Gain From Nature’s Power


We can learn some lessons (and gain profit) from observing nature’s power.

Growing  up in the Cascade  mountains of  Oregon I was always aware of  forest fires. When one of  the recent  big fires in  Oregon  came within  500 yards of  our daughter’s  house, that awareness became more personal.  This started me thinking about the consequences of ignoring the laws of nature.

Humans defy the laws of nature all the time.  What happens and how can we profit from this fact?

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The Riverside fire threatened Estacada Oregon

The Riverside fire is now 72% contained (as of late October) but forest fire problems are far from solved.  California has 22 wildfires as I write this report. In Colorado the Cameron Peak Fire, the state’s largest fire in history, has been burning for months, having scorched over 208,000 acres.

The fires this week are raging in 13 western states, according to the National Fire Information Center, and the factors driving them are numerous and varied.

According to an article at Theguardian.com, (1) “Underlying the megafires are two human-caused catastrophes: the climate crisis and a century of fire suppression. Stephen Pyne, a fire historian, saw the fierce fires as “an ancient plague” reawakened.”

This mention of these fires being a plague, reminded me of a quote from the book, “Sapiens: A Brief History of Humankind” written by by Yuval Noah Harari:  “Biology enables, Culture forbids.”

There is ultimate wisdom contained in the Laws of Nature.  Yet for many reasons humans, pretty much as a whole, choose to ignore or defy them.

We  can  dwell  on  this  thought  as it  relates  to the current pandemic.

A recent Wall Street Journal article, “Great Barrington Declaration” (2) tells about how three men, a physician/economist, a biostatistician and a  professor of epidemiology at Oxford wrote how they believe the pandemic as been mishandled.

The Great Barrington Declaration published on Oct. 4, asked for “focused protection”—a policy of allowing “those at minimal risk of death” to resume their lives while societies concentrate on “better protecting those who are at highest risk.”  The declaration asks for the protection of the vulnerable and the poor world-wide from “avoidable death and suffering.” The lockdowns have “manifestly failed to do this by inducing economic collapse that has placed the lives of 130 million poor people world-wide at risk of starvation.”

The authors describe lockdowns as “the worst assault on the working class in half a century—the worst assault since segregation and the Vietnam War.” Present policies are protecting “very low-risk college students and very low-risk professionals—attorneys, bankers, journalists who can basically work from home.”

Recent budget deficits suggest that this declaration makes sense.

For example the recent Wall Street Journal article: (3) “U.S. States Face Biggest Cash Crisis Since the Great Depression” tells how the drop in state tax revenue has led to a total shortfall expected in the hundreds of billions of dollars, more than twice the amount spent that year on state roads and other transportation infrastructure.

The article says: Deficits have already prompted tax hikes and cuts to education, corrections and parks. State workers are being laid off and are taking pay cuts, and the retirement benefits for police, firefighters, teachers and other government workers are under more pressure.

A nationwide decline in combined state revenue has happened after only two events in 90 years: following the Sept. 11, 2001, attacks and in the aftermath of the 2008 financial crisis.

Annual state revenue fell following the Sept. 11 attacks and the bursting of the dot-com bubble around that time, but recovered within a year. During the recession that followed the 2008 crisis, state government revenue fell 9% over two years, according to Census Bureau data.

This time the shortfall could reach 13% over two years, according to Moody’s Analytics projections.

wsj.com

How many tensions, deaths, crimes and addictions will lockdowns create?

There is plenty of room for argument on how to deal with the pandemic (especially if a loved one is ill or dying),  but “which is the best approach” is not the point here.   The point is that whatever model is used… there will be consequences.

How to survive and prosper?

Look at what nature in every other species does. In the case of forest fires, other species run.

With a virus, other species die off leaving the fittest.  Survival of the fittest is a natural law.

Then look at how human society reacts.  Whatever natural law we ignore or defy, there will be a backlog distortion and finally a release.  Look for the contrasts and distortions created by the social economic actions and invest and be active in the balancing consequences.

Examples

Each of us have our own experiences and wisdom that connects us with nature.  We’ll see differing contrasts and distortions.

One example I see as a landlord comes from the Wall Street Journal article. “Struggling Rental Market Could Usher in Next American Housing Crisis”.

wsj.com

The article explains how millions of renters are behind on their payments and that mass evictions could come soon.

Here’ a quote from the article: A large number of renters have been unable to pay some or even all of their rent since March, when the pandemic temporarily shut down most businesses. Many businesses remain closed or only partially open, pushing renters into unemployment and draining their savings.

Federal and local eviction moratoriums have protected many of them from losing their homes if they missed payments during the pandemic. But the national eviction ban and some state and city protections are set to expire by January or sooner. Renters then will be on the hook for months of missed payments, which even those who have jobs could struggle to pay.

The distortion is that millions of good people, hit by forces way beyond their control will be looking for places to rent.  My action is to liquidate appreciated rentals I have in high rent areas and to buy more rentals in lower rent areas.  Plus I am looking at creative ways to help potential renters earn their rent money.

Use your background and experience to ask, “what are the consequences of society, as a whole to change, whether it be climate change, pandemics or whatever”.  Then look for ways to be involved in balancing the consequences of our action.

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.

A model portfolio that dates back to 1969 has dramatically outperformed almost every stock market in the world.

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A hundred US dollars invested in that portfolio in 1969 is now worth $44833 compared to $100 invested in an equity weighted world index being worth $11,548.

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 2020.   There have been no changes since.

70% is diversified into Keppler’s good value (BUY rated) developed markets: China, 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, Colombia, 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 Germany (symbol EWG) is a Country Index ETF  that tracks the investment results of the MSCI Germany Index. The fund is at all times invested at least 80% of its assets in the securities of its underlying index that primarily consists of all the large-and mid-capitalization companies traded on the Frankfurt Stock Exchange.

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 in our Pifolio.

This year I celebrated my 52nd anniversary 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.

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.

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.

Included in the basic training is an additional 120 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 celebrated my 51st anniversary 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.

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.

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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.

Save $102 If You Act Now

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.

Triple Guarantee

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

Your subscription will be charged $99 a year from now, but you can cancel at any time.

Gary

(1) www.theguardian.com/us-news/2020/sep/12/california-oregon-washington-fires-explained-climate-change

(2) www.wsj.com/articles/epidemiologists-stray-from-the-covid-herd-11603477330?mod=itp_wsj&mod=&mod=djemITP_h

(3) www.wsj.com/articles/u-s-states-face-biggest-cash-crisis-since-the-great-depression-11603910750?mod=itp_wsj&mod=&mod=djemITP_h