Multi Currency Major Market Analysis – Oct. 2008


Multi Currency Investment Major Market Value Analysis – Sept. – Oct. 2008

As stock markets drop below realistic levels during the current global correction, knowing where to find the best values grows in importance.

Commodity investing grows more dangerous as investors who have lost heavily in the recent gold, oil and commodity volatility have discovered.

No one can predict short terms moves in any type of market because day to day pricing is always driven by erratic human nature. Yet markets are efficient, driven by value, in the long term.

This course is based on the premise that the best way to create long term investment profits is in equities and the best way to invest in equities is to get good value in the shares you buy.

One portion of this filter is to keep track of global market values so we 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 term ups and downs.

He, in my opinion, is one of the best market statisticians in the world. Numerous very large fund managers use his analysis to manage funds such as State Street Global Advisors.

Here is a summary of Keppler’s current comments on recent developments & outlook in international major markets that covers the month of September 2008 and is issued in October.

OCTOBER 2008 Developments & Outlook

Equity markets around the world continued to retreat last month. The Morgan Stanley Capital International (MSCI) World Total Return Index (with net dividends reinvested, December 1984=100) plunged 10.8 % in local currencies, 11.9% in US dollars and 7.7 % in euros.

Year-to-date (through the end of September), the MSCI World Index has lost 22.7 % in local currencies, 24.2 % in US dollars and 21.1 % in euros.

The US dollar gained 4.8 % versus the euro in September to finish the month at 0.7119 — 4.1 % higher compared with its level at the end of 2007.

There was no place to hide last month: All eighteen major markets covered here declined. Spain (-5.7 %), Switzerland (-8.3 %) and the USA (-9.2 %) suffered least, while Austria (-27.7 %), Norway (-23.9 %) and Belgium (-21.8 %) performed worst.

There were no winners year-to-date either: all Major Markets declined during the first
nine months. The best markets — again, those which lost least — were Canada (-12.2 %), the United States (-19.5 %) and Switzerland (-20.6 %), while Belgium (-44.6 %), Austria (-42.1 %) and Hong Kong (-40.2 %) came in near or at the bottom year-to-date. All performance numbers are in local currencies.

There was one change in our performance ratings last month: Austria was upgraded to “Neutral” from “Sell”. This upgrade does not have any influence on the composition of the Top Value Model Portfolio, which contains Belgium, France, Germany, Italy, the Netherlands, Spain and the Untied Kingdom at equal weights.

According to our analysis, these markets offer the highest expectation of long-term risk-adjusted performance.

Keppler’s SELL CANDIDATES (Low Value) are: Canada, Denmark, Hong Kong, Singapore, Switzerland , U.S.A.

Keppler’s NEUTRALLY RATED MARKETS are: Austria , Australia , Japan , Norway , Sweden .

Remember that the overall market value is just one of many filters we should use when we review value. The seven steps we use in our reviews include

1: Are the shares traded in a good value market?
#2: Does the share trade at fair Price to Earnings and Price to Cash Flow ratios?
#3: Does the share pay a good value dividend?
#4: Do the share have a good value relative to their previous price?
#5: Does the company have rising earnings?
#6: Has the share price been rising?
#7: Is the company’s management good and is their product or service line in a wave of the future

Michael Keppler also reminds investors not to misinterperate the investment analysis implicit in the Country Selection Strategy. A country is BUY-rated based on the valuation levels reflected in the MSCI benchmark index of country. A BUY rating therefore does NOT imply that any stock in that country would be considered an attractive investment.

To invest according to the Country Selection Strategy it is necessary to
construct diversified, risk-controlled, representative country portfolios in
every BUY rated country, weighting each country approximately equally in the
overall portfolio. It is not appropriate to instruct a stockbroker to simply to select stocks in the BUY rated countries.

For more details on Keppler’s analysis, contact Roderick Cameron at 1-212-245-4304 or email roderick.cameron@kamny.com

Regards,

Gary

Join Merri, me and Peter Conradsen of Jyske Global Asset Management at OUR INTERNATIONAL INVESTING & BUSINESS COURSE IN ECUADOR. We review economic conditions, Ecuador real estate, my entire portfolio plus investing and business ideas for the months ahead.

To help our Multi Currency subscribers meet Peter and learn direct how Jyske can help, we are are dropping the price of your subscription, $249, from the course fee. The normal course fee is $749 for one or $999 for two. The fee for all Multi Currency Portfolio Course subscriber is reduced to $500 for one or $750 for two.

Please send me any other questions. I’ll give the questions priority if you add BL in the subject line. I cannot give you direct investment advice individually but can answer questions (without disclosing your identity) in these lessons.

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