Unemployed Investing Strategy


Here’s an investment strategy idea.

Yesterday’s message looked at the importance of mental agility and the ability to adapt.

One way to adapt is to create new ways to filter information so we can understand what the real situation is specific to our lives.

Take global business as example.  There’s not much we can do about the world and we can’t know it all.  But there is a lot we can understand about specific parts of the world that relate to our own unique experience.

In this limited realm of understanding we can act and get results and then ignore the rest of the overwhelming noise thrown at us each day.

In this way we can filter down a huge amount of data that’s far beyond our comprehension, into usable amounts of quality information that we are uniquely prepared to deal with.

There are few ways to profit faster than good investment in stock markets.  Knowing which countries will do best coming out of the recession (or depression-it’s too soon to tell) will be really useful information.

But how can we know it all?  How can we come close to figuring out the best countries?

In our Purposeful Investment Course, we compare price-to-book, price earnings and average dividend yield of 46 stock markets to spot which offer the best overall value.

We take a mind boggling amount of data and filter it down to just three meaningful points, price-to-book, price earnings and average dividend yield.   We build a portfolio of country ETFs that invest in the indices of the top value markets.

Another way to gain insights on which stock markets will recover best is to observe what has happened and is happening to unemployment in various countries.

For example according an article on unemployment at the tradingeconomics website (1) :  The US unemployment rate jumped to 14.7 percent in April 2020, the highest in the history of the series and compared to market expectations of 16 percent, as the Covid-19 crisis threw millions out of work. The number of unemployed persons rose by 15.9 million to 23.1 million, while the number of employed declined by 22.4 million to 133.4 million. The labor force participation rate decreased by 2.5 percentage points over the month to 60.2 percent, the lowest rate since January 1973.

The chart below from that article shows how horrible rising unemployment is in the US, up to 14.7% compared to Denmark, New Zealand, Mexico, Sweden, Switzerland, the Netherlands, Germany, Switzerland and France (See chart 2).

unemployeed

These poor US unemployment figures do not tell the entire story either.

Most countries have created and implemented massive relief programs. These stimulation arrangements have broadly fallen into two categories, those where economic relief is given directly to workers or those where the relief is created by paying employers to maintain their workforce.

Countries that used stimulus to keep the workforce employed show much lower unemployment.

The nine rich democracies mentioned above and shown in chart two  the United States has seen the largest increase in official unemployment measures.

The US, Israel and Norway relied heavily on programs that pay workers through unemployment insurance benefits.  Thus they show much higher unemployment.

There is an excellent report by the Brookings Institute on the effects of Covid 19 on international labor markets that every investor should read (2).

The reports says: Several countries created new laws to make unemployment insurance more financially attractive and inclusive to workers than it would normally be, and they also created programs to subsidize employers with the goal of maintaining employment relationships.

The United States is among them. Congress created the Paycheck Protection Program (PPP) and other provisions of the CARES Act to reduce employers’ need for layoffs. Using data from the Small Business Administration (SBA), which oversees the program, I estimate that roughly 10 million U.S. workers have been supported by the program through May 16th. That represents 6% of the U.S. labor force, which makes the program as far-reaching as similar efforts in Denmark and Sweden (Figure 2).

Unlike in those countries, claims for unemployment insurance have spiked in the United States, soaring by 21 million (or 13% of the workforce) since February. Thus, workers are more than twice as likely to have been laid off than to have been supported by PPP. PPP’s problems are well documented, but include the following: a) large businesses (which employ roughly half of American workers) are not eligible; b) it is administered through private banks which were free to reject any qualifying applicant; c) the program is structured, confusingly and oddly, as a loan that can be converted to a grant if many complicated conditions are met; d) the SBA changed the rules to make it less flexible and more risky for many businesses.

unemployeed

So US unemployment compared to other wealthy democracies may not compare as poorly as the figures above suggest, but when observed on a global basis unemployment is bad despite the fact that many countries have maintained employment only at the cost of hug government pay outs!

The Brookings Institute points out: In total, across these 20 countries representing 660 million workers, 38 million have filed for unemployment insurance during the pandemic, 5.7% of the total. The United States stands out in that 13% of its workers are currently receiving unemployment insurance. Canada, Israel, Ireland, and the United States are the only countries in the group to see double-digit increases in unemployment insurance claims, as a percentage of their workforce.

What might we do as investors to adapt?  Starting thinking along the lines of… “what will these layoffs do?  Who will and who won’t be reemployed?…  Which companies will mechanize and use more robots?  How will the unemployment decrease demand?”  How will the unemployment decrease production?  How will the decrease and increase affect specific products and services?”

Each person, since we also have differing areas of specialty and different experiences, will come up with different answers, but the seeds of specific profits  may well be planted in the answers that come to you.

Gary

Coronavirus and the Stock Market Round One is Done

Coronavirus and the stock market.  Round Two is coming.

This virus and the market faced off in the spring.  The market won.  As the chart below shows, after a huge March 2020 collapse, by early June, the DJIA was back to its December 2019 level.

stock chart

The market’s back up, but history suggests that we’ll see volatility in the ten years ahead.

Here is a chart of the Dow Jones Index for the past three decades.  The .dotcom bubble burst just before the beginning of the 2000 decade.

microtrends.com

The market then went nowhere from 2000 to 2014.   Finally it started reaching new high levels.

Such decades long sideways movement after a severe correction is nothing new in the stock market.

So everything’s in order… except the pandemic.  The ravages of the coronavirus dramatically increase the unknown and this uncertainty is the greatest purveyor  of weakness that a stock market can have.

How do we maximize the return on your savings and investments during this extremely dangerous time?

For the past four and a half years, my strategy, to protect against the next stock market crash and yet gain income and appreciation from rising share prices is to invest in an equally weighted portfolio of the value based country ETFs.

We track 46 stock markets around the world in our Purposeful Investing Course to determine which markets offer the best value so we can be in a perfect position to take advantage of stock market corrections all over the world.

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 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 decide when it’s best to invest more.

70% is diversified into developed markets: Austria, Canada, 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.

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 during the pandemic to introduce you to this online course  I am knocking $124.50 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. 

Due to the COVID-19 pandemic we have cut the subscription to $174.50.  You save $124.50!

Then because this global recovery is going to take years, we’ll maintain your subscription at just $99 a year rather than $299.  Your subscription will be autorenewed in 2021 at $99, though you can cancel at any time.

Click here to subscribe to Pi at the discounted rate of $174.50

Subscribe to Pi today and you get a year’s subscription 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.

Gary

 

(1) tradingeconomics.com/united-states/unemployment-rate

(2) www.brookings.edu/research/the-effects-of-covid-19-on-international-labor-markets-an-update/