The Error of Time & Race


There is value in stock market corrections.  Loss can actually mean profit.

When users of commodities, that always rise in price long term, see a price temporarily depressed short term…  they stock up!   The lower the price goes,  they more the user buys.

As long as they don’t drain their liquidity so they are forced to resell that commodity at a lower price, they can’t lose, especially if they are paid to hold the commodities they scooped up in bargain deals.

The chart of a portfolio we created, hold and track in our Purposeful Investing course (we call it a Pifolio) shows that it did not perform well in 2018… apparently.

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Of course, few portfolios performed well if you measured success starting in January 2018 and ended in December 2018.

This is the biggest error of most stock market investors… to measure up in time.

They invest on the basis of time and race.

The typical investor makes their portfolio a race against time.

They cut up equity performance into arbitrary bits of days, weeks, quarters, years to date and years.

Then they let the illusions created by the normal heartbeat of the market play with their emotions.   They feel good or bad.  They feel rich or poor.  They feel like winners or losers.  They feel the emotions of fear and greed. The faster the market’s heart beats so too does their.  They act based on these emotions.  Because fear outweighs greed, they act fearfully more often than not and because markets always rise long term, they are perpetually wrong.

They lose money.

Even worse they let these illusions interfere with their quality of their life and after all… this is what investing is, or should be about…. enjoying a better quality of life.

The investment turmoil of 2018 was worse than most because it came upon a US market high.  Nobody wants a great party to end.  Yet everyone edges towards the exit doors.  They keep casting looks upon the fun and excitement with a wary eye.

Living this way is exhausting and its’ all created by the illusion of investing on a time and race basis.

The 2018 volatility was different than normal market turbulence because there was a low stock and stock-bond correlation.

Individual stocks moved out of sync with one another, rather than in tandem. This created an uneven price action that was impossible to predict and plan for.

The market’s sell-off from October 2018 left investors with few places to hide as each sector went through starkly different declines at different periods.

We can use such downturns and turmoil to spot extra value and profit potential and can expect 2019 to be a banner year for accumulating value.

The underperformance of our global top value Pifolio compared to the S&P 500 (green line in the chart above) was due, in part, to the fact that international equities fell more than US shares.

ENR Asset Management clarified the opportunity created by the global share weakness in its January 2019 Market Outlook: The destruction across global markets has resulted in some of the best absolute values in years, particularly for beaten down foreign stocks.

The lower overseas shares pricing, according to Motif (the losw cost online broker we use) results in higher values and lower volatility.  Here’s Motif’s ranking of the Pifolio… very high value and only medium volatility.

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One of the bigger reasons why overseas shares appear to have underperformed US shares is the rise of the US dollar.

The current strength of the dollar creates a forex profit opportunity and helps the competitiveness of overseas companies.

ENR’s Market Outlook shows why the dollar is likely to drop and push up overseas share prices.

The Outlook says: U.S. Dollar Index Rallies 4.3% in 2018

The U.S. dollar has now completed its seventh year of a bull market advance. In 2018, the USD steamrolled every currency in the world and posted its best year since 2014.

Supported by a hawkish Federal Reserve following seven interest rate hikes since December 2015, the central bank is poised to soften its rhetoric next year as the American economy slows, Chinese-U.S. trade wars remain a wildcard and Brexit dominate its outlook.

ENR will conduct its Global Investment Outlook in 2019 investor conference call on Thursday, January 31 at 1.30pm EST.

You can get a copy of the PowerPoint presentation ahead of the call. Email info@enrasset.com or call toll-free at 1 877 989 8027

Interest rates are a huge component in a currency’s strength and this interest rate chart from the Economist shows how US dollar rates are far higher than the pound, euro and yen.

The US dollar interest rate is more than double the British pound rate, seven times higher than the euro rate and 30 times higher than the yen rate!

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Many analysts believe the Fed will slow down it’s rate increases this year.

The January 4, 2019 Wall Street Journal article “Fed Chairman Powell Sees Flexibility on Rates This Year” (1) spotlights how the Fed is backing off its trend to raise rates every quarter.

The article says: Stocks rally after chairman says central bank isn’t on a fixed path to push benchmark rate higher.

ATLANTA—Federal Reserve officials on Friday laid the groundwork to take a break from raising short-term interest rates in coming months, propelling stock prices already cheered by a stronger-than-expected December jobs report.

Fed Chairman Jerome Powell said mild inflation would give the central bank greater flexibility to set policy in the year ahead and that the Fed, which raised rates once every quarter last year, wasn’t on a “pre-set” path to push its benchmark rate higher.

Numerous factors beyond the interest rates may keep US dollar interest rates down.

US business wants a weaker US dollar.  Approximately 37% of revenues derived by S&P 500 Index companies are earned abroad; a weaker dollar helps boost sales.

The US government wants a low US dollar interest rate.  The Treasury’s huge financing needs are assisted greatly by low interest rates helps keep the debt service low.

The government will have to pay higher interest rates that creates the really big problem of rising national debt service. 

For more than a decade American national debt has been skyrocketing.  At the same time interest rates were plunging and have remained really low.  Now rising rates put a kink in that formula. Rising rates mean rising US debt service unless the government balances its budget.  How likely is that?

This is why holding good value international stocks, that are non dollar denominated, has extra potential now.

All investors need to diversify in more currencies than just the greenback.  The Pifolio provides low cost diversification, adds safety and increases profit potential in an EZ way that ignores the time race and looks only at value in equities on a global basis.

Gary

The Only 3 Reasons to Invest

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The stock market has always been the best place of places to protect and increase wealth over the long haul.   Yet it’s also been the worst place to lose money, a lot of it, quickly.

