Tag Archive | "global equities"

Better Value Now


Here’s why I am getting better value in the stock market this month compared to September. 

See how you can get better value too.

pixabay

Last week we sent our Purposeful Investing Course (Pi) subscribers an October 2020 developed market update that provides immediate information about 23 major stock markets around the globe (essentially all of the world’s developed markets).

That update is based on an examination of every stock listed in the 23 developed equity markets.

The subscribers saw how in September 2020, six markets were up and seventeen markets declined.

The stock markets in Denmark (+3.3%), Sweden (+3.0%) and Ireland (+1.0%) gained most.  Stock markets in Israel (-7.9%), Austria (-7.0%) and Hong Kong (-5.2%) had the lowest returns.

They also saw that Year-to-date, Denmark was still the best performing market, up  +20.2%.

The review of these markets includes data dated back to 1969.  A model portfolio, based on the Top Value Strategy we use, that was started in December 1969 at $100, is now worth $33,413.

The review also showed that this model portfolio is very safe, far less volatile than any one share or even any one stock market as a whole.   Yet like any stock portfolio it does not rise all the time.  In fact in 2020 year-to-date, this portfolio is down 15.8%.

The secret in this type of investing is to accumulate during down times because, the portfolio offers better value when rices are down.

The basis for deciding what’s a good value or poor value portfolio is in part the price-to-book of the entire market and the average dividend yield.

According to the analysis we use for our Pi course the tables below shows how the Developed Markets Top Value Model Portfolio compares to three alternatives at the end of  August and September 2020 including price-to-book  (PBV) and average dividend yield (DY):

End of August 2020

keppler

Values at the end of August 2020

The Top Value Portfolio was available at 1.26 times book in August, but is available at 1.24 times book now.  In addition the average dividend has risen  from 3.36% to 3.44%.

End of September 2020

Screen Shot 2020-10-06 at 7.15.42 AM

Values at the end of September 2020

Dollar Cost Average

When investors create a dollar cost average strategy using a top value portfolio strategy, they get the largest amount of equities at the best price, that pay the highest dividend.

Here are the eight top value developed markets as of the end of September 2020.

The Top Value Model Portfolio holds the eight “Buy”-rated markets Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom at equal weights.

According to the analysis, we track for our Pi course, this Developed Markets Top Value Model Portfolio is now undervalued by 41% compared to the MSCI World (Standard) Index, by 53% compared to the MSCI USA Index and by a whopping 68% compared to the MSCI World Growth Index.

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

 

Global Stock Market Spread


One way to beat inflation and economic pitfalls in the long term is with a global stock market spread.

msci World Index

This is a Bloomberg chart showing the performance of the Morgan Stanley MCSI World Index.

The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The MSCI World Index consists of the following 24 developed market country indices: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Greece, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, the United Kingdom, and the United States.

However global equity growth is not always smooth.  There are many a potential crisis likely to cause equities to drop suddenly… everywhere… all at the same time… as they did in June.

This chart above shows how stock market investors panicked over the Greece crisis and how equities rebounded when the problem was once again forestalled.

The temporary reprieve in Greece is not the end of a sad story… but this delay does give us as investors time to prepare.

See below… the easiest way to gain the safest… and perhaps best long term, investment in the world.

Some great research, a long-term global equity study of shares versus bonds from 1900 to 2009, by Dimson,Marsh & Staunton at London Business School shows that the best way to beat inflation and economic downturns long term is in shares… invested for the long term.

Over this 110-year period, 19-country capitalization-weighted stock index total return of 8.6% pa in U.S. dollars compared to a 4.7 % return per annum for the equivalent 19 country bond index.  The global stock portfolio grew 331 fold vs. only a six fold growth of the global fixed-income portfolio.

So we should not have been surprised to see stock markets rebound last week at news regarding the Greek austerity plan.

Greece was the most imminent economic disaster waiting to tip a string of financial dominoes that would create financial turmoil in the Western world… at the least.

Thomas Fischer at Jyske Global Asset Management  sent this market update at the beginning of the week.

Kicking the can down the road!

You could almost hear the investors and European bankers sigh of relief when the Greek parliament Thursday agreed on the new austerity measures.

The measures will be implemented over the next four years and are a mixture of increased taxes, spending cuts and privatizations. The tax increases include an new solidarity levy, lower tax free threshold, increased sales tax and wealth taxes on luxury items.

