Prepare for Rough Times


ENR Asset management sent an invitation to a very interesting webinar conducted Monday, September 14.

You’ll want to get into this webinar because I was recently speaking with my long time friend Thomas Fischer, who lives in Copenhagen and worked with me years ago to create some portfolios that rose over 100% in a year, when we both worked with the Danish Jyske Bank.

We were discussing how the dynamics of long term, low interest rates have consequences that make it hard to trust the lessons and rules our investing experiences have brought us over the past 50 years.

I was telling him how real estate sales and prices, both in Lake County Florida and Ashe County North Carolina  had recently risen crazily.

mt dora

A new ring road around Orlando that exits at Mt. Dora (X) has helped push real estate prices there sky high

The broker we work with in Florida explained it this way.  A 30 year $100,000 mortgage at 5% requires a base payment of $536.82 a month.  When the interest drops to 2.47% the payment is only $393.56.    This means that buyers can afford to pay 26% more for the same house and that many more people with lower incomes qualify for larger loans.  This super heats the market.

Thomas replied: Real estate has gone crazy in Denmark also.  Danske Bank now offers a 30 year mortgage at a fixed rate of 1% (only up to 60% of the house value) with no re-payments interest only. You can then repay the mortgage after 30 years or when selling! Pretty amazing.

How can we make intelligent decisions during times when there are so many imponderables?

The bulk of the new real estate buyers are Millennials and this is a great time for them to gain some extra financial stability… but this also leaves Boomers in a lurch.

I believe this will be one of the greatest purchasing power transfers (from Boomers to  later generations) in history.

The Millennials especially have time to let the stock market ups and downs equalize in the years ahead.

Boomers do not.   Boomers have a much shortened investing time frame, so they don’t have time to recover from a serious market correction.  Millennials can take over real estate and pay ultra low interest rates gained from investing instruments that Boomers would normally use to retire.

Picture the benefits that a Danish Millennial gains with a 30 year 1% interest only mortgage.  Where does the money the bank lends come from?  The answer is “investing instruments” normally funded by investors who want low risk and higher income.

money.com

An article at money.com “How Can Retirees Living Off Savings Succeed in Today’s Low-Yield Environment?” explains the dilemma.

The article says:  Experts say you may need to take a little more risk.

Interest rates are still at record lows, and it looks like they could stay that way for years thanks to Fed Chair Jerome Powell’s recent indication that the central bank won’t increase rates to protect against inflation.

The biggest challenge retirees are now facing is how to turn their nest egg into an income solution — and strategies they have been relying on might not work as well in today’s low-rate environment, experts say. New solutions may entail a bit more risk than bonds, which have long been a common income source for retirees. But a little more risk might be necessary.

“If you’re not willing to make some minor adjustments and accept different forms of risk, you’re basically locking yourself into inflation risk and going to lose your buying power,”

While there’s certainly still room for bonds in portfolios, experts say retirees may not be able to rely on them for income in the way they’ve become accustomed to.

The article states that additional places to invest include Dividend stocks and Pass-through securities that include
master-limited partnerships (MLPs), real estate investment trusts (REITs), closed-end funds (CEFs) and business development companies (BDCs).

REITs are a way to invest in real estate, there is risk there also because REITs hold office and retail space, which in the pandemic and shift to home office and online shopping can reduce dividends and create capital loss.

The dramatic shifts created by long term low interest rates are a reason why you should listen in to ENR’s webinar “How to Prepare Your Money for Tough Times to Reduce Risk, Create Legacy and Produce an Enviable Retirement Portfolio”.

The webinar is this Monday, September 14, 2020.

ENR wrote: Just because the Fed and other central banks are printing trillions to save the world economy since March doesn’t mean risk assets can’t decline. Stocks have surged 55% since March 23 – the biggest advance in percentage terms since 1938. Stocks in the United States now fetch their second highest premium in history at more than 30 times earnings and 23 times forward estimates. There is little margin for error if earnings disappoint in 2021. Plus, what if Joe Biden is elected and hikes taxes on capital gains? Investors might dump equities after November 3rd.

If you’re planning retirement over the next few years, you should consider moves now to protect your assets.

On Monday, September 14, 2020, you’ll hear me discuss:

•        How to prepare your portfolio for tougher times using the right securities to substantially reduce risk
•        How to significantly reduce portfolio volatility without selling your stocks and incurring taxes
•        Build a financial roadmap to a less stressful and more enjoyable life

Plus, important discussions, including:

•        As you age, risk levels decrease
•        Older investors can’t afford bear market losses
•        Since 2000, we’ve had 3 bear markets
•        A traditional 60/40 portfolio won’t protect your wealth in the years ahead
•        Volatility will remain historically elevated as deficits rise, trade tensions grow and inflation gains momentum

Please join us on Monday, September 14 at 1.30PM EDT. Please use the following link to register:
https://attendee.gotowebinar.com/register/6167268881717301773

This link has been having some difficulties. If you encounter any problems let Thomas Fischer know at  thomas@enrasset.com

Low interest rates create an economic crisis for Boomers most of all.

Already, nearly a quarter of Baby Boomers plan to postpone their retirement due to the COVID-19 pandemic, according to a new survey, and about the same number say the crisis has changed when they plan to claim their Social Security benefits.

Boomers, especially early Boomers born in the 1940s, cannot take the same long view as younger generations.

ENR’s webinar can help you decide what to do.

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.

wsj.com

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.

keppler62020

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.

keppler

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

(1) money.com/where-to-find-yield/?xid=applenews