Treat the Terror – Not the Problem


Is the coronavirus really a risk?

There’s many things we can be terrified about.  But we should not be.  See how to stop the fear below.

coronavirus

Our real fear should be of mania created by the news.

Take terrorism as an example.

Terrorists really cannot defeat us.  Yet, look at how much the Western world has distorted its way of life over terrorism mania.

I do not claim in any way to be a military strategist but do try to follow the thinking of those who are good at strategic global thought such as… the late Lee Kwan Yew.  See his perspective on terrorism and the press.

I worked and spent a lot of time in Singapore during the late 1960s and early 1970s and recall vividly the way Singapore used to be.  Lee Kwan Yew had a lot to do with Singapore emerging from a form of colonialism, that included a lot of poverty, to one of the wealthiest societies in the world.

Lee Kwan Yew outlined the risks of relying on local press in an with UPI’s Arnaud de Borchgrave, when asked the question “why don’t democracies produce great statesmen anymore?”  Here’s an excerpt.  Bolds are mine.

A: I don’t know how long this phase will last, mass media domination, owned by a group of media barons who want constant change for their balance sheets.   But it’s also the enormous pressure of media competition and the giant appetite for advertising revenue, what television program gets what viewership, or eyeballs, or clicks online. Never mind the consequences. If you get the advertising, you win.

Even if we can’t win, we mustn’t lose or tire. We cannot allow them to believe they have a winning strategy, and that more suicide bombers and WMD will advance their cause and give them a chance to take over. 

But let me repeat, they cannot conquer you.  They can create trouble.  So micro actors can cause a lot of trouble for your friends, but they can’t eradicate them.

How to treat the terror.  Mania in stock markets can ruin our investing if we let it.  Be smart rather than fearful.  Get, and act on, math based facts…  not the scary headlines in the news. 

It’s a fact.  Terrorists cannot defeat us.  Plus the math suggests that the coronavirus is not as serious as the press is making it.

Here are some math based facts about COVID-19 that the MD, I have used for decades, sent me.

medscape

Medscape says, bolds are mine (1): The mortality rate associated with COVID-19 may be “considerably less than 1%,” instead of the 2% reported by some groups, write Anthony Fauci, MD, director of the National Institute of Allergy and Infectious Diseases, and colleagues in an editorial published February 28 in the New England Journal of Medicine.

The editorial appeared alongside a report by Wei-jie Guan, PhD, and colleagues, that characterized 1099 patients with laboratory-confirmed COVID-19 from 552 hospitals in China through January 29, 2020. Guan is with the Guangzhou Institute of Respiratory Health, First Affiliated Hospital of Guangzhou Medical University in China,

“Guan et al report mortality of 1.4% among 1099 patients with laboratory-confirmed Covid-19; these patients had a wide spectrum of disease severity. If one assumes that the number of asymptomatic or minimally symptomatic cases is several times as high as the number of reported cases, the case fatality rate may be considerably less than 1%,” Fauci and colleagues write.

“This suggests that the overall clinical consequences of Covid-19 may ultimately be more akin to those of a severe seasonal influenza (which has a case fatality rate of approximately 0.1%) or a pandemic influenza (similar to those in 1957 and 1968) rather than a disease similar to SARS or MERS, which have had case fatality rates of 9 to 10% and 36%, respectively.”

Even a 1% mortality is terrible.  Merri and I are aged 73 and 77, so we have noted the added risk, but as an actual killing illness for all of society, COVID-19 is a minor league player compared to SARS or MERS.

Look at the facts.

Fact #1: We all know that stock markets rise and fall.  This is the nature of all markets.

Fact #2: The US stock market was far too expensive.

Fact #3: The time was past due for stock market prices to correct.

Fact #4: Periods of high performance are always followed by periods of low performance and vice versa.

Pay attention to the vice versa.

We know that there will be a rapid upwards shift in the stock market after the panic subsides.

The only question is when and this is what we should be planning for.

The best time to sell shares is when investors are buying and the best time to invest is when market mania sells.

Now is the time to create a plan of extra investing in the stock market in the era of great opportunity ahead.

Yesterday we sent our Purposeful Investing Course (Pi) subscribers a full analysis of 100 years of stock market crashes, in 1929, 1966, 1999 and 2010) so they can learn what to expect and know when to take advantage of the enormous opportunity building up now.  Here’s an excerpt from the study we sent.

Fast forward to the next bear that began in 1966. The DJIA reached a high of 7,884 in December 1966.

Investors who invested right at that top, did not see a recovery until August 1995 when the Dow reached 7,801, in about 30 years.

Investors who entered the market 30% below the 1965 high (5,519 in Sept 1969) saw it recover by March 1973 but then slipped until June 1987 and then immediately slipped again to September 1991.  The full convincing recovery took about 26 years.

