The Value of Security and Fun


Do you feel less secure in 2020?

Are you having less fun… satisfaction…. fulfillment?

Have events of this year taken you by surprise?  Are you more doubtful… increasingly confused?

If you’re like me… there were a lot of yes answers to the questions above.

Never fear!

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Were you surprised by the shortage of toilet paper and paper towels and how the stock market fell and then rose and is falling again (or is it by today)?

It was recently suggested to me that the phrase “2020” would become a colloquial verb, meaning “negative turbulence”.   When there’s talk about many problems taking place, you might hear the reply… “don’t 2020 me”.

Or maybe “2020” adjective, a synonym for “unsettled” “surprising” or “unknown”.

Certainly many readers have sent me notes similar to this one I received last week.

Gary, I have officially stopped stock trading as this year has been a complete disaster for me.

After 22 years investing in the market, I feel completely lost now.

Nothing makes sense to me and I am so afraid of another sharp correction that I don’t dare to hold anything over night. I’ve completely lost all appetite for risk. This has led to a ton of missed opportunities and quick losses.

I still feel more comfortable holding cash. In any case, mentally, it’s just not working for me in the market.

I will have a lot of freed up mental space to start focusing solely on my online – among a few other fun projects.

My thinking was ahead of this reader.  I came to a similar conclusion but over half a decade ago.

Two events, low interest rates and the abandonment of Federal fiscal responsibility, had enough impact on stock markets that I felt my 50 years of equity trading experience was no longer applicable enough.

Only one factor made sense to me… value.   I decided to let price-to-book, P/E ratios and average dividend yields of stock markets be my value guide.

Stock markets acted so contrary to what experience taught me, that when I held specific shares, I no longer felt secure.

Feeling secure is a really important part of  investing because when you invest without an anchor of value, a belief or purpose, you’re always running scared.  The human trait of “Risk Aversion” will almost always lead to loss.

If you are not feeling secure and if you are not enjoying the process, you should not be trading stocks.

However, long term, holding cash is not a good solution either!  Government deficits are at all time highs and the US debt is as high as at the end of WWII.

This is almost a guarantee of serious inflation.  The Feds new approach to maintain 2% inflation on average over a span of years, so that high inflation will later be corrected by low inflation is simply a stall aimed at sucking in gullible investors for a few extra years.

Do not believe the promise that high inflation will be corrected by low inflation in future years.

The answer to this dilemma is to invest in what you know and enjoy.  Make your investments based on value that you understand enough so you feel secure.

This conclusion led me to invest more strongly in real estate, because I know and enjoy the process.  I feel more secure investing in a property I can see and understand more than a stock.

For my equity investments, I set up a Good Value Equity Market portfolio I call a “Pifolio”…  my Purposeful Investments create my Pifolio.

That Pifolio is invested 70% in Country ETFs that hold equities in the best value developed stock markets around the world.

There are eight top value markets shown below.  For example the price to book of the Singapore stock market (based on its MSCI Index) is 1.00.  You can buy a mix of the Singapore stock market at book value.   In comparison, the cost of the US stock market is 4.11 times book value.   In other words Singapore investments are selling for a quarter of US stocks.

Plus Singapore shares pay an average dividend of 4.66% compared to 1.56% for the US market.

Here are the developed markets as of September 1st, 2020.

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The remaining 30% of my Pifolio is invested in the best value emerging markets.

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The indices of these markets are a much better value than US indices.

This emphasis on value has given me an added feel of security as well as a solid return since 2015.

The 70/30 Pifolio has not been as profitable in 2020 as investing in shares like Apple, Google, Amazon and other high tech shares that have pushed the S&P 500 Index to all time highs.   Yet I still feel secure and safe based on the incredible values of the shares I hold.

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What the rest of this year (and the flu season) will bring and how we’ll fare after the election into 2021, I do not know.

What I do know is that value investing takes very little time and is so well diversified and based on such immutable principles that I feel secure.  I may not (or might) have the highest return short term, but I do have the best sleep at night!

Plus statistics suggest that holding this type of portfolio generates the highest long term return.

The value approach is easy and leaves me time to live a rich life.  In the past five years there have only been a half dozen trades based on changing market values.  This gives me time to focus more on my family, writing and real estate, all the most important parts of my life that are fun and fulfilling for me.

