Tag Archive | "Value investing"

A Turkey of an Investing Lesson


Here is a turkey of a lesson about investing.

With Thanksgiving around the corner, many are focused on getting a turkey.

My thinking is on a lesson about Turkey.

The lesson affects my wealth… and can help you increase and keep yours.

The key to good value investing is to rely on mathematically based financial news instead of the guesswork and conjecture in the economic news. 

We make our investment decisions based on the value analysis of global stock markets by Keppler Asset Management.

Keppler breaks the analysis into two categories, Developed and Merging Markets.

For several years there was no change in Keppler’s emerging country ratings.  There were ten emerging markets — Brazil, Chile, China, Colombia, the Czech Republic, Korea, Malaysia, Poland, Russia and Taiwan.

According to to Keppler’s analyses, an equally weighted combination of these most attractively valued markets offers the highest expectation of long-term risk-adjusted performance.

Then at the beginning of 2017 Keppler added Turkey as a good value emerging market.

Over the years, I have been a big investor in Turkey. This market has performed exceedingly well.

Yet I had exited Turkey when it turned into a poor value market.

When it shifted and began offering good value again, I ignored my own good advice.  I used my conjecture based on erroneous political thought and ignored the value.

“Turkey has too many problems”, I thought.

I was worried about the way that Turkey’s constitutional referendum took place, and how the voting did not meet international standards.

Also I did not like Recep Tayyip Erdogan’s harsh response to the attempted coup, the increased arrests and the additional delegitimization of parliamentary opposition.

I worried that these changes could further destabilize Turkish politics.

So many concerns.  I did not invest in Turkey despite the value.

In Keppler’s autumn 2017 emerging market analysis he wrote:  The best performing markets so far this year were China (+44.0 %), Turkey (+34.1 %) and Peru (+29.0 %).

Despite the economic and political news coming out of Turkey, this was the second best performing emerging market this year.

I missed a big profit because I ignored the value.

The table below shows how the Emerging Markets Top Value Model Portfolio compares to the MSCI Emerging Markets Index and to the MSCI World Index as of the end of September 2017, based on selected assets and earnings valuation measures:

keppler

Based on Keppler’s analyses, the asset class Emerging Markets Equities is now undervalued by 18 % compared with the MSCI World Index of the developed markets.

Furthermore, our Emerging Markets Top Value Model Portfolio is undervalued by 19 % versus the MSCI Emerging Markets Index and by 34% versus the MSCI World Index.

The outlook for further out performance of emerging market equities versus the developed markets in general and of the Emerging Markets Top Value Model Portfolio in particular, over the next three to five years, remains favorable.

According to Keppler’s analyses, an equally weighted combination of these most attractively valued markets offers the highest expectation of long-term risk-adjusted performance.

Gary

Beware the Straw

Which straw will start the stampede that breaks and brings the US stock market down?

What final bad event will ruin everything?

Often that spark that ignites a collapse is small so beware of the small stuff.

We certainly have enough big stuff.   Earthquakes in Mexico.  Floods in Houston.  Hurricanes in Florida and Puerto Rico.  Fire in California.

Yet the market has risen above them all.

Which one thread, when pulled, will unravel our entire social and financial structure?

Could the after effects from all the recent hurricanes earthquakes and fires bring insurers down?   Could their fall ruin a bank or two and cause an ensuing panic?  Noaa calculated that recent insurance costs will be in the hundreds of billions.  The full financial impact Hurricane Harvey alone could prove more expensive than the catastrophic Hurricane Katrina in 2005, which cost over $160 billion.

Or maybe something simple, like higher interest rates could create a stock market fall.

What’s next?

There is a super volcano beneath Yellowstone National Park. This could expel 2,500 times more ash than Mt St Helens, cover the US in a blanket of ash and even create a volcanic winter.  The last time this erupted with over 600,000 years ago. Scientists believe that a super volcano erupts somewhere every 100,000 years or so.

There is another ancient super volcano beneath California’s Long Valley caldera.

The Cascadia Subduction Zone (CSZ) is another looming disaster, a 620 mile long fault that stretches from Northern Vancouver Island to Cape Mendocino in northern California.  Tectonic action in this zone has previously created huge earthquakes, and monumental volcanoes.  CSZ movement caused Mount Mazama to blow 7,500 years ago and left Crater Lake.  That eruption was 42 times greater than the one of Mount St. Helens in 1980.  Winds caused ash to cover over 500,000 square miles including nearly all of Oregon, Washington, northern California, Idaho, western Montana, and parts of Utah, Nevada, Wyoming, Alberta, British Columbia, and Saskatchewan.

Mount Meager exploded about 2,350 years ago.  This was the largest volcanic eruption in Canada in the last 10,000 years. Mount Meager has also been the source of several large landslides including a massive debris flow in 2010.   Mount St. Helens erupted in 1980.

Major cities at risk to movement in the CSZ zone include Vancouver and Victoria, British Columbia; Seattle, Washington; and Portland, Oregon.

In 2009, geologists predicted a 10% to 14% probability that the Cascadia Subduction Zone will produce an event of magnitude 9.0 or higher in the next 50 years.   In 2010, studies suggested that the risk could be as high as 37% for earthquakes of magnitude 8.0 or higher.

Could this be the straw?

Geologists and civil engineers have broadly determined that the Pacific Northwest region is not well prepared for such a colossal earthquake.  The resulting tsunami might reach heights of 100 feet.   FEMA estimates 13,000 fatalities  plus 27,000 injured and a million people displaced, plus 2.5 million requiring food and water. An estimated 1/3 of public safety workers will not respond to the disaster due to a collapse in infrastructure and a desire to ensure the safety of themselves and their loved ones.

One study suggests that even a magnitude 6.7 earthquake in Seattle could kill nearly 8,000 people, cause $33 billion in damages as 39,000 buildings would be largely or totally destroyed.

Even before the California fires, Hurricane Maria, Irma and Harvey, along with the Mexico earthquakes have led dozens of global insurers and reinsurers to issue profit warnings.

Yet the US stock market continues to rise.

Warren Buffet once warned against the Cinderella effect.

He said “Don’t be fooled by that Cinderella feeling you get from great returns.  Nothing sedates rationality like large doses of effortless money.  After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball.  They know the party must end but nevertheless hate to miss a single minute of what is one helluva party.  Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.”

Cinderella may have lost a shoe when she fled the party.  We can lose much more when we rush from a crashing stock market.

There is inherent disaster building in rising markets… especially now.

Almost everyone feels good.

The clock of economic reckoning is ticking.

No wants to see it.  Nothing rises forever and especially… not everything at the same time.

