More Than Portfolio Performance


Profit comes from more than just portfolio performance.

If we have good habits that take care of our health, spend less than we earn and look after our savings, we’ll probably end up with plenty to retire.  But life really is about more than just the money.

A mantra at this site is that the idea of retirement is not a good idea. 

trout

Believe it or not, for me, this is work.  I love fishing so one of my micro businesses is to raise trout.

A recent Wall Street article “When good habits go against you” (1) says: Imagine spending a lifetime acquiring habits that offer the promise of a longer, happier and more fulfilling life. Then imagine that to have that fulfilling life, you suddenly must abandon all those habits.

Not easy, is it? But that’s what happens when people go from work to retirement, from saving money to spending it. Too often, the same personality traits that facilitate saving for retirement become impediments when it is time to spend that money.  The mental tricks we employ while working become mental mistakes when we move into the next phase of our lives.

Let’s take this thought one step further and ask “Why should we wait until age 65 or any arbitrary age to develop habits to have that longer, happier and more fulfilling life?”

The idea of retirement at age 65 is wrong.  This concept was a political trick used by Bismarck to win elections at a time when few people lived to be age 65.  The idea of working most of our lives just to have a happier more fulfilling life after age 65 is wrong as well.

We should all have a pinnacle career, where we do what we love and figure out how to profit financially from the activity as a byproduct.  Age should not be a barrier.  In fact this is an era where technology makes our experience worth more than the cost of getting it… the more years we have lived, the better we should be in our career.

When we have a pinnacle, we do not want to retire.  Fulfillment is more important than the money and when we are fulfilled we live longer as well.

This is why we created an investing course (the Purposeful investing Course or “Pi”) that allows us to protect our investments and increase our profits by diversifying in multi-currency good value stock markets without spending a lot of our time in the process.

We created the course and started our personal Pifolio in December 2015.   The US market is NOT a good value market and the US dollar contains a lot of risk, so all the markets we chose were non US markets.

Timing was poor in that there was a dip in global markets literally after we made the investment.  You can see the dip (the red X is our date of purchase) in the share performance of the Vanguard International Equity Index ETF which I use as the bellwether for measuring our portfolio performance.

motif

Performance chart of  The Vanguard International Equity Index Fund  at www.finance.yahoo.com (2)

This Vanguard ETF Vanguard International Equity Index Fund (Symbol VT) tracks stock markets all over the globe, with the exception of the United States.  As an index product, the fund targets stocks from this universe that constitute the largest 98 percent based on market cap.   This fund offers perhaps the easiest way for investors to make a low cost equity investment in both developed and emerging international economies.

This ETF has risen from $59.92 December 1st 2015 to $66.28 on April 30th, 2017.   This is a 10+% rise.

The Good Value Portfolio we created has risen over 14+% in the same period so it is strongly over performing the bellwether at this time.

This portfolio is really hopping in 2017 and is up over 10% in the first 5 months of this year.  Let’s hope it keeps that pace.

motif

The lesson we share here is not about the great performance but about how little time was required to gain such strong performance and added safety.

Frankly, if we compare the the bellwether ETF VT to  the Dow Jones Industrial Index (Red) or S&P 500 Index (Green) below, the profits from December 2015 till now have been higher in the USA.

Had one invested in either index over this period (Dec.  2015 to now) their performance would have been slightly better, due to the strength of the US dollar.

stock chart

Our good value portfolio is diversified into 18 good value equity market ETFs  denominated in 13 currencies.

This is the current breakdown of each ETF as a percent of the total Pifolio.

Developed Countries

Market Australia   Symbol EWA  Percent of portfolio 8.4%   –  Austria EWO  9.0% – France EWQ 8.3%  –  Germany EWG 9.3%

HK  EWH 8.2%  –  Italy EWI  6.7%  –  Japan EWJ 7.5% –  Norway NORW 7.5%  –  Spre EWS 7.9%  –  UK EWU 7.0%

Developing Countries

Brazil EWZ 3.9%  –  Chile ECH 3.1%  –  China FXI 2.7%  –  Colombia ICOL 3.1%  –   Malaysia EWM 1.7%  –  South Korea  EWY 2.8%

Taiwan EWT 2.9%

During this entire period there has only been one trade, when in 2017 I used dividends earned to add the Platinum ETF, PPLT which represents 4% of the portfolio.

To me, the greatest value of this type of investing is not the added safety nor the extra profit.  These are important features,  yes, but the extra time I have to devote to things I love-writing, buying and fixing real estate, raising fish, growing oranges, importing roses, gardening, is the really big profit.

I certainly enjoy life more and will hopefully live longer, plus I am pretty sure that the income these activities generate are greater than if the time was spent fiddling with my investments.  In fact, most studies about investing suggest that the fiddling reduces portfolio profits.

The big profits in Purposeful investing are improved health, added longevity, more fun and fulfillment.

Time, that’s the greatest asset of all!  Create your purposes so you invest it well.