There are only three reasons why we should invest.  We invest for income.  We invest to resell our investments for more than we had invested.  We invest to make our world a better place.

The goal of investing should be to stabilize our security, bring feelings of comfort and elimination of stress!

We should not invest for fun, excitement or to get rich quickly. We should not divest in a panic due to market corrections.

This is why my core stock portfolio consists of 19 shares and this position has hardly changed in three years.  During this time we have been steadily accumulating the same 19 shares and have traded only three times.

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This portfolio is built around a strategy that’s taught in my Purposeful Investing Course (Pi).  I call these shares my Pifolio.

This portfolio more or less matched the S&P 500 until May 2018.  Then a stronger US dollar made the portfolio look like it was falling behind.   This currency illusion creates a special opportunity we’ll view in a moment.

This portfolio above is based on stock price to value analysis built around 91 years of stock market data.

The value analysis is used to create a portfolio of MSCI Country Benchmark Index ETFs that cover  stock markets that are undervalued.  I have combined my 50 years of investing experience with the study of the mathematical market value analysis of Michael Keppler, CEO of Keppler Asset Management.

In my opinion, Keppler is one of the best market statisticians in the world.  Numerous very large fund managers use his analysis to manage over $2.5 billion of funds.  However because Keppler’s roots are in Germany (though he lives and operates from New York) and most of his funds registered for the European Union, Americans cannot normally access his data.

I was lucky to have crossed paths with Michael about 25 years ago, so I am one of the few Americans who receive this data and you will not find his information readily available in the US.

In a moment you’ll see how to remedy this fact.

The Pifolio analysis begins with Keppler’s research that continually monitors 46 stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  Then Keppler takes market’s history into account.

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Michael Kepler CEO Keppler Asset Management.

Michael’s analysis is rational, mathematical and does not cause worry about short term ups and downs.  Keppler’s strategy is to diversify into an equally weighted portfolio of the MSCI Indices of each good value (BUY) market.

This is an easy, simple and effective approach to zeroing in on value because little time, management and guesswork is required.  You are investing in a diversified portfolio of good value indices.

A BUY rating for an index does NOT imply that any one stock in that country is an attractive investment.  This eliminates the need for hours of research aimed at picking specific shares.  It is not appropriate or enough to instruct a stockbroker to simply select stocks in the BUY rated countries.  Investing in the index is like investing in all the shares in the index.  You save time because all you have to do is invest in the ETF to gain the profit potential of the entire market.

To achieve this goal of diversification the Pifolio consists of Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2019.

70% is diversified into Keppler’s good value (BUY rated) developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in Keppler’s good value (BUY rated) emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the MSCI indicies of the good value BUY markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (PI).  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 get this course when you enroll in our Purposeful Investing program (Pi) with a triple guarantee.

Triple Guarantee

Enroll in Pi.  Get the 130 page basic training, a 46 stock market value report, access to all the updates I have sent in the past three years, two more reports on investing (described below) and an online 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 118 page 46 market value analysis, access to over 100 previous Pifolio updates, the “Silver Dip 2019” and “Three Currency Patterns For 50% Profits or More” reports, and value investment seminar, plus begin receiving regular Pi updates throughout the year.

Subscribe to a Pi annual subscription for $99 and receive all the above.

You also begin receiving regular emailed Keppler analysis and online access to all that analysis of the last three years.  Each update examines the current activity in  Pi, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 118 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 covering thousands of shares.

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 one of two reason why my Pifolio lagged behind the S&P 500 from May 2018.

The US dollar has become overly strong.

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 strong dollar gives non US shares extra profit potential.

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.

Enroll in Pi.  Get the 130 page basic training, a 46 stock market value report, access to all the updates I have sent in the past three years, two more reports on investing (described below) and an online Value Investing Seminar right away.  Subscribe to a Pi annual subscription for $99 and receive all the above.

The Time for Value is Near

Overseas, value investing is really a bargain following a dismal year in 2018.

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It’s no secret that value-based equities in the United States and overseas have lagged their growth cousins since 2009.  It’s unusual for value to lag growth this long (see above chart).

Why has value so badly trailed growth in this cycle?  Investors have embraced growth because of accelerated earnings and growing revenues in sectors of the market that continue to lead the charge in this bull market: technology.

Recent declines in tech shares suggests that we’ll soon see a return to value.

Plus get the $39.95 report “The Silver Dip 2019” 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 Dip Strategy with platinum.   The “Silver Dip 2019” 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 2019” about a leveraged speculation that can increase the returns in a safe portfolio by as much as eight times.

Subscribe to a Pi annual subscription for $99 and receive all the above.

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.

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

In 2018 I celebrated my 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.

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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.

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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 $366.90 If You Act Now

Subscribe to the first year of The Personal investing Course (Pi).  The annual fee is $99, but to introduce you to this online, course that is based on real time investing, I am including FREE the $29.95 report “Three Currency Patterns for 50% Profits or More”, the $39.95 report “Silver Dip 2019” and our latest $297 online seminar for a total savings of $366.90.

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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.

On other bit in the bargain is that after the first year, you will continue to receive the market analysis but for only $39 a year.   You can cancel at any time, but for just over $3 a month you’ll receive all my updates on global investing.

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 118 page 46 market value analysis, access to over 100 previous Pifolio updates, the “Silver Dip 2019” and “Three Currency Patterns For 50% Profits or More” reports, and value investment seminar, plus begin receiving regular Pi updates throughout the year.

Subscribe to a Pi annual subscription for $99 and receive all the above.

Gary

(1) www.wsj.com: Fed chairman Powell sees flexibility on rates this year