Quotes from three great value investors support this thought.
“Be fearful when others are greedy, and greedy when others are fearful.” Warren Buffett
“In the short run, the market is a voting machine, but in the long run it is a weighing machine.” Ben Graham
“We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” Charlie Munger
We do not have to be brilliant to preserve our wealth. When it comes to investing, discipline can make you smarter than the smartest man in the world.
Sir Isaac Newton is widely regarded as one of the most influential scientists of all time. His role was key in the scientific revolution.
His book “Mathematical Principles of Natural Philosophy” laid the foundations for mechanics.
He supplied a foundation to optics.
He helped develop modern calculus.
Newton formulated the laws of motion and gravitation and confirmed the heliocentric model of the cosmos.
Newton built the first practical reflecting telescope.
His theories about color and cooling and the speed of sound were spring boards in physics.
In math, Newton contributed to the study of power series, the binomial theorem to non-integer exponents, and a method for approximating the roots of a function.
He is said to have been the greatest genius who ever lived!
But Sir Issac Newton also lost his shirt in the stock market. His comment was “I can calculate the motions of the heavenly bodies but not the madness of the people.“
Sir Issac forgot the intelligence in seeking value. He ignored the fact that buying and selling discipline is more important than being smart.
How can we gain this discipline? Discipline comes from simple math which is why two of the three exports I use in my Purposeful investing course (Pi) and mathematicians not economists. I am happy to introduce an investing math program that instills investment discipline in our Pi course.
Use math, not emotion to protect your wealth.
There are time tested mathematical systems that can help you know when to take profits that maximizes gains and minimizes loss.
These systems help you seek value but also create disciplined exit strategies because one of the toughest decisions most of us have is to know when to sell a rising or falling share.
Human nature makes it harder to let winners run, than to cut loses.
Let’s look at a real time example of how purposeful investing strategies can increase profit. In this real example, in 2002 Merri and I invested in Jyske Bank shares. We were visiting the bank with a group of readers. We had been in Copenhagen for several days and took the group out to the bank’s headquarters in the small charming village of Silkeborg. We visited the CEO (who has been a friend for many years) in his new modest offices, saw the bank’s new currency trading room and visited with the Jyske Invest Fund Managers. What impressed us was the conservative and balanced thinking throughout the bank. There were no staff limos or corporate jets. The CEO’s office was small with walls of glass so staff could see him at work. The bank worked for and talked about the long term view.
Jyske Bank share price since September 2002.
We invested in Jyske shares at DKK96.50 on 2nd September 2002. We sold half in April 2006 at DKK352.50. The share price of the remaining shares we hold have never dropped below our purchase price. Today the share price is over DKK300 again.
Could I have done better with a mathematical system? I asked Dr. Richard Smith, CEO of Tradestops.com, who has a PhD in mathematics and is one of the experts we use in our system, to see how his trailing stops strategy would have increased my profit.
It turns out I could have done better. Much better. Here is the chart of the trailing stops that his strategy would have given me had I been using it.
Click on image to enlarge.
Let’s look at three scenarios to show the difference in profit between using simple buy and hold with no stops, my system of taking back the original investment and the Trailing Stops strategy. For simplicity sake, I am not including dollar to Danish kroner fluctuations. The forex fluctuations would make a difference if calculated in US dollars performance but we’ll analyze that element of the invest in another message.
Scenario #1: DKK100,000 becomes worth DKK350,158. Profit is DKK241,880 in 15 years. In this scenario we assume a DKK100,000 investment. The investment is at DKK96.50 so 1036 shares were purchased. The assumption in this scenario is that all the shares have been held. The price of today’s quote (April 23, 2015) is DKK330. The value is DKK341,880 on DKK100,000 invested.
Scenario #2: DKK100,000 becomes worth DKK357,679. Profit is DKK247,840 in 15 years. Assume again, DKK100,000 investment. 1036 shares were purchased at DKK96.50. In this scenario, (what I actually did), 285 shares when the price reached DKK352.50. This returned my original investment appx. DKK100,000. The remaining 751 shares at 330 (4/22/2015 price) are still held so are worth DKK 247,840. This represents a total profit of 247,840. This is a little better than keeping all the shares, except the shares sold in 2006 created new opportunity potential for nine years so this scenario is actually much better than the numbers appear.