Gary

(1) wsj.com: When Good Habits Go Against You

(2) Vanguard share chart at finance.yahoo.com

When Too Big To Fail Is Too Small

Our world turned upside down when, starting in late 2007, the real estate bubble popped.  Many Americans saw their homes slide underwater, their stock prices plummet and the earnings on their safe savings collapse to zero return.  That  financial ruin was created very much in part by banks that were “Too Big to Fail”.

Now as stock markets reach all time highs, another debacle is rising.  The tremors have already started, aftershocks from 2009, that can create a greater economic landslide.  There are numerous scandals at US and overseas big banks.  These calamities can make the safety net of “Too Big to Fail”, too small.  The disintegration that ensues could ruin average investors in three ways.

The risk is systemic because the bigger the bank, the more corrupt it seems to be.  This makes sense.  These banks have little to lose.  Why not cheat and take risks?  When fraud and speculation fail, the bank is bailed out by taxpayers.  No one, except the customer, gets too badly harmed.

Wells Fargo is an example.  Even after new regulations and backups were put in place after 2009, this entire organization continued to treat clients with complete disdain.

Here are some of the risks.

First, banks will have more opportunity to cheat because of increased stock market turmoil.  Every part of the US stock market has reached an all time high.  Global stock market volatility has also picked up.  The world is in a period of technological, political and economic transformation.  None of the old rules are as certain as they used to be.  Nothing makes markets shakier than the unknown.

Second, the new administration will reduce bank regulations.  Reduced regulations are good for business but big overseas banks have especially taken advantage of investors and home owners.  Foreign big banks have acted with impunity and need to be regulated.

Third, we’ll see rising interest rates.  Banks will raise interest rates as fast as they can.  The key to bank profitability is “Net Interest Margin”, the difference between the rate banks pay for deposits and money and what they charge for loans.   When interest rates collapsed in the late 2000s, banks made extra profit one time.  Their securities portfolios rose, loan defaults slowed and the cost of deposits fell.  Yet over time as new loans brought lower yields and the one-time boosts were gone, the lower interest rates squeezed bank profit margins.

The government and the Fed will want higher rates to avoid runaway inflation.  This will strengthen the US dollar short term but hurt the US stock market and the dollar in the long run.

The rising interest rates will be accompanied by inflation.  The government and the Fed do not want inflation but they will create it anyway.  They will spend more and reduce tax that increases US debt financed by savings from Europe, China and Japan.  Currently, America’s gross debt is more than $19 trillion, or 105 percent of GDP.  This has been sustainable in recent years because interest rates have been at historic lows.  As rates rise from slightly over 2 percent today to over 4 percent by 2019, government interest payments will more than triple from $250 billion in 2016 to more than $800 billion in 2026.  By 2030, interest alone will represent over 14 percent of the federal budget.  If interest rates rise even higher,  Federal payments will be even greater—a one percentage point increase costs the country an additional staggering $1.6 trillion over a decade.  If interest rates returned to the record-high levels of the 1980s, the country would pay $6 trillion more in interest alone.

This debt will cause the US dollar to fall.

Here are three steps to take that can protect your investments in this scenario. 

Protection #1: Avoid Too Big to Fail Banks.  When you use a global bank, you are not using just one institution.  You are dealing with a big business that owns multiple banks in different regions.  This has costly implications for how far the bank’s equity goes, and how small safe the particular bank you choose really is.  Plus banks with two or more sub banks have more ways to take advantage of investors.  For example, one division of a bank can be recommending an investment to customers while having another unit in another country sell the investment short.  The bank makes money in three ways: creating the investment, selling the investment to customers and selling it short when the investment implodes.

Use local community banks where you can know your bankers, what they are doing and where their reputations are their most important asset.

Protection #2:  Use Math to Spot Value. 

Whether you like to trade or invest and hold, math based financial information works better than the spin, rumor and conjecture of the daily economic news.   Invest in a diversified portfolio based on fundamental value.  When you do, you’ll be on a solid path to everlasting wealth that is not so easily diverted by the daily drama that seems to be unfolding in the modern world.

For example, our Purposeful investing Course teaches  three mathematically based routines that have been proven to out perform the market over time .

The first routine in the course is the quarterly examination by Keppler Asset Management of 43 equity markets and analysis of their value.  This makes it possible to create a base portfolio of Country ETFs based on basic value.  This passive approach to investing in ETFs is simply to invest in Country ETFs of good value equity markets.

For example, the January 2017 Keppler analysis shows that the “Good Value Developed Market” Portfolio is twice the value of a US market index fund and a much better value than any of the other indices shown.  These are based on the cornerstones of value, price to book, price to earnings and dividend yield (except the European dividend yield).

The Good Value Developed Market Portfolio offers even better value than the Morgan Stanley Capital Index  Emerging Market Index.

keppler

The Spring 2017 Keppler analysis shows that the “Good Value Emerging Markets”

Investing in this broad spectrum of good value does not mean that profits will come over night.  Often markets remain distorted for extended periods of time.