Gary

Add Safety & Get Paid 154% More

Get paid more now!

Current markets have turned economic history upside down.  Normally bonds pay the highest interest rates and add safety to a portfolio.  Not right now.

This chart from the New York Times article “The Mystery of High Stock Prices” (1) shows that equities pay a higher yield than bonds.

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Most Important, Get Paid the Most Now!

Just because US stocks pay more than dollar denominated bonds, does not mean they offer the best income deal.  In fact the chart below shows that US shares pay one of the lousiest yields of the 46 stock markets we monitor around the world.

The US MSCI Index pays a modest 1.91%.  That’s a terrible yield, but better than the 1.6% you can get in AA rated corporate bonds.

Nine solid, top value stock markets (shown below) not only add diversification and the best long term profit potential, they pay 71% higher yield, 3.27% compared to the US yield of 1.91%.

This is why my core stock portfolio consists of a handful of top value share ETFs and this position has hardly changed in five years. 

Let me explain why this strategy adds safety, increases long term appreciation potential and pays almost double short term income right now.

In a moment, I’ll show how to push that yield to 4.07% per annum without adding additional risk.

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During the past five years, I have been steadily accumulating the same good value ETFs.  I have traded only three times, so my trading costs, my fuss, fiddle and time spent have been kept to an absolute minimum.

I have been investing in iShare country ETFs.  Each one invests in the MSCI Index of one of the top (or neutral in the case of Canada and Australia) value markets above.

My strategy protects against stock market volatility and yet has potential for the best gains long term from rising share prices by holding an equally weighted portfolio of the best value based country ETFs.

The Purposeful Investing Course tracks 46 stock markets around the world into determine which markets offer the best value.

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

Plus Value ETFs are Safer

The people who dominate stock markets include a pack of thieves.  This fact has always been true.  We were recently reminded of this fact when Wirecard AG, one of Europe’s most prestigious companies, listed on Germany’s premier stock-market index, the Dax 30 fooled everyone including its top grade, longtime auditor, Ernst & Young GMBH.

The shares in German fintech company Wirecard AG (symbol WDI fell 63.74% as it filed for insolvency proceedings, after revealing that more than $2 billion in cash missing from its balance sheet was all a fraud.  The company’s market value fell to less than €500 million from almost €13 billion in a week.

Investors have seen this type of rip off again and again, really big scams from Enron to Bernie Madoff and these are just the tip of the iceberg.

Shares in stock markets are manipulated all the time.  Stock markets (in fact almost all types of markets) are led by sharks plain and simple.  Count on this fact.  This is the nature of the beast and the number one goal of many big businesses is to take as much of your money as they can to line their pockets.

In the Wirecard AG example many  thousands of investors have seen their hard work, their thrift, their security and hopes for the future disappear, even though they seemingly did everything right by investing in a blue chip, new era, high tech company.

A study of 92 years of investment returns shows that, despite the fraud and cheating and deceit, stock markets are still a good way to make your money grow… if you invest long term and diversify.

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Our Pi strategy makes it harder for cheaters to grab your wealth because it’s very hard to manipulate an entire stock market, much less a dozen or so stock markets around the world.

Manipulators have a hard time tricking an entire market, especially larger markets.  If you get the best value country ETFs, your chances of long term profits improve.

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 iShare Country Index ETFs managed by Black Rock, Inc.

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.

I am updating my plan to increase my average yield to as much as 4.07%.

My developed market portfolio has been diversified into nine developed markets: Austria, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

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

The average yield of these nine markets combined was 3.27% as of June 2020.  By replacing the three lowest yielding markets, Austria (.64%), Germany (1.83%)  and Japan (2.51%)  with two better yielding neutral markets Australia (4.57%) and Canada (3.54%) the average annual yield on the entire portfolio rises to 4.07%.

4.07% is 154% higher than the 1.6% you can currently earn on AA rated corporate bonds!

The ETFs provide higher income and incredible diversification for safety, plus the highest long term profit potential.

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.

Here’s 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.  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 of all 46 markets.

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 the Pi course.

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 $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, plus all new updates over the next year.

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 from the pandemic 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) www.nytimes.com: mystery of high stock market prices