Scenario #3: DKK 100,000 becomes worth DKK1,156,069. Profit is DKK1,056,069 in 15 years. As in the other two scenarios there was a DKK100,000 investment. 1036 shares were purchased at DKK96.50.
Dr. Smith, backtracked to and see what the system would have done would with this share.
Richard sent the exact dates with buy and sell numbers:
Exit @ 325.50 on 6/13/2006. All the shares are sold bringing in DKK337,218.
Buy @ 321.98 on 10/9/2006. The DKK337,218 buys 1047 shares.
Exit @ 404 on 6/8/2007. This sale grosses DKK422,988
Buy @ 118.5 on 3/20/2009. The DKK422,988 buys 3,569 shares
Exit @ 170 on 8/10/2011. This sale grosses DKK606,730
Buy @ 173.40 on 2/1/2012. The DKK606,730 buys 3,499 shares
Still in @ 330.4 on 4/22/2015. The share value at this time is DKK1,156,069.
Wow, what a difference if one followed and used the trailing stops. The trailing stops and re buy signals increase the investment by 11 times versus 3.5 times in the other scenario.
The Jyske shares had a volatility quotient at that time of 15.5% so would create a sell signal at around DKK287.
These scenarios are based on approximations and do not include trading costs, management fees, etc. so the real money in the bank would not be exactly this amount. For our analytical purposes this study suggests that trailing stops help us protect the successes we gain in spurts.
This type of math creates great discipline so you know not to sell too soon and give away profit but, also know not to hold too long and give away returns already made.
Yet using trailing stops only works when you have good shares to begin.
To easily spot good value, we use Keppler Asset Management as our first source of data. We follow the analysis of our friend, Michael Keppler.
Michael Keppler is an expert on stock market value and I have worked with him for nearly 30 years because the best way to create long term multi currency investment profits is to get good value in the shares you buy.
Michael continually researches international major 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. He compares each major stock market’s history. From this he develops his Good Value Major Stock Market Strategy, an analysis that is rational, mathematical and does not worry about short ups and downs.
Michael Keppler. In my opinion, Michael is one of the best market statisticians in the world.
Numerous very large fund managers use his analysis to manage funds. In January, his company, Keppler Asset Management, was, for the third consecutive year, named Best Fund Company in the Fund Specialists’ category by Capital, a leading German business magazine. Keppler’s firm was one of only six out of 100 companies tested that received the highest five-star rating based on an independent evaluation of fund quality, management, and customer service by Feri Rating & Research and Steria Mummert Consulting.
Yet you have not heard about Keppler nor can you hire his services because he only serves mutual funds and institutional investors for investors in Europe.
This is why I want to introduce you to our Purposeful investing Course (Pi) with this special offer.
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.
We should not invest for fun, excitement or to get rich quick, or in a panic due to market corrections.
This is why the core Pi model portfolio (that forms the bulk of my own equity portfolio) consists of 19 shares and this position has not changed in over two years. During these two years we have been steadily accumulating the same 19 shares and have not traded once.
The portfolio has done well in 2017, up 22.6%, better than the DJI Index.
In the first quarter of 2018 its rise was modest, up .3%, but more much better than the S&P 500 (down-.7%).
However looking at even two year’s performance is not enough data to create a safe strategy.
The good value portfolio above is based entirely on good value financial information and mathematically based safety programs developed around models that date back 91 and 24 years.
The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets developed combining my 50 years of investing experience with study of the mathematical market value analysis of Keppler Asset Management and the mathematical trend analysis of Tradestops.com.
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 stock in that country is an attractive investment, so you do not have to spend 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 use.
70% is diversified into Keppler’s good value (BUY rated) developed markets: Australia, Austria, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore and the United Kingdom.
30% of the Pifolio is invested in Keppler’s good value (BUY rated) emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.
The Pifolio consists of iShares ETFs that invested in each of the MSCI indicies of the good value BUY markets.
For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.
iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.
Pi uses math to reveal the best value markets then protects its positions using more math created by Richard Smith founder and CEO of Tradestops.com to track each share’s trend.