History shows, though, that over the long run, math and value drive the price of markets.

This tactic is a simple, easy and low cost way to diversify in the predictability of good value.

The second tool Pi provides is a way to actively monitor and shift the good value markets using trending and volatility algorithms.  These algorithms allow us to trade good value markets through downtrends and upticks to increase profits in a diversified even more.

The third tool Pi provides is a way to spot ideal position speculations to use sparingly to enhance performance with greater risk.

Protection #3:   Spot Distortions that Create Ideal Condition for Speculation.

Pi teaches the strategy of speculating in metals when when speculative conditions are absolutely ideal.  The Silver Dip relies ion a really simple theory… gold should rise about the same rate as other basic goods and the rise and fall of silver’s and platinum’s price should maintain a parity with gold.

In 2015 Pi recommended speculating in silver because of a dip in the price of silver.   We sent Pi subscribers a report entitled Silver Dip 2015.   That tactic returned 62.48% profit in just nine months.

In 2017 Platinum speculation is even better.

“Silver Dip 2017” has been written and is available to Pi subscribers to show how to determine good value in precious metals and ways to use gold, silver, platinum or other precious metals to spice up returns in safe, diversified stock portfolios.

Here is some history of the Silver Dip strategy.   “The Silver Dip” report of 1986 was the first specific investment report I ever published.  Silver had crashed in 1986, I mean really crashed, from $48 per ounce to $4.85 an ounce.  After I wrote that 1986 report, silver’s price skyrocketed to over $11 an ounce within a year.  The 1986 Silver Dip described how to turn a $12,000 ($18,600) British pound loan (investors only had to put up $250 and no other collateral) into $42,185.

Circumstances relating to precious metals in 2015 were similar to those of 1986.  In May 1986, the dollar pound rate was 1.55 dollars per pound.  The pound then crashed to 1.40 dollars per pound.   The loan could be paid off for $13,285 immediately creating an extra $5,314 profit or total profit of $47,499 in just a year.

Platinum conditions are ideal

Since 2014 the price of platinum has fallen below the price of gold and at the beginning of this year reached a historical low.  The distorted gold platinum spread suggests that platinum is a very good value.

The “Silver Dip 2017” explains how to speculate in platinum plus outlines the following:

  • How to use the Silver Dip strategy in platinum without adding a penny of cash if you already have investments.
  • How to invest as little as a thousand dollars in platinum if you do not have a current investment portfolio.
  • Why this is a speculation, not an investment and who should and should not speculate and how to limit losses and take profits.
  • Three reasons conditions are better for a Platinum Dip now.
  • Three different ways to invest and speculate in gold, silver or platinum in the US or abroad.
  • How to buy gold and silver or platinum with or without dollar leverage margin accounts.

The “Silver Dip 2017” also contains four matrices that calculate profits and losses so investors can determine cut off positions in advance to protect profits and/or losses.  The report also looks at how to switch time horizons for greater safety.

Rising interest rates make the US stock market highly dangerous in the short term. “The Silver Dip 2017” shows how to create a safe, diversified good value stock portfolio and use it to generate much higher returns with a little controlled speculation in platinum.

Learn how to get platinum loans for as low as 1.58%.  See why to beware of  certain brokers and trading platforms, how to choose a good bank or broker and how platinum profits are taxed.

The report includes a complex comparison of gold and silver with other costs of living from 1942 to today to help determine the real value of gold, silver and platinum.

Finally, learn why and how to use advisers to manage profits from the gold and silver dips.

Current circumstances could cause the price of platinum to rise rapidly at any time.  Do not delay reading this report.

The Silver Dip sold for $79 in 1986.  Due to savings created by online publishing (we have eliminated the cost f paper and postage), we are able to offer this report for $39.95.

Order now by clicking here.  Silver Dip 2017  $39.95

Get the Silver Dip 2017 FREE when you subscribe to the Purposeful investing Course.  Act Now.

Subscribe to the first year of The Personal investing Course (Pi).  The annual fee is $299, but to introduce you to this online, course that is based on real time investing, I am knocking $102 off the subscription.  You also receive the $39.95 report “Silver Dip 2017” FREE.

You also receive FREE

  • The $29.95 report “Three Currency Patterns For 50% Profits or More”
  • The $49 report “How to Grab Sequential Value Profits”.

Triple Guarantee

Enroll in Pi.  Get the first monthly issue of Pi and the three reports right away. 

#1:  I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through slow, worry free purposeful investing.

If you are not totally happy, simply let me know.

#2:  I guarantee you can cancel your subscription within 60 days and I’ll refund your subscription fee in full, no questions asked.

#3:  You can keep the three reports as my thanks for trying.

You have nothing to lose except the fear.  You gain the ultimate form of financial security as you reduce risk and increase profit potential.

Subscribe to a Pi annual subscription for $197 and receive all the above.

Gary


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