Choose investments based on markets instead of shares, diversify in value, rely on financial rather than economic news and keep investing simple, easy and at a low cost.

Diversify in value markets, not shares.  One strategy is to invest in country ETFs that easily provide diversified, risk-controlled investments in countries with stock markets of good value.  These ETFs provide an easy, simple and effective approach to zeroing in on value.  Little management and less guesswork is required.  The expense ratios for most ETFs are lower than those of the average mutual funds.  Plus a single country ETF provides diversification equal to investing in dozens, even hundreds of shares.

A minimum of knowledge, time, management or guesswork are required.

The importance of…

easy…

transparent…

and inexpensive. 

Keeping investing simple is one of the most valuable, but least looked at, ways to avoid disaster.  Simple and easy investing saves time.  How much is your time worth?  Simple investing costs less and avoids fast decisions during stressful times in complex situations where we are most likely to get it wrong.

Fear, regret and greed are an investor’s chief problem.  Human nature causes  investors to sell winners too soon, and hold losers too long.

Easy to use, low cost, mathematically based habits and routines help protect against negative emotions and impulse investing.

Take control of your investing.  Make decisions based on data and discipline, not gut feelings.  The Purposeful investing Course (Pi) teaches math based, low cost ways to diversify in good value markets and in ETFs  that cover these markets.  This course is based on my 50 years of investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.

Enjoy Repeated Wealth With Pi

Pi’s mission is to make it easy for anyone to have a strategy and tactics that continually maintain safety and turn market turmoil into extra profit.

One secret is to invest with a purpose beyond the immediate returns.  This helps create faith in a strategy that adds stickiness to the plan.

Another tactic is to invest with enough staying power so you’re never caught short.

Never have to sell depressed assets during periods of loss.

Lessons from Pi are based on the creation and management of Model Portfolios, called Pifolios.

The success of Pifolios is based on ignoring economic news (often created by someone with vested interests) and using financial math that reveals deeper economic truths.

One Pifolio covers all the good value developed markets.  Another covers the emerging good value markets.

The Pifolio analysis begins with a continual research of 46 major stock markets that compares their value based on:

#1:  Current book to price

#2:  Cash flow to price

#3:  Earnings to price

#4:  Average dividend yield

#5:  Return on equity

#6:  Cash flow return.

#7:  Market history

This is a complete and continual study of almost all the developed major and emerging stock markets.

This mathematical analysis forms the basis of a Good Value Stock Market Strategy.   The analysis is rational, mathematical and does not worry about short term ups and downs.

This strategy is easy for anyone to follow and use.  Pi reveals the best value markets and provides contacts to managers and analysts and Country Index ETFs so almost anyone can create and follow their own strategy.

The course examines and regularly reports on the hows and whys of seven professionally managed portfolios so we can learn how managers find and invest in good value.  The Pifolios are:

  • Keppler Good Value Developed and Emerging Market Pifolios
  • State Street Global Advantage Emerging & Developed Market Pifolios
  • Gold & Silver Dip Pifolio
  • ENR Advisory Extra Pifolio
  • Tradestops.com Trailing Stops Pifiolio

tradestops

As you can see in this image (click to enlarge) the top performing Pifolio we are tracking is the State Street Global Advantage Pifolio is up 43.15%.  Here is the breakdown of that current Pifolio.

pifolio

Learn how to invest like a pro from the inside out.

State Street is one of the largest fund managers in the world and their Global Advantage funds invest in good value shares in good value markets.

In the updates we review each portfolio, what has been purchased and sold, why, the ramifications for high risk, medium risk and low risk investors.

As of autumn 2017 my personal Pifolio is based on select ETFs in the Keppler Developed and Emerging markets.  My Pifolio is invested in Country ETFs that cover seven developed and three emerging markets:

Norway
Australia
Hong Kong
Germany
Japan
Singapore
United Kingdom
Taiwan
South Korea
China

Don’t give up profit to gain ease and safety!

This portfolio has outperformed the US market this year as the chart below shows.

My portfolio blue.  S&P… green.

motif

Regardless of economic news, these markets represent good value and have been chosen based on four pillars of valuation.

  • Absolute Valuation
  • Relative Valuation
  • Current versus Historic Valuation
  • Current Relative versus Relative Historic Valuation

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

You also receive two special reports.

In the 1980s, a remarkable set of two economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  Then the cycle ended.  Warren Buffett explained the importance of this ending in a 1999 Fortune magazine interview.  He said:  Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!

I did well then, but always thought, “I should have invested more!”  Now those circumstances have come together and I am investing in them again.

The circumstances that created fortunes 30 years ago were an overvalued US market (compared to global markets) and an overvalued US dollar.  The two conditions are in place again!

30 years ago, the US dollar rose along with Wall Street.  Profits came quickly over three years.  Then the dollar dropped like a stone, by 51%  in just two years.  A repeat of this pattern is growing and could create up to 50% extra profit if we start using strong dollars to accumulate good value stock market ETFs in other currencies.

This is the most exciting opportunity I have seen since we started sending our reports on international investing ideas more than three decades ago.  The trends are so clear that I have created a short, but powerful report “Three Currency Patterns for 50% Profits or More.”   This report shows how to earn an extra 50% from currency shifts with even small investments.  I kept the report short and simple, but included links to 153 pages of  Good Value Stock Market research and Asset Allocation Analysis.

The report shows 20 good value investments and a really powerful tactic that shows the most effective and least expensive way to accumulate these bargains in large or even very small amounts (less than $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

This report sells for $29.95 but in this special offer, you receive the report, “Three Currency Patterns for 50% Profits or More” FREE when you subscribe to Pi.

Plus get the $39.95 report “The Silver Dip 2017” free.

With investors watching global stock markets bounce up and down, many missed two really important profit generating events over the last two years.  The price of silver dipped below $14 an ounce as did shares of the iShares Silver ETF (SLV).   The second event is that the silver gold ratio hit 80, compared to a ratio of 230 only two years before.

In September 2015, I prepared a special report “Silver Dip 2015” about a silver speculation, leveraged with a British pound loan, that could increase the returns in a safe portfolio by as much as eight times.  The tactics described in that report generated 62.48% profit in just nine months.

I have updated this report and added how to use the Silver Dip Strategy with platinum.   The “Silver Dip 2017” report shares the latest in a series of long term lessons gained through 40 years of speculating and investing in precious metals.  I released the 2015 report, when the gold silver ratio slipped to 80.  The ratio has corrected and that profit has been taken and now a new precious metals dip has emerged.

I have prepared a new special report “Silver Dip 2017” about a leveraged speculation that can increase the returns in a safe portfolio by as much as eight times.

