Economic Review VII – Steady As You Go


This series is reviewing ideas gained at the Jyske Bank Global Economic Seminar in Copenhagen where I recently spoke.  Yesterday’s message began by looking at the thoughts of Jakob Griesen, a very bright lad who is the lead portfolio manager for Jyske Invest’s Aggressive Strategy and the Jyske Invest Favorite Equities Fund, one of the best performing global big cap funds in Europe .

We saw in yesterday’s note how Jakob uses a VAMOS system (Value-Momentum-Strength) system to select good shares.

Let’s continue with what Jakob shared.  He looked at the previous performance of the VAMOS system and said that the VAMOS model has been tested by an external advisor back to 1990.  The results showed that 20% of the best scoring shares out perform the stock market by 8% per annum excluding trading expenses.

Griesen went on to explain that the share selection process does not stop with VAMOS scoring.  Once a share has been highlighted the system’s due diligence asks the following questions.

  • Does the VAMOS score look right?  For valuation they look at the company’s history and the industry it is involved in as well. For momentum they review structural and other possible triggers. For momentum they research the capital and balance sheet of the firm.
  • Their due diligence also leads them to study the company’s strategy, products, market situation and ability to sustain its positive momentum.
  • Finally all highlighted shares are reviewed by the investment team in a weekly idea and decision meeting.

I think you will begin to see here why most of many equity investments are made via Jyske Invest Mutual Funds as VAMOS is such a comprehensive process.

Jakob went on to explain that the Jyske Invest Favorite Equity Fund has a global portfolio of 30 to 35 shares that represent the very best investment ideas they have all in one portfolio. The fund has a high flexibility to invest in different regions and sectors based on what they believe will generate the highest return.

The fund’s goal is to find solid long term investments that yield significantly higher returns than global stock markets.

They buy stocks that they plan to own for the long term (three years) but the stock’s price or news flow may affect the investment decision to hold longer or sell sooner.

The Jyske invest and VAMOS entire investment process is based on:

  • Common sense and logical thinking.
  • Higher priority on numbers rather than good stories.
  • Rational decisions.
  • Being repeatable. Good shares can be found again and again.

The type of company that Jakob and his team, which include 12 managers, 48 years of management experience and 150 years of experience working in financial markets are looking for has:

  • Attractive valuation and positive earnings development.
  • High quality.
  • Good VAMOS scores in both value and momentum.

Finally he left us with the following thoughts about investing:

  • We know less than we think we do…and that’s OK.
  • Listen to those who disagree with us…this expands our horizons.
  • The consensus may be wrong…truth is not created through repletion of an error.
  • Don’t listen to emotions…we are just human beings.
  • Don’t trust analysts…they may be human beings in disguise!
  • Always evaluate shares you hold with the same critical eye as if you do not…ask, “Would you have acquired it today?”.
  • Don’t fall in love with a stock…the feeling is never mutual.
  • Sell your losers and let your winners run.
  • Risk is your partner…for better or for worse.
  • You cannot succeed without making mistakes…if you opt for certainty, you will die anonymously.

This is good advice, especially the ideal about risk being your partner.  We will learn why in tomorrow’s message.

Until then, may all your mistakes be good!

Gary

Here is the latest word from the large publisher that we have developed a cooperative plan to offer our Multi Currency Educational Service.  “ Gary , I have sent your promo out to a designer this week…we’re eager to market ASAP.  I’m waiting to hear back from our ops crew about how best to get you the orders.”

This means that the time to subscribe at the low, existing $149 price is nearly through.  To take advantage and save duri

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P.S.  We have had two cancellations so you can still meet with Merri, Thomas Fischer of Jyske Bank and me for International Business & Investing Made EZ course in North Carolina, September 14-15-16, 2007. We hope to see you there. Details are at http://www.garyascott.com/nccourse/

All delegates are invited to the farm for afternoon tea on Sunday September 16.  Autumn is here! The first yellow leave swirled in the wind today so come along, learn and enjoy the glory of nature in the Blue Ridge .  Here is an autumnal shot at the farm.

Or join us and Jyske Bank at our Hotel El Meson de las Flores for International Business & Investing Made EZ in Ecuador , November 9-10 and 11. http://www.garyascott.com/catalog/IBEZec/


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