We use Smith’s algorithms that calculate momentum of the good value markets.
The Stock State Indicators at Tradestops.com act as a full life-cycle measure that indicates the health of each stock. They are designed to tell you at a glance exactly where any stock stands relative to Dr. Smith’s proprietary algorithms.
Kepppler’s analysis shows the value of markets. The SSI signal indicates the current trend of each stock (performing well, or in a period of correction, or stopped out).
The SSI tells you one of five things:
Akey component of the Stock State Indicator (SSI) system is momentum based on the latest 521 days of trading. A stock changes from red to green in the SSI system only after it has already gone up a healthy amount and has started a solid uptrend.
How SSI Alerts Are Triggered
If the position has already moved more than its Volatility Quotient below a recent high, the SSI Stop Loss will trigger. This is an indicator that the position has corrected more than what is normal for this stock. It means to take caution.
Below is an example of how SSIs work. This example shows the Developed Market Pifolio that we track at Tradestops.com.
Equal Weight Good Value Developed Market Pifolio.
At the time this example was copied, all the ETFs in the Developed Market Pifolio (above) currently had a green SSI.
We do not know when the US market will fall. We only do know that it will. We also do not know if, when the US market corrects, global markets will follow or rise instead.
The fact that the Pifilios are invested in good value markets reduces long term risk.
Additional protection is added by using trailing stops based on the 521 day momentum of each stock in the Pifolio.
Take for example the graph below from our Tradestops account that shows the iShares MSCI United Kingdom ETF. This ETF had a green SSI and a Volatility Index (VQ) of 13.26%. This means the share can move 13.26% before there is a trend shift.
iShares MSCI United Kingdom ETF (Symbol EWU)
Pi purchased the share at$31.26 and in this example the share was $34.43 and rising. Tradestop’s algorithms suggested that if the price drops to $31.69 its momentum would have stopped and it would have shifted into trading sideways. The stop loss price is currently $29.86. If EWU continues to rise, both the yellow warning and the stop loss price will rise as well.
When the US stock market bull ends, know one knows for sure how long or how severe the correction will be.
When the bear arrives, what will happen to global and especially good value markets?
No one knows the answer to this question.
What we do know is that the equally weighted, good value market Pifolios have the greatest potential long term and that math based trailing stops can be used to protect against a secular global stock market correction when it comes.
My fifty years of global investing experience helps take advantage of numerous long term cycles that are part of the universal math that affects all investments.
What you get 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.
You also receive two special reports.
In the 1980s, a remarkable set of two economic circumstances helped anyone who spotted them become remarkably rich. Some of my readers made enough to retire. Others picked up 50% currency gains. Then the cycle ended. Warren Buffett explained the importance of this ending in a 1999 Fortune magazine interview. He said: Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!
I did well then, but always thought, “I should have invested more!” Now those circumstances have come together and I am investing in them again.
The circumstances that created fortunes 30 years ago were an overvalued US market (compared to global markets) and an overvalued US dollar. The two conditions are in place again!
30 years ago, the US dollar rose along with Wall Street. Profits came quickly over three years. Then the dollar dropped like a stone, by 51% in just two years. A repeat of this pattern is growing and could create up to 50% extra profit if we start using strong dollars to accumulate good value stock market ETFs in other currencies.
This is the most exciting opportunity I have seen since we started sending our reports on international investing ideas more than three decades ago. The trends are so clear that I have created a short, but powerful report “Three Currency Patterns for 50% Profits or More.” This report shows how to earn an extra 50% from currency shifts with even small investments. I kept the report short and simple, but included links to 153 pages of Good Value Stock Market research and Asset Allocation Analysis.
The report shows 20 good value investments and a really powerful tactic that shows the most effective and least expensive way to accumulate these bargains in large or even very small amounts (less than $5,000). There is extra profit potential of at least 50% so the report is worth a lot.
This report sells for $29.95 but in this special offer, you receive the report, “Three Currency Patterns for 50% Profits or More” FREE when you subscribe to Pi.
Plus get the $39.95 report “The Silver Dip 2018” free.