You also learn from the Value Investing Seminar, our premier course, that we have been conducting for over 30 years.  Tens of thousands of delegates have paid up to $999 to attend.  Now you can join the seminar online FREE in this special offer.

This three day course is available in sessions that are 10 to 20 minutes long for easy, convenient learning.   You can listen to each session any time and as often as you desire.

The sooner you hear what I have to say about current markets, the better you’ll be able to cash in on perhaps the best investing opportunity since 1982.

https://www.flickr.com/photos/garyascott/5909014941/in/photolist-a1afgX-a1d6vu-a1d6r7-a18iJ6-a1b61w-pVCPYm-pVKgyB-pVCNR1-b6dbJn-4XpTvn-Bu6c32-a3Ltu1-97YGzk-8AiSzK-8ogwR2-8ojuib-8ogj6x-8ogj12-8ogiQn-8ogiMB-8ojtBW-8ogi8n-8oghJT-8ojsCu-8ojsm5-8oggEt-8ojrA9-83sUQc-83sUJg-83vYgN-83vX1o-83vWFN-83vL4y-83vJp1-83sBB8-83vHnm-83sAi6-83syGk-83opmC-7ZSdvK-7ZVo8W-7VHwoi-6Vu1vH-6VtZNX-6Vy4vQ-6VtYzv-6Vy3FS-6Vy3zj-6Vy3n7-6Vy2oS/

Tens of thousands have paid up to $999 to attend.

Next year I celebrate my 52nd anniversary in the investing business and 50th year of writing about global investing.  Our reports and seminars have helped readers have better lives, with less stress yet make fortunes during up and down markets for decades.  This information is invaluable to investors large and small because even small amounts can easily be invested in the good value shares we cover in our seminar.

Stock and currency markets are cyclical.  These cycles create extra profit for value investors who invest when everyone else has the markets wrong.  One special seminar session looks at how to spot value from cycles.  Stocks rise from the cycle of war, productivity and demographics.  Cycles create recurring profits.  Economies and stock markets cycle up and down around every 15 to 20 years as shown in this graph.

stock-Charts

The effect of war cycles on the US Stock Market since 1906.

Bull and bear cycles are based on cycles of human interaction, war, technology and productivity.  Economic downturns can create war.

The chart above shows the war – stock market cycle.  Military struggles (like the Civil War, WWI, WWII and the Cold War: WW III) super charge inventiveness that creates new forms of productivity…the steam engine, the internal combustion engine,  production line processes, jet engines, TV, farming techniques, plastics, telephone, computer and lastly during the Cold War, the internet.  The military technology shifts to domestic use.  A boom is created that leads to excess.  Excess leads to correction. Correction creates an economic downturn and again to war.

Details in the online seminar include:

* How to easily buy global currencies, shares and bonds.

* Trading down and the benefits of investing in real estate in Small Town USA.  We will share why this breakout value is special and why we have been recommending good value real estate in this area since 2009.

* What’s up with gold and silver?  One session looks at my current position on gold and silver and asset protection.  We review the state of the precious metal markets and potential problems ahead for US dollars.  Learn how low interest rates eliminate  opportunity costs of diversification in precious metals and foreign currencies.

* How to improve safety and increase profit with leverage and staying power.  The seminar reveals Warren Buffett’s value investing strategy from research published at Yale University’s website.  This research shows that the stocks Buffet chooses are safe (with low beta and low volatility), cheap (value stocks with low price-to-book ratios), and high quality (stocks of companies that are profitable, stable, growing, and with high payout ratios). His big, extra profits come from leverage and staying power.  At times Buffet’s portfolio, as all value portfolios, has fallen, but he has been willing and able to wait long periods for the value to reveal itself and prices to recover.

keppler asset management chart

This chart based on a 45 year portfolio study shows that holding a diversified good value portfolio (based on a  good value strategy) for 13 month’s time, increases the probability of out performance to 70%.  However those who can hold the portfolio for five years gain a 88% probability of beating the bellwether in the market and after ten years the probability increases to 97.5%.

Time is your friend when you use a good value strategy.  The longer you can hold onto a well balanced good value portfolio, the better the odds of outstanding success.

Learn how much leverage to use.  Leverage is like medicine, the key is dose.  The best ratio is normally 1.6 to 1.  We’ll sum up the strategy; how to leverage cheap, safe, quality stocks and for what period of time based on the times and each individual’s circumstances.

Learn to plan in a way so you never run out of money.  The seminar also has a session on the importance of having and sticking to a plan.  See how success is dependent on conviction, wherewithal, and skill to operate with leverage and significant risk.  Learn a three point strategy based on my 50 years of investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.

The online seminar also reveals  the results of a $80,000 share purchase cost test that found the least expensive way to invest in good value.  The keys to this portfolio are good value, low cost, minimal fuss and bother.  Plus a great savings of time.  Trading is minimal, usually not more than one or two shares are bought or sold in a year.  I wanted to find the very least expensive way to create and hold this portfolio so I performed this test.

I have good news about the cost of the seminar as well.   For almost three decades the seminar fee has been $799 for one or $999 for a couple. Tens of thousands paid this price, but online the seminar is $297.

In this special offer, you can get this online seminar FREE when you subscribe to our Personal investing Course.

Save $468.90 If You 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.  Plus you receive FREE the $29.95 report “Three Currency Patterns for 50% Profits or More”, the $39.95 report “Silver Dip 2017” and our latest $297 online seminar for a total savings of $468.90.

ecuador-seminar

Triple Guarantee

Enroll in Pi.  Get the basic training, the 46 market value report, access to all the updates of the past two years, the two reports and the Value Investing Seminar 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, easy diversified 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 two reports and Value Investing Seminar 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 Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, the “Silver Dip 2017” and “Three Currency Patterns For 50% Profits or More” reports, and value investment seminar, plus begin receiving regular Pifolio updates throughout the year.

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

Gary

 

 

 

 

 

Good News or Ironic?


Well, there ya go.  We made it through October without a serious stock market crash.

That’s good because October has secured a reputation as a bad month for US stocks.

It has a black mark.  It’s the only month since 1950, that has twice had double digit declines.  The Dow dropped 21.67% in October 1987 and 16.79% in October 2008. Plus of course the worst stock crash of all began in October 1929.

In other words October is a scary month because investors are more likely to stampede with a sudden double digit downturn.

It’s the stampede that creates the serious cataclysmic drop.

In terms of average return, October is not a bad month.  It’s tied for the sixth best.

stockchimp

February is the month to be wary according to statistics from Moneychimp.com (1) 

Here are some statistics about  the Dow Jones Industrial Average average return by month since 1950.