Investors however who waited until the DJIA fell 40% to 4,731 in December 1973 saw a recovery in January 1987, but again the index immediately slipped and did not reach that level again until August 1988, about 15 years.

In other words it took a full 15 years for a full convincing recovery.

I am planning my entry into value stock markets now so when the magic point is reached, I’ll automatically be investing while other investors flee.

This strategy has always created exceptionally good deals for me and the subscribers who listen to math and logic.

See below how to subscribe to Pi and get the full analysis of 100 years of stock market crashes.

Have a good weekend.    In the midst of the current madness, I think that Rudyard Kipling’s poem, “How to be a Man”(2)  is worth a read.  Here is the first part.

“If you can keep your head when all about you
Are losing theirs and blaming it on you,
If you can trust yourself when all men doubt you,
But make allowance for their doubting too;

“If you can wait and not be tired by waiting,
Or being lied about, don’t deal in lies,
Or being hated, don’t give way to hating,
And yet don’t look too good, nor talk too wise:

“If you can dream – and not make dreams your master;
If you can think – and not make thoughts your aim;
If you can meet with Triumph and Disaster
And treat those two impostors just the same:

“If you can fill the unforgiving minute
With sixty seconds’ worth of distance run –
Yours is the Earth and everything that’s in it,
And – which is more – you’ll be a Man my son!

Gary

Prophet Words for Profit in 2020

Here’s ten most important words (and numbers) for the 2020 decade…  MSCI World Index All-Time High Valuation December 31, 1999.

Keep these word and numbers in mind when thinking about the stock market this year.

Here is the all time high valuation for this index.   Price to book 4.23.  Price Earnings Ratio 35.7. Average dividend yield 1.30%. 

Those were the all time high valuations for the Morgan Stanley Capital World Index in December 1999, just before the dot.com bubble burst.

Here is a chart of the Dow Jones Index for the past three decades.  You can see that bubble pop just before the beginning of the 2000 decade.

microtrends.com

Let’s compare some valuations just before the US stock markets began to crash

                                                                                 Price to Book       P/E       Average Dividend

The All World MSCI World Growth Shares           5.22                28.4                 1.28%

MSCI  US Index                                                               3.65                 23.1                  1.83%

MSCI Word Index                                                           2.57                 20.0                  2.33%

MSCI World Index All-Time High                            4.23                  35.7                  1.30%

MSCI USA Index                                                            3.65                  23.1                   1.83%

These valuations create the important investing question. “Will the 2020 decade be more like the 2000s decade or the 2010 decade?”

The current bear market suggests that we are back in a 2000 scenario, which mans that the greatest opportunity is ahead.

“How close can the USA Index come to the all time high watermark before there is a correction?”

For the past four years, my strategy, to protect against the next stock market crash and yet gain from rising share prices is to invest in an equally weighted  of the value based portfolio of country ETFs we invest in and track in our Purposeful Investing Course is formulated.

The valuation of the top value portfolio we use as the basis of our portfolio is now Price-to-book  below 1.4, P/E Ratio under 14 and average dividend yield of nearly 4%.

An equally weighted combination of  these top value markets offers the highest expectation of long-term risk-adjusted performance and the valuation of the top value portfolio is now undervalued by more than 40% compared to the MSCI World (Standard) Index, by 50% compared to the MSCI USA Index and by 62% compared to the MSCI World Growth Index.

Since no one knows what the future will bring, investing in value makes the most long term sense.

Our Purposeful Investing Course (Pi) teaches an 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.

Sticking to math based stock market value and country ETFs eliminates the need for hours of research aimed at picking specific shares.   Investing in an index is like investing in all the major shares of the market.  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 Pi portfolio 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.  Now I am updating my plan to include when it’s best to invest more.

70% is diversified into developed markets: France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in 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 good value markets.

The ETFs provide incredible diversification for safety.  For example, the iShares MSCI  Japan (symbol EWJ) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Japan Index which is composed mainly of large cap and small cap stocks traded primarily on the Tokyo Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Japan so an investment in the ETF is an investment in hundreds of different Japanese shares.

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 almost 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.

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.

You also receive a 100+ 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.

This year I will celebrate my 52nd anniversary of global investing and 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.

Those five decades of experience have taught me several incredibly valuable lessons.

The first lesson is that there is always something we do not know.

The second lesson is that stock market booms and busts always eventually return to value.

Third, the only sure way to succeed is to use time not timing.

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.

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%.

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.

Guarantee

Enroll in Pi.  Get the basic training, the 46 market value report and access to all the updates of the past two years.

 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 in the first two months for a full no fuss full refund.

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, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197.

Your subscription will be charged $299 a year from now, but you can cancel at any time.

Gary

(1) www.medscape.com/viewarticle/926089?src=WNL_trdalrt_RM_200307_MSCPEDIT&uac=66459CZ&impID=2302922&faf=1

(2) fs.blog/2012/12/how-to-be-a-man-rudyard-kipling/