The Brexit Boost


Economic opportunity is created by supply and demand.  A growing global population, if put to work in increasingly efficient ways, increases everyone’s wealth.  This real growth is reflected in long term stock prices that fluctuate short term (based on greed and fear) as they rise.

Short term change, that does not affect supply and demand, but causes a global stock spike, up or down, creates distortions that can boost profits.  Brexit is such a change as it has created a lot of fear.

Brexit created  a distortion we can see in the price of the Vanguard International Equity Index Fund (symbol VT).  This ETF reflects global share prices as it tracks benchmark indices created from the price of 7,728 stocks in 46 developed and emerging markets around the world. The fund tracks the performance of the FTSE Global All Cap Index, a float-adjusted, market-capitalization-weighted index designed to measure the market performance of large, mid-and small-capitalization stocks of companies located around the world.

finance.yahoo.com chart

This chart from www.finance.yahoo.com shows how share prices dropped globally after the Brexit vote.

Brexit may cause a wrinkle, up or down, in the global market place, but nothing compared to the market’s reaction.

The basics of global wealth growth remain good.  For example, the latest Federal reserve report on American household wealth shows it climbed to new peaks bolstered by rising real-estate values that more than compensated for a flat stock market.  The net worth climbed by $695 billion to $85.7 trillion.  Global wealth increased as well.

Investing in this long term global economic growth enhances the odds of top investing performance.

ETFs and indexing are one of the most efficient ways to  capture this growth.

ETFs are one of the easiest but least expensive ways to invest in value.  Indexing strategies aim to equal a specific market index as closely as possible.

Benefits of ETFs over traditional mutual funds include:

Better performance.  Statistics show that more than 75% of all active money managers fail to beat a bellwether index in their sector over short and longer term periods.  Most actively-managed stock funds can’t beat the stock market nor can they beat investors who use indexing.

Reduced  tax.  Actively managed funds exert a heftier tax bill on portfolios than passive products.

Lower portfolio turnover cost.  Every time a manager makes a trade, there’s a cost.  ETFs invest in the shares that compose the index and do not trade.  In a typical year actively managed funds in the US turn over 85% of their holdings.  Remember that this activity resulted in poorer average results than the indices for 75% of these funds.

Anticipating short term price movements is like trying to predict wave tops on an incoming tide.  Indexing with ETFs lets you invest in distorted sectors in the least expensive way.

According to Keppler Asset Management, the United Kingdom MSCI Stock Market Index was already a good value market before Brexit.  The Price to Book at last valuation was 1.71, (World index 2.09) PE ratio 18 (World index 19.3) and dividend yield 4.35%, (World index 2.66). That yield is the highest of all good value developed markets.

These UK valuations are much better than the MSCI World Index.

keppler chart

Logically an index investment in the UK is better than an indexed investment in world markets at this time.

Combine Value and ETFs

Even better is an equally weighted investment in each of the good value developed markets.  Adding this well diversified, equally weighted good value investment during a global market dip increases safety and profit potential.

Here are the valuations of the good value developed markets.

keppler

Brexit is such a complicated issue.   The unintended and unexpected consequences, good and bad, will go on for years.

Indexing strategies, that focus on value, cut through all the complexity.  There are more people every year, more productivity, more supply and more demand.  Value indexing allows us to diversify into value for the long term and ignore all the time wasting and stress creating ups and downs.

This is how investing should be- a simple, easy, fast way to feel increasingly secure in a volatile world.

Gary

“If I Live Long Enough, I’ll Really Cash In Next Time”

Periods of good investing performance are always followed by periods that are bad.

Think about this…

The US dollar has risen over 50% above its lows of 2011.   The greenback is at its highest level versus the Chinese yuan since 2008.  India’s rupee is at an all-time low against the buck.  Other Asian currencies, the Singapore dollar and Malaysian ringgit have plunged to depths not seen since the financial crisis of 1997-98.  The euro, Mexican peso and Canadian dollar have crashed.  In other words, the US dollar is in a period of high performance.

What happens is the greenback is in a free fall.  Smart investors can cash in huge profits.

Yet there is a bigger economic problem that can ruin the purchasing power of your cash faster than you can imagine.

While the dollar was rising non US governments and businesses accumulated almost ten trillion dollars of debt denominated in US dollars.

The terror in this debt is that it acts as a destructive and very rapid financial amplifier.  Dollar debt is like a short position.  When the dollar rises, borrowers scramble to short-cover their position by selling their own currency.  This defeats the purpose of their hedging as it increases the strength of the dollar.  So they short even more.  Those short sales create an upward dollar spiral.  The buck rises higher and higher, based entirely on fear and speculation.

When that leverage energy is spent the currency stalls and plummets out of control… like now.

The last time we saw such a upwards spiral was from 1980 to 1985.  The dollar rose 50% in those five years.

Guess what?

Then it collapsed 50% in just two years.

The US dollar is in a similar position as at the beginning of Ronald Reagan’s first term in the 1970s.  This was a time of widening budget deficits, rising interest rates and a US dollar surge.  This created a problem then, as it does now, and creates huge opportunity for those in the know.

The rise of the dollar, the debt and the US stock market creates an especially dangerous conflict because Donald Trump wants to balance America’s trade.  A stronger dollar makes this impossible because it pushes up the cost of US material, US labor and US exports.

The overpriced dollar, the poor value of the US stock market (compared to other markets) create a dollar crisis and a special opportunity for you and me as investors.

“If I Live Long Enough, I’ll really cash in next time”.    I made this promise to myself in the 1980s.   A remarkable set of economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  I invested as much as I could handle then as the profits rolled in for about 17 years.  I had wished I could have invested more.

Now those circumstances are here again.

And I have…

invested more… a lot more… betting again the dollar.

The swollen stock market prices, huge dollar denominated debt and weakening dollar are three patterns that can create a fast 50% profit.

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 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.

There is a way to accumulate good value equities denominated in the following currencies of special strength, including the Euro, Canadian dollar, Singapore dollar, British pound, New Taiwan dollar and Chinese yuan.

The report reveals 21 special non dollar equities that have the greatest opportunity for safety and appreciation.

I kept the report short and simple, but include links to 153 pages of global stock market and asset allocation analysis so you can keep this as simple or as complex as you desire.

The report shows 22 good value investments and a really powerful tactic to use that allows you to inexpensively accumulate these bargains now even in very small amounts (even $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

Research shows that most people worry about having enough money if they live long enough.   I never thought of that.   I just wanted to live long enough to see the remarkable economic opportunity that started in 1980 come again so I could hit the jackpot.  This powerful profit wave has begun.  I have made the investment myself  suggest you investigate this in my report “Three Currency Patterns For 50% Profits or More.”

Order the report here $29.95

My Guarantee

Order now and I’ll email the online report “Three Currency Patterns For 50% Profits or More” in a .pdf  file right away. 

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 within 60 days and I’ll refund your subscription fee in full, no questions asked.

You can keep the report “Three Currency Patterns for 50% Profits or More”  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.

Order the report here $29.95

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