 Month                          Up Years   Down Years   Average Return   # of double digit downs

November                          44                   23                     1.38%                              0
December                          50                   17                      1.54%                               0
January                              39                   29                     0.76%                               0
February                            38                   29                   – 0.05%                               1
March                                 43                   24                      1.14%                                1
April                                    46                   21                      1.34%                                0
May                                     39                   28                     0.15%                                 0
June                                    34                   33                    – 0.09%                               0
July                                     37                   30                       0.88%                               0
August                                37                   30                    – 0.27%                                1
September                         29                   38                    – 0.67%                                 1
October                             41                   26                       0.76%                                2

September is the worst month for returns in the US stock market, followed by August, June and February.

The good news.

November and December are the two best months of the year for the US stock market.

If this type of stock history is of any value, then we should not expect and serious retraction in the stock market until at least February.

Ironic.

Beware because markets are full of irony!

Won’t it be if a share crash comes along during these next best two months?

The Reality.

We won’t know till we know.  So we should always protect our investments.

There is three realities we can derive from these statistics.

#1:   Since 1950 the Dow Jones Average has risen an average of  6.87% per annum.

#2:   Since late 2008, the Dow Jones Average has risen almost 172% or 21.5% per annum.

#3:  Periods of high performance are followed by periods of low performance and vice versa.

Gary

(1)  www.moneychimp.com/features/monthly_returns.htm

 

Evidence of Falling Equity Value


Yesterday was the day.  October 29, 1929 saw the beginning of the worst crash in Wall Street history. 

Will it start again?

Cross your fingers.

We can see rising equity risk by analyzing the Autumn 2017 “Keppler Asset Management Good Value Developed Market Review”.

The table below compares values of the Developed Market Portfolios as of the end of September 2017.

This comparison is based on selected variables (current numbers for book value, 12-month trailing numbers for the other variables — no forecasts).

keppler

Our latest Purposeful investing Course (Pi) update, compared this value chart with the value charts for the past year to highlight the steady rise in the Price to Book cost of even the best value equity markets.

Here are the results of the good value developed markets:

Quarter                Price to Book   PE Ratio  Dividend Yield

Autumn 2017              1.54              17.8                 3.17%

Summer 2017             1.47              19.0                 3.31%

Spring 2017                1.44               18.0                3.27%

Winter 2016               1.39               18.0                3.15%

Though the Price to Book has risen, the PE ratio has fallen and dividend yield has also dropped just a bit.  This means that companies have increased profitability and that payout ratios have increased.

But investors are paying more to get the results.

Shares, even in these best value markets, are becoming more expensive.

Another chart (below) shows the entire real-time forecasting history of Keppler Asset Management Inc. for the KAM Equally Weighted World Index, starting at the end of 1993.

keppler

Keppler’s projections are made based on relationships between price and value over the previous fifteen years moving forward in monthly increments and thus adjusting steadily to an ever-changing norm.

The chart includes two remarkable episodes: the five-year period (1997-2001) during which the KAM Equally Weighted World Index stayed above the upper forecast band, and the period starting in October 2008, when it fell below the lower forecast band, where it stayed through April 2014 (5 years and 7 months).

Since then, the Index (red line) has fallen slightly below the lower forecast band again twice last year.

In the past, index levels below or slightly above the lower forecast band turned out to be attractive entry points for long-term investors.

These implicit three-to-five-year projections indicate that the KAM Equally Weighted World Index is expected to rise at a rate that corresponds to a compound annual total return estimate of 3.9 % in local currencies — down from 5.5 % last quarter.

The upper-band estimate implies a compound annual total return of 8.8 % (down from 10.4 % three months ago), while the lower-band estimate of has turned negative in the second quarter for the first time since March 2001.  This indicates a compound annual total return of -1.7 % (down from -0.2 % three months ago).

The Keppler Total Total Projected Returns graph supports the idea that the higher the Price-to-Book rises, the lower the projected return.  Keppler’s projected return has been falling steadily for more that a year as the review below shows.

Projected

Autumn 2017    3.9%                                      8.8%                                   -1.7%

Summer 2017   5.5%                                     10.4%                                   -0.2%

Spring 2017      6.0%                                     10.9%                                    +0.2%

Winter 2016      7.7% down from 9.2%     12.7% down from 14.3%    1.9% down from 3.3%

These indicators suggest a slowing market that could be fueled by a sudden catastrophic drop (my opinion).

This is the first time in 16 years that Keppler’s projections suggest that we could experience a negative return in world stock markets over the next four years.

But overall, holding a weighted portfolio of good value developed shares still offers better opportunity than cash or bonds.

Based on this logic, the current projection is not particularly conducive making a major commitment to equities.

This makes it especially important to add protective positions in your investments and to doubly focus equity investments in good value markets.

Gary

Greed, Fear & Stampedes


Fear & greed. 

Their battle for dominance creates a most dangerous time.

Like a drug addict…  investors know the bull market might kill their wealth.

They cannot stop.

amygdala

See how this small almond shape cluster can bring Wall Street down…. in minutes.

Are there high levels of greed in the US market today?

A New York Times article “Investors Push Into a Resurging Market: House Flipping” (1) suggests that greed is on the rise.

Investors are putting their hard earned cash back into funds that invest in shaky real estate deals.

The article says:  House flipping, which declined after the financial crisis in 2008, is on the rise again, thanks to low interest rates and rising home prices. And with the renewed interest come investors looking for a high return.

Last year, 5.7 percent of all home sales were flips, the highest level since 2006, according to Attom Data Solutions, a national property database.

It’s going to come to an end at some point, but why not make it while you can?

Investors seem undaunted by the risk of a collapse.

Funds set up these days by lenders like Genesis Capital in Los Angeles and Anchor Loans in Calabasas, Calif.

Goldman Sachs’s acquisition of Genesis Capital might demonstrate the evolution of the industry.

Here are signs of fear in the market.

Four months investors began moving away from stocks.  They had pulled $30 billion from the stock market by the beginning of August 2017.

Fear grew.  In September investors pulled $24.36 billion from stock funds. Net outflows increased despite the market rising for a fourth straight month.  This marked 15 consecutive weeks of net mutual fund outflows.

Other signs of fear in the market include a decline in the number of U.S. stocks that are hitting new highs along with the broader market.  Also Dow transports, traditionally thought to rise and fall with the economy, have been on a downtrend.

Fear… investors continue to leave the market.

Greed… the Dow Jones Industrial, S&P and NASDAQ indices continue to rise into new, all time high territory.