The spending cuts include a reduction in public sector wages by 15%, reduction in the public workforce by 150,000, retirement age raised to 65 and general spending cuts. The government will also sell stakes in a range of national assets including 39 airports, 850 ports, railways, motorways, casinos and thousands of acres of land for development.

While protestors were rioting in the streets of Athens representatives of the Greek government were, according to the British newspaper The Guardian, trying to drum up international investors interest in the “fire sale” of  the national assets at Claridge´s hotel in London.

German and French banks, among the biggest holders of Greek debt, may join the rescue package by swapping existing bonds maturing within the next years into longer maturity debt.

As Athens said yes and with the can rolling down the road investors went into a risk-on mode and bought stocks and bonds selling safe haven assets such as US treasuries, gold and the Swiss franc. Even Greek government bonds, once the pariah of the investment world, became attractive sending the yield down from 30% to “only” 26.40%

William Shakespeare wrote in Hamlet “Something is rotten in the state of Denmark” –  the same can be said of Greece and the rest of the peripheral euro-zone, so debt issues may be solved for the time being but they will re-emerge. As the economist Herb Stein once said “If something cannot go on forever, it will stop”.

Thomas Fischer also added: Hi Gary, There is a report from UBS and published by the Guardian has hit the headlines in Denmark as Jyske Bank is the only bank in Denmark with serious exposure to Greece (EUR 92 million). The bank had already last year reduced the exposure by 30 million EUR. Also in relation to the banks own capital (13,5 billion Danish kroner or USD 2.5 billion) it is “only” 3.5%. Furthermore time to maturity is only 1 year.

It might hit the news in the US so thought you would like to see the full report:
http://www.guardian.co.uk/news/datablog/2011/jun/17/greece-debt-crisis-bank-exposed#data

Obviously the Greece and Cyprus banks have the highest exposure but the figures look grim for some German, Portuguese and French banks.

Thomas

The Greek approval of the austerity plan gives the EU and European banks a reprieve. There are however plenty of other critical dominoes… Ireland…Portugal and the US debt ceiling being the most immediate.

Maybe the USA? Excerpts from a June 29, 2011 USA Today article entitled “Debt-limit impasse puts social programs at risk, study shows” by Richard Wolf says: Social Security payments to millions of retirees and people with disabilities could be threatened if President Obama and Congress can’t agree to increase the government’s debt limit by Aug. 2, a new analysis shows.

Although the Treasury Department likely could avoid delaying Social Security checks, the analysis by the Bipartisan Policy Center points up the depth of the cuts that would be needed if the $14.3 trillion debt ceiling isn’t raised.

It shows that in August, the government could not afford to meet 44% of its obligations. Since the $134 billion deficit for that month couldn’t be covered with more borrowing, programs would have to be cut.

If Social Security, Medicare, Medicaid, unemployment benefits, payments to defense contractors and interest payments on Treasury bonds were exempt, that would be all the government could afford for the month. No money for troops or veterans. No tax refunds. No food stamps or welfare. No federal salaries or benefits.

As the center foresees it, the picture would get worse: layoffs and lawsuits. Global market reaction and media glare. A possible downgrade in the U.S. credit rating, perhaps followed by the loss of market access.

The effect on the country, said former Republican senator Pete Domenici of New Mexico, would be “irretrievable.”

There are riots in the streets of Greece today. Imagine what the streets of the USA would look like if  Social Security promises were reneged!

These pitfalls require more diversification and a reduction of risk… but also create opportunity.

Equities rise long term. Each downfall creates a good buying opportunity.. if you can afford to buy, wait and hold on.

For investors wishing to easily diversify… there are few vehicles as wide spread as the Vanguard Total International ETF. (NasdaqGM: VXUS ). The chart (since inception) of this ETF is shown above.

This is the broadest international ETF that follows the MSCI All Country World Ex USA Investable Market Index which covers over 6,000 securities in 44 countries.

This new fund, which started less than a year ago, is also an efficient way to invest globally.  This ETF has an expense ratio 0.20% per annum, the lowest cost international ETF and less than half this sector’s standard expense ratio.

The fund has over $50 billion in assets so it replicates the entire index and provides incredible diversification.

vanguard etf

This is a simple bet on non US securities around the world.

A comparison to the chart above of the MSCI World Index shows how closely the funds performance is to the index.

msci World Index

However earning sure profits from a global spread of equities requires time.  Many investors and or those who are unemployed or retiring do not have time.  What are they to do?

We’ll see in tomorrow’s message.

Gary

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