume you are buying 30% below value.
You are gaining $300,000 in equity and holding for long term gain.

However if you leveraged and had 20% down on the properties(hypothetically- I know it'd be difficult to get a loan on this many), you'd have:

140 properties purchased:
$1,500,000 in equity built in. Lowering your cashflow on the deals wouldn't matter as long as they were positive and you had the bankroll to sustain variance.

To look deeper into the numbers:

28 properties purchased cash
est. $350 cashflow/month. (assuming 50% for all expenses)
$4,200/yr.
x 28 properties= $117,600 cashflow/yr

assuming properties are worth twice as much in 10 years: (I realize we wouldn't buy with based on potential appreciation, this is strictly to show the potential upside vs. potential risk)

10 years later:

Your properties are worth $2,000,000.
$1,176,000 cashflow.
Total: $3,176,000


If you bought leveraged:

140 properties purchased leveraged
est. $300 cashflow/month. (assuming 50% for all expenses)
$3,600/yr.
x 140 properties= $504,000 cashflow/yr

10 years later:

Your properties are worth $10,000,000.
$5,040,000 cashflow.
Total: $15,040,000

In example 1 you'd return $2,176,000 on your $1m investment.

In example 2 you'd return $14,040,000 on your $1m investment.


Technically if you are buying the deals you're buying, and not messing up on any of the due diligence, your risk is going to be absurdly low. Even if you are leveraging, assuming you run the numbers and you have the funds to cover expenses, your risk actually would NOT increase, it may actually decrease.(in depth math would have to be done to prove this, but because of only the small decrease in cashflow from the assets and the decreased variance from increased number of assets, if risk increased at all it would be miniscule.)

For example's sake let's pretend that your risk actually doubled. Let's pretend that buying all cash you could actually lose $100k if you messed up and things went wrong. Let's say if you bought leveraged you could actually lose $200k.

Here is how things would look:

10 year period:

Cash deals:

Potential downside: $100,000
Potential upside: $2,176,000

Leveraged deals:

Potential downside: $200,000
Potential upside: $14,040,000

Something else you need to think about is the ability to compound the money after this. Let's look at examples:

Using your 12 year average return of around 15.5% returns, let's take a look at each scenario:

Cash deal:

downside: leaves you with $900k to invest.

Based on est. return you will double your investment roughly every 5 years.

10 years later:

$3,600,000

upside: leaves you with $2,176,000

10 years later:

$8,704,000


Leveraged:

downside: leaves you with $800k to invest

10 years later:

$3,200,000

upside: leaves you with $14,040,000 to invest

10 years later:

$56,160,000


So, assuming RE investing for the first 10 years, + re or stocks for the following 10 years assuming your current rate of return, you'd be looking at something like this:

Starting with cash:

bad case scenario: $1,000,000 turns into $3,600,000 after 20 years
good case scenario: $1,000,000 turns into $8,704,000 after 20 years

with leverage:

bad case scenario: $1,000,000 turns into $3,200,000 after 20 years
good case scenario: $1,000,000 turns into $56,160,000 after 20 years

Obviously we're using hypothetical numbers- but this should give an idea of how substantial the risk/reward factor would be in a scenario like this.


Potential downside using leverage instead of cash for the initial investments, followed by compounded investing:

$400,000

Potential upside using leverage instead of cash for the initial investments, followed by compounded investing:

$47,456,000

 

[Rickson9]

Excellent question!

Although I appreciate the calculations, I really do understand the math.

It is intuitively obvious that investing $5M ($1M representing 20% down) will generate higher cashflow, greater ROE and higher potential appreciation than investing $1M (all cash).

It is also intuitively obvious that if an individual can compound stocks at 15% per year, that the logical decision is to leverage the ability in the same way and put it all in stocks to come out with a more massive number!

Although these are all intuitive outcomes, the more interesting question is why an individual (or business) would choose not to employ leverage when the downside is so minimal?

Using a business analogy, why would a small subset of high quality business, run by generations of owner operators, all of which have been producing very high rates of return for decades, find themselves making the decision to employ no debt?

 

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[snowbank]

Jim,

Hopefully it didn't come off as though I was challenging you for not leveraging. You seem like one of the few people that do understand the math, so I wasn't questioning that. That's really why I am genuinely curious.

In regards to your question about why someone would not leverage when the downside is so minimal- some people want as close to no risk at all, which I understand. In regards to why some high quality businesses don't employ debt- I'm not familiar with public companies since I don't invest in the stock market, so I wouldn't know enough about the subject to be able to comment. You've said in past posts, that fear causes some companies to hoard cash. I could see that being one of the reasons, but again, I'm not a good person to answer that question.

Another reason I'm so curious about it is because the stage that someone like you or I is at(relatively young without large wealth), is substantially different to wealthy investors where they have already achieved large amounts of wealth and are usually much older.(making it less optimal for them to be highly leveraged unless their goal was only to create as much money as they possibly could) That's why I was interested in what your goals were with investing since there'd obviously be 2 different games to play depending on what they were.

the more interesting question is why an individual (or business) would choose not to employ leverage when the downside is so minimal?

This is basically a much better/shorter way to ask what I was trying to ask- why are you personally choosing not to in this scenario?

 

[Jonleehacker]

I'd like to toss out a slightly different perspective on the topic of leveraging on these deals.

As a fellow Canadian who has spent the last few winters golfing in Arizona, the thought of purchasing a place down there has crossed my mind many times.

But what has kept me from pulling the trigger is the currency risk.

In the last 18 months alone, the US dollar has lost more than 20% of its value against the Canadian dollar.

It is my belief that this trend will continue. So putting my Cad. dollars to work in a US based investment becomes doubly risky.

The way I have thought of to remove the currency risk is simply to leverage up by getting a mortgage, therefore putting as few Cad. dollars into the deal as possible.

That way if the US currency decline continues the actual amount I'll be paying in Canadian dollars actually goes down as the USD declines. This also becomes especially attractive with interest rates sitting so low and the way US banks offer terms that extend the full amortization period of the mortgage... therefore reducing inflation risk when paying with non-US currency.