Is fear building?

We have almost made it though October, but don’t discount the power of fear.

A New York Times article “A Stock Market Panic Like 1987 Could Happen Again” (2) by Robert Shiller, who won a Nobel Memorial Prize in Economic Sciences in 2013 reminds us how a rapid equity downturn could happen.

The article says: On Oct. 19, 1987, the stock market fell more than 20 percent. It would  be comforting to believe a crash couldn’t recur. But we are still at risk.

From this perspective, I believe a rough analogy for that 1987 market collapse can be found in another event — the panic of Aug. 28, 2016, at Los Angeles International Airport, when people believed erroneously that they were in grave danger. False reports of gunfire at the airport — in an era in which shootings in large crowds had already occurred — set some people running for the exits. Once the panic began, others ran, too.

Like the 2016 airport stampede, the 1987 stock market fall was a panic caused by fear and based on rumors, not on real danger. In 1987, a powerful feedback loop from human to human — not computer to computer — set the market spinning.

Ultimately, I believe we need to focus on the people who adopted the technology and who really drove prices down, not on the computers.

Instead, it appears that a powerful narrative of impending market decline was already embedded in many minds. Stock prices had dropped in the preceding week. And on the morning of Oct. 19, a graphic in The Wall Street Journal explicitly compared prices from 1922 through 1929 with those from 1980 through 1987.

The declines that had already occurred in October 1987 looked a lot like those that had occurred just before the October 1929 stock market crash. That graphic in the leading financial paper, along with an article that accompanied it, raised the thought that today, yes, this very day could be the beginning of the end for the stock market. It was one factor that contributed to a shift in mass psychology. As I’ve said in a previous column, markets move when other investors believe they know what other investors are thinking.

Such feedback loops have been well documented in birds, mice, cats and rhesus monkeys.

Fear that stampedes causes the worst stock market collapses (and greatest opportunity).  The stampede instinct is part of our animal  nature.   The stock market is the savannah where life’s endless struggle continues to play.  Fight or flight.  Which? How do we know?

An article at “Learning fears by observing others: the neural systems of social fear transmission” (3) tells one tale of how our brain reacts when markets crash.

This hard read says “fear acquired indirectly through social observation, with no personal experience of the aversive event, engages similar neural mechanisms as fear conditioning. The amygdala was recruited both when subjects observed someone else being submitted to an aversive event, knowing that the same treatment awaited themselves, and when subjects were subsequently placed in an analogous situation.

This study suggests that indirectly attained fears may be as powerful as fears originating from direct experiences.

The amygdala is a small almond-shaped group of nuclei located deep in the middle of the brain.  It’s part of our lizard limbic system that helps us survive through fight or flight.  The amygdala processes memory, affects decision-making, and emotional reactions.  When senses danger it floods the body with fight or flight stress.

amygdala

Do we fight (buy)?

Or should we be in flight?

The human brain will react and answer these questions based on rumor, despite the facts.

Technology has made viral rumor transmission much easier so the stock market could fall much faster.

This does not mean we should not invest in equities.

We should protect against fear and greed by using these seven ways instead of our fight or flight responses.

#1: Do not care too little about strategy.  Do not overextend yourself.  Invest in good value for the long term and avoid fight or flight stress from the getgo.

#2: Do not panic during the stampede.  Make rational decisions.

#3: Turn on the auto pilot and normally add to your position.

#4: Do not let feelings influence you too much.

#5:  Add some restructuring stories to your portfolio

#6:  Know that a period of low returns will be followed by a period of high returns.

#7:  Place a higher priority on numbers rather than good stories.

Fear & Greed.  They are partners… creating the thrill and the macabre.

Ignore them.  Build on solid, sensible good value foundations that are sized for your wants, needs, desires and timing.  That’s the true path to everlasting wealth.

Gary

(1) www.nytimes.com: House flipping loans

(2)  www.nytimes.com:  Stock market crash 1987

(3) academic.oup.com – Learning fears by observing others

Don’t Give Up Profit for Safety


When you invest in value, you add safety and increase the odds of profit.

Take for example, the company that has almost three times as many customers as the US population.

See it in one of the highest yielding sectors.

Discover that it is selling for less than half the price to book average of the US Stock Market.

At the Purposeful investing Course (Pi) we create fantasy portfolios and track them to learn how to invest for greater profit and increased safety. 

The best performing Pifolio is the State Street Global Advantage Pifolio which is comprised of good value shares listed in good value markets.

That portfolio is up 43.15%.

tradestops

We also review portfolios created by ENR Asset Management, who specialize in value investing and stop loss protection.

Their October Advisory Extra Bulletin was of special interest because it says:

The latter group continues to rank along with energy as the largest dividend-paying sectors in the market this year; both energy and telecom stocks have posted generally poor returns in 2017, down about 9%, respectively. But both offer good dividends at a time when the broader market barely yields 2%.

The most undervalued global telecommunications company in late 2017 is also the world’s largest:  China Mobile ADR (NYSE-CHL).

China Mobile is the leading telecommunications services provider in Mainland China.  It boasts the world’s largest mobile network and the world’s largest mobile customer base, currently 867 million users.

867 million mobile customers alone is 2.69 times more than the US population.

Yet size is not what caught my eye.

The bulletin goes on to say:

This $207-billion-dollar telecom Goliath offers a low valuations multiple, a growing dividend and an earnings recovery as it eventually generates a significant return on its vast 4G network recently made in 2014-2016.

Owing to its early success, China Mobile has generated significant free cash flow. It has not only the strongest balance sheet among telecom companies worldwide, but also one of the strongest, period. At the end of June 2017, the firm had a net cash (including marketable securities) position of USD 71 billion. This cash provides the ability to build out its network faster than its competitors.

From an all-time high of $73.73 per share just ahead of the financial crisis almost ten years ago, China Mobile ADR sits at just $50.50 or 31.5% below its all-time high. CHL now trades just above its 52-week low.  The stock has outperformed most telecom stocks this year, up about 1% but down 12.5% over the last 12 months.

Because Pi is based on mathematical financial news, not economic conjecture and guesswork, the valuations of China Mobile were the especially important feature.  ENR wrote:

The valuations for this company are compelling. China Mobile trades at 12.7 times trailing price-to-earnings, 1.47 times price-to-book value and 1.95 price-to-sales. That compares to a trailing P/E of 15.5x for the iShares Global Telecom ETF (NYSE-IXP) and 2.14x price-to-book value.

BUY China Mobile ADR (NYSE-CHL) at market up to $55. Place a 20% stop-loss below your purchase price.