With investors watching global stock markets bounce up and down, many missed two really important profit generating events over the last two years. The price of silver dipped below $14 an ounce as did shares of the iShares Silver ETF (SLV). The second event is that the silver gold ratio hit 80, compared to a ratio of 230 only two years before.
In September 2015, I prepared a special report “Silver Dip 2015” about a silver speculation, leveraged with a British pound loan, that could increase the returns in a safe portfolio by as much as eight times. The tactics described in that report generated 62.48% profit in just nine months.
I have updated this report and added how to use the Dip Strategy with platinum. The “Silver Dip 2018” report shares the latest in a series of long term lessons gained through 40 years of speculating and investing in precious metals. I released the 2015 report, when the gold silver ratio slipped to 80. The ratio has corrected and that profit has been taken and now a new precious metals dip has emerged.
I have prepared a new special report “Silver Dip 2018” about a leveraged speculation that can increase the returns in a safe portfolio by as much as eight times.
You also learn from the Value Investing Seminar, our premier course, that we have been conducting for over 30 years. Tens of thousands of delegates have paid up to $999 to attend. Now you can join the seminar online FREE in this special offer.
This three day course is available in sessions that are 10 to 20 minutes long for easy, convenient learning. You can listen to each session any time and as often as you desire.
The sooner you hear what I have to say about current markets, the better you’ll be able to cash in on perhaps the best investing opportunity since 1982.
Tens of thousands have paid up to $999 to attend.
In 2018 I celebrate my 52nd anniversary in the investing business and 50th year 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.
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.
Details in the online seminar include:
* How to easily buy global currencies, shares and bonds.
* Trading down and the benefits of investing in real estate in Small Town USA. We will share why this breakout value is special and why we have been recommending good value real estate in this area since 2009.
* What’s up with gold and silver? One session looks at my current position on gold and silver and asset protection. We review the state of the precious metal markets and potential problems ahead for US dollars. Learn how low interest rates eliminate opportunity costs of diversification in precious metals and foreign currencies.
* How to improve safety and increase profit with leverage and staying power. The seminar reveals Warren Buffett’s value investing strategy from research published at Yale University’s website. This research shows that the stocks Buffet chooses are safe (with low beta and low volatility), cheap (value stocks with low price-to-book ratios), and high quality (stocks of companies that are profitable, stable, growing, and with high payout ratios). His big, extra profits come from leverage and staying power. At times Buffet’s portfolio, as all value portfolios, has fallen, but he has been willing and able to wait long periods for the value to reveal itself and prices to recover.
This chart based on 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%.
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.
Learn how much leverage to use. Leverage is like medicine, the key is dose. The best ratio is normally 1.6 to 1. We’ll sum up the strategy; how to leverage cheap, safe, quality stocks and for what period of time based on the times and each individual’s circumstances.
Learn to plan in a way so you never run out of money. The seminar also has a session on the importance of having and sticking to a plan. See how success is dependent on conviction, wherewithal, and skill to operate with leverage and significant risk. Learn a three point strategy based on my 50 years of investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.
The online seminar also reveals the results of a $80,000 share purchase cost test that found the least expensive way to invest in good value. The keys to this portfolio are good value, low cost, minimal fuss and bother. Plus a great savings of time. Trading is minimal, usually not more than one or two shares are bought or sold in a year. I wanted to find the very least expensive way to create and hold this portfolio so I performed this test.
I have good news about the cost of the seminar as well. For almost three decades the seminar fee has been $799 for one or $999 for a couple. Tens of thousands paid this price, but online the seminar is $297.
In this special offer, you can get this online seminar FREE when you subscribe to our Personal investing Course.
Save $468.90 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. Plus you receive FREE the $29.95 report “Three Currency Patterns for 50% Profits or More”, the $39.95 report “Silver Dip 2018” and our latest $297 online seminar for a total savings of $468.90.
Enroll in Pi. Get the basic training, the 46 market value report, access to all the updates of the past two years, the two reports and the 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.
Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, the “Platinum Dip 2018” and “Three Currency Patterns For 50% Profits or More” reports, and value investment seminar, plus begin receiving regular Pifolio updates throughout the year.
Subscribe to a Pi annual subscription for $197 and receive all the above.