Major Market Update


International Investments Major Market Value Analysis – August – September 2007

The best way to create long term investment profits is to get good value in the shares you buy.

One way we keep track of value is to follow the analysis of our friend, Michael Keppler. Michael continually researches international major stock markets and compares their value based on current book to price, cash flow

to price, earnings to price, average dividend yield, return on equity and cash flow return. He compares each major stock market’s history. From this he develops his Good Value Major Stock Market Strategy. His analysis is

rational, mathematical and does not worry about short ups and downs.

He is in my opinion one of the best market statisticians in the world and numerous very large fund managers use his analysis to manage funds.  In January, his company, Keppler Asset Management, was, for the third

consecutive year, named Best Fund Company in the Fund Specialists’ category by Capital, a leading German business magazine. Keppler’s firm was one of only six out of 100 companies tested that received the highest five-star

rating based on an independent evaluation of fund quality, management, and customer service by Feri Rating & Research and Steria Mummert Consulting.

Once a month we share Michael’s analysis with you.

Here is a summary of Keppler’s current comments on recent developments & outlook in international major markets.

Recent Developments & Outlook

August 2007 was a good example of why it does not make sense to extrapolate daily volatility to weekly numbers or monthly volatility to annual numbers. Please be aware of formulas which allow you to do just that. They rely heavily on normal distributions of returns, which most market observers have stopped believing in after years and years of empirical evidence that this theory is flawed. While daily volatility of the MSCI World Index has doubled in August to 1.02 % from its June level of 0.51%, the monthly total returns seem as “normal” as could possibly be. My conclusion is that an increase in short-term volatility does not mean that investing in global equities has become riskier for long-term investors. It has become riskier for short-term speculators, however, especially if they are highly leveraged.

Last month, the MSCI World Total Return Index (with net dividends reinvested lost 0.05 % in local currencies and 0.08 % in US dollars and gained 0.33 % in euros.

Year-to-date (through the end of August), the MSCI World Total Return Index gained 4.8 % in local currencies, 6.7 % in US dollars and 3.2 % in euros.

Five markets out of the eighteen markets covered here advanced in August, twelve markets declined and one market ( Italy ) was flat.

Australia (+3.3 %), the United States (+1.5 %) and Germany (+0.6 %) performed best.

Japan (-5.5 %), Norway (-4.6 %) and Austria (-3.6 %) performed worst.

Year-to-date, fourteen markets remain in positive territory, with Singapore (+18.1 %), Germany (+15.8 %) and Hong Kong (+14.6 %) gaining most. Japan (-3 %), Belgium (-2.3 %) and Austria (-2 %) came in at the bottom of the 8-month performance ranking. All performance numbers are in local currencies unless mentioned otherwise.

There is one change in our performance ratings this month: Hong Kong is downgraded to “Sell” from “Neutral”.

There is, however, no change in the Top Value Model Portfolio, which contains Belgium , France , Germany , Italy , the Netherlands , Spain and the United Kingdom at equal weights.

Our current ratings suggest that these markets continue to offer the highest expectation of risk-adjusted returns.

SELL CANDIDATES (Low Value) Austria , Canada , Denmark , Hong Kong , Japan , Singapore , Switzerland , U.S.A.

NEUTRALLY RATED MARKETS Australia , Norway , Sweden .

Keppler’s  current ratings suggest that these markets

continue to offer the highest expectation of risk-adjusted returns.

For more details on Keppler’s analysis, contact Roderick Cameron at

1-212-245-4304 or email roderick.cameron@kamny.com

You can get ideas on shares in these top value emerging stock markets from Thomas Fischer at Jyske Bank at Fischer@jbpb.dk

Jyske Bank is the second largest Danish bank with 450,000 domestic clients, 35,000 international clients, USD 23 Billion in total assets, and a Moody’s rating of AA1.  Jyske has over 35 years’ specialization in private banking

and Denmark is ranked by Moody’s as the safest country in the world to have a bank account in. 

Jyske Bank uses a good value system as well and their affiliated fund management company has been rated #1 by Morningstar. They use this value system to help us select shares for Multi-Currency Portfolio Educational

Tracking Service.  This has worked pretty well. In 2006 the mainly equity portfolios we tracked rose 42.93% (Emerging Market) and 114.16% (Asia Emerging Market) in a year.

This year the five portfolios we track are up in the past ten months:

You can learn why this performance has taken place in a sixteen page email report about how 13 economic forces now clash to shape investments markets ahead that show the rewards and the risks.  The report also outlines the

five Multi-Currency Portfolios we are tracking in our Borrow Low-Deposit High Multi-Currency Sandwich Educational Service. Details are at http://www.garyascott.com/catalog/bldh

At our upcoming International Business Made EZ in N.C., we will update our latest multi currency portfolios and much more.  Join us in Ecuador November 9-11. See http://www.garyascott.com/catalog/IBEZec/

Until next message, may all you global investments be good.

Gary


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