The MSCI Emerging Markets Index is trading at 1.66  times price-to-book value.

keppler

The MSCI Developed Markets Index is more expensive at 2.32 and the US MSCI index is quite high at 3.13 times price-to-book value.

keppler

This makes China Mobile’s 1.47 times price-to-book value… a value worth considering.

Here is the October 20, 2017 chart for the China Mobile ADR traded in New York.

enr asset management

You can track China Mobile’s New York share price at https://finance.yahoo.com/chart/CHL

ENR’s Advisory Extra Bulletin ends with this warning.

Though impossible to forecast when the market will decline again – it is now been more than 18 months since we’ve seen a decline greater than 10% — a correction or worse is inevitable.

Periods of high performance are followed by periods of low performance.  This is a fact.

Markets move short term based on emotion and are unpredictable.

Markets move long term based on value and are predictable.

When you invest in mathematically based value, not only is safety improved, long term performance is better.

You can see all 20 shares in the ENR Asset Management’s October portfolio as a Pi subscriber.

See details of a Pi subscription below below.

Gary

Learn more about ENR Asset Management  from Thomas Fischer at Thomas@enrasset.com

 

3 Wall Street Warnings


Almost 50 years ago one of my client’s, a top foreign service officer at the US consulate in Hong Kong, approached me.

“Invest $10,000 in a commodity deal.  A Japanese broker gets inside information so we cannot lose. “

So he said.

A quick investigation revealed a sad fact… he was being scammed.

I warned him, “Avoid it like the plague” and  laid out exactly how the broker (aka con artist) would relieve him of his entire $10,000.

Later he told me… with some embarrassment, that he had made the investment anyway.  He lost it all.  $10,000.

Just as I had warned.

Then he dropped a bombshell.

He had invested another $10,000.  The broker convinced him the loss was a fluke and he could get his money back.

He lost that as well…  in exactly the same way.

The whole deal was a bit nefarious.  This is the con artist’s trick… make the deal a bit outside the law.  He could not even file a complaint.

This was the perfect scam.  The client knew exactly what would happen, but did it any way.

Go figure.

Why?

Because the investor was desperate… to make more profit.

This leads me to three warnings about Wall Street.

Before I share these warnings let me add one more thing.

That client convinced me 50 years ago, that no matter what I write… no matter how much I shout… regardless of the logic…  not everyone will listen.

Fair enough.  I might be wrong.

Why listen to me anyway?

Instead I ask you, consider these beliefs I have developed over the past 50 years of my global investing.

No one knows when the super heated US stock market will begin its next bear trend.

But a bear will again descend on Wall Street.

The autumn and winter months ahead are a likely time for the crash to begin.

Yet we cannot be sure.

We can still see profits and growth in US shares and we will… until we won’t.

The volatility quotient of the DJI is about 10%,  so at 22,800, a volatility stop loss should be around 20,500.

The trend is bullish so the trend won’t really break until the DJI drops below 21,500.

Watch carefully.  Be concerned.

Below 20,500, the risk of a crash is very high.

At 20,500, hedge or get out.

Quickly.

Do not delay.  That a sudden crash can take happen in minutes, even tomorrow… or this afternoon or any day.

This warning is not about the market… because equity markets, as rigged as they are, ultimately are rational.

The warning is about ourselves…  our fears. our dreams.  our desires.

Our reactions.

Our weakness is the urge to invest irrationally in a rational market.

That is why we can see a warning in the Wall Street Journal article “Income Investors: It’s OK to Be Sad, But Don’t Get Desperate” (1).

This article warns that markets will ignore your needs.

The article says:  Old bull markets don’t produce new ideas. They just produce new ways for investors to hurt themselves with old ideas.

With stocks at record highs and the income on bonds not far from record lows, circumstantial evidence suggests investors are getting restless — if not desperate.

Chasing “yield,” or trying to get higher investment income, is one form of desperation. Last month, $1.6 billion in new money poured into exchange-traded funds holding high-yield corporate bonds, according to FactSet.

The article explains how a survey of investors found that they “need” returns of 8.5%.  Since 1926, the return on U.S. stocks after inflation has averaged about 7% annually.

What return do you really need?

Markets do not care what you want or need it to do.

The desire for unrealistic returns can prompt us to take dangerous risks.  Just about any get-rich-quick story looks good, as it did for my client in Hong Kong, 50 years ago.

A symptom of an overheated market is when desperate investors are willing to buy blindly without knowing when or whether they will be able to sell.

The US market is at this point.

Overheated.

There is another warning in yesterday’s Wall Street Journal article “Junk Bond Boom Reaches Far Corners of the World” (2).  This tells how frenzied buying of risky assets predicts market turning points.  (underlines and bolds are mine).

The article says: Investors’ thirst for income is enabling governments and companies in some of the world’s poorest countries to sell debt at lower and lower interest rates.

And the global bond boom has even reached Tajikistan.

Tajikistan’s bonds were rated B- by S&P, six notches below investment grade. The ratings firm estimated the country’s per capita gross domestic product at $900, putting it among the lowest of the sovereign nations it rates, but said it sees Tajikistan’s growth prospects improving gradually.

The central Asian country last month raised $500 million in its first-ever international bond sale, paying just 7.125% in annual interest on the debt after the U.S.-dollar offering drew a swarm of American and European buyers.

Greece, which was on the brink of default a few years ago, issued new bonds this past summer, and the National Bank of Greece launched a bond sale Tuesday, marking the first visit of a Greek bank to the credit markets since the country’s sovereign-debt crisis.

And June saw the bond-market debut of the Maldives, a tiny nation in the Indian Ocean that raised $200 million in a sale of five-year bonds with a 7% coupon.

The euphoria is worrying some investors, who warn that frenzied buying of risky assets sometimes presages market turning points.

A third warning, also from the Wall Street Journal, shows that even junk bonds are not risky enough for many investors now.

The article, “Watch Out As Risky Loans Overtake Junk Bonds” (3) outlines how even riskier floating interest rates make loans attractive to investors but could cause pain down the road.

The article says: Yield-hungry investors have made borrowing easier than ever for riskier companies. One sign: this year loans have raced ahead of bonds as the preferred form of debt. But when interest rates rise, this preference could mean trouble.

The very thing that is attractive to investors will become a big problem if interest rates rise sharply.  For the borrowers, which are mainly companies owned by private-equity firms or others with high debt levels, the costs of servicing their debt will increase, cutting profits, or, worse, creating real cash-flow problems.

The stories above provide three signs that Wall Street equity prices could collapse at any time.

Remain alert.  Short-term trading algorithms can cause market trends to shift at astounding speed.

Prepare now what you will do if the markets panic.

Create a plan based on math that reveals good value economic data.

When the crash comes, stick to your plan.

Do not panic.

Turn on the auto pilot and normally add to your position.

Do not let feelings influence you too much.  Use logic and math instead.

Invest in value.

Gary

(1) wsj.com: Income investors don’t get desperate

(2) wsj.com: Junk bond boom reaches far corners of the world

(3) wsj.com: Watch 0ut as risky loans overtake junk bonds

 

Value Reflection


Here is why we need to use mathematically based value information, rather than economic news, to make investment decisions.

Come back with me in time.

Take advantage of my 50 years investing experience.

Gain lessons learned from my decisions.

And sometimes stupidity.

I was a gold and silver speculator in the 1970s and 1980s.

I made a lot of money.

Then I gave most of it back…

Stupid.

My profits came when gold and silver spiked in the late 1970s.

“This will go on forever”, I thought.

“Instability between the USA and the Soviet Union will push up the price of  gold.”

I thought.

Secretary Brezhnev died November, 10 1982.  A power struggle took place in the Kremlin.  Yuri Andropov became the new General Secretary.  US−Soviet relations deteriorated rapidly.   In March 1983, President Ronald Reagan dubbed the Soviet Union an “evil empire”.   September 1, 1983 the Soviets shot down of Korean Air Lines Flight 007  with 269 people including a sitting US congressman, Larry McDonald.

“Gold is really going to sky rocket now!”

I thought.

I bought!

This historical chart of gold’s price (that period is lined in red) shows how that went well.

gold

Gold’s price crashed.

I lost.

Let’s apply this lesson to yesterday’s wall Street Journal article “Gold Prices Fall to Seven-Week Low as Dollar Strengthens” (1)

The article says:  Gold prices fell to a nearly two-month low Monday, weighed down by a stronger dollar.

Gold for December delivery edged down 0.7% to $1,275.80 a troy ounce on the Comex division of the New York Mercantile Exchange—the most actively traded gold contract’s lowest close since Aug. 8. Prices have fallen in four of the last five sessions and in three consecutive weeks since hitting their highest level in more than a year, with concerns about interest-rate increases and a stronger dollar hurting the precious metal.

Investors have also largely shaken off recent geopolitical risks, weakening demand for gold and other haven assets that typically rise during times of political turbulence. Gold prices fell Monday even after voters in Catalonia backed independence from Spain in a referendum that was boycotted by opponents and marred by violence, and after President Donald Trump rejected dialogue with North Korea.

This could suggest that its time to sell gold.

My math based value assessment suggest the opposite.

It’s closer to the time to buy gold.

There are seven layers of tactics in the value based Purposeful investing (Pi) strategy.

Pi Tactic #1: Determine purpose and good value.

Pi Tactic #2: Diversify 70% to 80% of portfolio equally in good value developed markets.

Pi Tactic #3: Invest 20% to 30% equally in good value emerging markets.

Pi Tactic  #4:  Use trending algorithms to buy sell or hold these markets.

Pi Tactic  #5:  Add spice speculating with ideal conditions.

Pi Tactic  #6: Add spice speculating with leverage.

Pi Tactic  #7:  Add spice speculating with forex potential.

An “ideal condition” is a rare distortion of an economic fundamental that history has shown “almost always” reverses itself.  

The words “almost always” indicates that there is always risk, but our in depth analysis of gold’s price at Pi shows that based on inflation anytime gold drops below $1,225 the price is distorted, is a good value and is time to buy.

In other words we are at a price where its almost time to begin accumulating gold.

More of  yesterday’s Wall Street Journal news “U.S. Stocks Close at Records” (2)  suggest that US shares are really hot.  The article says: Dow industrials, S&P 500, Nasdaq Composite and Russell 2000 close at records together for the first time since July.  Major U.S. stock indexes advance.  Euro falls after Catalan vote. Spanish bonds, stocks under pressure.  U.S. stocks clinched new records Monday, as fresh economic data bolstered investors’ beliefs in a resilient economy.

Over past decades I have experienced how readers react when markets continually jump from high point to high, so I am issuing the following warning for the third time in a week.

No one knows when the super heated US stock market will begin its next bear trend.

What we do know is the value of the US market compared to its history and to other stock markets around the world.

The numbers below from Keppler Asset Management, another source of data we follow at Pi,  shows that the price-to-book of the MSCI US Share Index at 3.13 price-to-book is still well below the super inflated price to book of 4.23 in December 1999.

keppler

A bear will again descend on Wall Street.

The autumn and winter months ahead are a likely time.

Yet we cannot be sure.

We can still see profits and growth in US shares and we will… until we won’t.

All stock markets have risk and volatility, but that if you invest in the top ten good value markets, that have a price-to-book of just 1.43,  this is a much better deal than paying 3.13 price to book  for US shares that are their record high.

Take extra caution in your equity investments now.  The volatility quotient of the DJI is about 10%.

The trend is bullish so the trend won’t break until the DJI drops below 20,000.

That could happen in minutes tomorrow… or any day.

Remain alert.  Short-term trading algorithms can cause market trends to shift at astounding speed.

Prepare now what you will do if the markets panic.

Create a plan based on math based good value economic data.

Include watching the price of gold.

When the crash comes, stick to you plan.

Do not panic.

Turn on the auto pilot and normally add to your position.

Do not let feelings influence you too much.  Use logic and math instead.

Gary

(1) www.wsj.com: gold prices edge lower

(2) www.wsj.com: stock markets off to a strong start

 

The Worst Month for Investments is Here


Statistically, September – and not October – is the worst month of the investing calendar year.

Throw in three major hurricanes and two earthquakes that could shake the solvency of the insurance industry.   Add in concerns that in October the Federal Reserve will  begin to shrink the portfolio of bonds it has acquired since the 2008 crisis.

This may spice it up with little things like… more earthquakes in Japan near nuclear plants… terrorism… maybe even some shooting from or at North Korea.

These are a lot of negatives thrown at an overpriced stock market sitting at all time high levels.

ENR Asset Managers is one of the three sources we use in our Purposeful Investing Course. They recently sent me this warning I want to share with you:

A market decline is not inevitable but also likely to be violent because of short-term trading algorithms that increasingly dominate market orders.

The report also asks and answers an important question.

You might be wondering why even bother owning portfolio hedges like Swiss francs or gold when the world economy seems to be in acceleration mode. Good point. For the first time in ten years, the world’s major economies are growing in sync – even historical laggards like Japan have come alive in 2017.  Italy and Greece, too.  According to the OECD, all 45 countries tracked in its universe are poised to grow compared to 12 months earlier – the first time since 2007.

The problem with a synchronized global economic recovery is that it’s rare and usually symptomatic of an ageing credit cycle. The last time it occurred was in the late 1980s (just ahead of a global recession and S&L Crisis) and in 1973 (oil embargo, high inflation and a dismal decade for financial assets).  Since last spring, we’ve documented the growing list of credit concerns in the United States and in China.

Respect the volatility of the US stock market and note the fact that most bear markets begin after September because September is statistically the worst slow down month for US shares.

macrotrends.org

The chart above from Macrotrends.net (1) show that in October 1999 the Dow Jones Industrial Average was 15,665.  By September 2002 it was 10,294.

In October 2007, the DJI was 16,367.  By February 2009 it was 8171.

No one knows when the super heated US stock market will begin its next bear trend.  The numbers below from Keppler Asset Management, another source of data we follow at Pi,  shows that the price-to-book of the MSCI US Share Index at 3.13 price-to-book is still well below the super inflated price to book of 4.23 in December 1999.

keppler

We only know that a bear will again descend on Wall Street, and the months ahead are a more likely time.  We also know that all stock markets have risk and volatility, but that if you invest in the top ten good value markets, that have a price-to-book of just 1.43, you’ll see the best long term performance.

Take extra caution in your equity investments now.  The volatility quotient of the DJI is about 10%.  Currently the trend is bullish so one would not expect the trend to break until the DJI hits around 20,000.  We can still see profits and growth in US shares and we will… until we won’t.

The only thing we can see is that investors are paying way more than they should.  This bullish trend is fueled by the greater fool theory, so let’s remain alert.  Short-term trading algorithms can cause market trends to shift at astounding speed.

Gary

(1)  www.macrotrends.net: Dow Jones 100 year historical chart

 

 

How Big Investing is Small


Merri’s and my personal equity portfolio is one of the most complicated in the world.

Thousands of shares in 18 non US stock markets are represented.  The investments include dozens of currencies.  One precious metal has been added to the mix.

Yet this big, complicated portfolio has a small cost, requires only small amounts of time and has the smallest amount of worry.

Our trading cost for this monstrosity?

Less than $20 in the last two years.

This must take huge amounts of time?

Just minutes…

The investments took just minutes to buy and only spend minutes a week monitoring the results.

This gives me time to focus on my  passions-family, life and my work, which has always been a more dependable source of  sustenance than investments.

Here is a review of one of Merri’s and my personal investment accounts using the principles of the Purposeful Investing Course (Pi).

This particular Portfolio is held at the online brokers Motif.com.  This means that my original investment of $40,000 has trading costs of just $9.95.  I added the platinum ETF PLT which cost another $4.95 so my trading costs in two years has been less than $20.

This portfolio (Blue Line) has risen much faster than the S&P 500 (Green Line) in the last 6 months.

motif

Click on images to enlarge.

Here are the shares in the portfolio.

motif

motif

motif

motif

This personal Pifolio is heavily weighted in the developed markets. Here is why.

Pi depends on the value analysis of Keppler Asset Management and the latest Keppler analysis of good value emerging markets show that the price to book is 1.34 compared to 1.47 for good value developed markets.  The PE ratio of the emerging markets is much better, 12.9 versus 19.0 but here is the catch… the average dividend yield for emerging and developed markets is almost the same, 3.35% for emerging markets versus 3.31% for developed markets.

Developed markets have lower volatility.   This stability, along with the similar dividend yields, fits my personal needs (higher income) as Merri and I are in our 70s and we don’t work as hard as we used to.

Emerging Market Values

keppler

Developed Market Values

keppler

This is a low cost portfolio.  The shares have been purchased at a good price to book value.

Compare the price to book of our portfolio to the US Stock Market.  We purchased our shares at about 1.4o to book.  On average you’ll buy US shares at 3.13 times their book value. On top of that, our portfolio earns an average yield of  about 3.3% compared to the average yield you’ll earn from US shares.

We can never know what will happen n the global economy.   We can know how much we are paying for this unknown and we are paying a lot less (and getting more).

Plus currently there is good appreciation.  We get all this plus enjoy more time because very little time is required to monitor this portfolio.

This is a formula which fits Merri’s and my needs and might fit yours as well!

Whatever your needs, when investing, always look for value, keep your costs low, diversify but not too much and remember that every investment has risk.

The Purposeful Development Course (Pi) is currently examining each Good Value Stock Market in good value countries, one at a time.  Learn more about Pi below.

Gary

How to Profit From Ugly


There is so much change.   It’s hard to keep up!  So here’s a tip.

Change is good because…

If nothing changed we could never get ahead.  We would be stuck where we are, in static.

Besides, we all know that nothing is constant.

All the promises we hear about to return to how it was is are just for illusion’s sake.

There is nothing but one way to move…

We have to move ahead.

Here is one way to take advantage of this universal fact.

usda

USDA standards are a refection of how most people ignore true value.

When Merri and I moved to our home in Central Florida we inherited a small commercial, navel orange grove that was attached to our house.

This created a small business and also gave us a supply of all types of citrus, any time we want, right off the tree.

Here’s a tip our grove manager  gave us.  “The ugliest oranges are usually the sweetest fruit.”

Yet the USDA standard’s are based mostly on fruit looking good.

For a fruit to be labeled U.S. Fancy it must meet the following basic requirements:

1) Well colored and not more than one-tenth of the surface, in the aggregate, may be affected by discoloration.
2) Firm, mature, smooth texture.
3) Well formed.

These are great characteristics for art… but food?  What about taste, nutrition, lack of toxicity?

This is the way things are.

This fact can help us find ways to live in a better way.

A recent Wall Street Journal article “Head of America’s Largest Grocer Talks Amazon and Ugly Tomatoes”  gives us a clue when it says:  Kroger facing slowing growth and more competition online and from discount chains like Wal-Mart

Mr. McMullen: I grew up on a farm. Last Sunday, I went out to see my parents and their garden, and I find the produce that looks the ugliest tastes the best.

Here is the tip…

Most people fear change so they are willing to accept the appearance of stability.  Look beneath the surface, for deeper values.  This search makes you rare, astute… wise.   Therein lays opportunity.

There will be change…

Most will resist it., but as Confucius said: “They must often change, who would be constant in happiness or wisdom.”

We have to change with the times.   Look for real, beneath the skin value. That’s the trick to everlasting wealth.

Gary

One change that is likely to take place due to the storms is acceleration of the falling US dollar. See how to get protection (and profit) from this trend below.

(1) www.wsj.com: Head of Americas largest grocer talks amazon and ugly tomatoes