Tag Archive | "John Nash"

Smart Trailing Stops


“Where would the world be like if Euclid had been able to exchange ideas with Albert Einstein or Pythagoras with John Nash?”

See how this question created a powerful investing strategy that can help make sure that you always have enough.

Pythagoras

Pythagoras

Euclid, Pythagoras, Einstein and Nash were four of the greatest mathematicians in history.   They were of different eras.  Euclid and Pythagoras were great, great grandfathers of math.  Einstein and Nash, lived much later.  The latter surely were influenced by the earlier math geniuses, but what might have happened had they all been able to huddle in the same room unleashing a torrent of brilliant formulas, theorems/proofs/ideas that could be used in the economic world?

The benefits to humanity could be untold.

The idea of getting mathematical geniuses together led to a benefit for us as investors trying to cut through the fog of rapid change and a financial industry that is integrity challenged.

Euclid

Euclid

The idea of combing the brilliance of more than one math expert  started me thinking about how I find good value equity investments by following the mathematical analysis of Michael Keppler.  Michael is a brilliant mathematician.  We have tracked him for over 20 years.  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 stock market’s history.  From this, he develops his Good Value Major Stock Market Strategy.  His analysis is rational, mathematical and does not worry about short ups and downs.

My latest report “Three Currency Patterns For 50% Profits or More” reviews 10 good value developed markets and 12 good value emerging markets.  According to Keppler’s analyses, an equally-weighted combination of these markets offers the highest expectation of long-term risk-adjusted performance in each of these sectors.

That report recommends dollar cost averaging into 19 ETFs, each investing in the MSCI Index of one of these markets.

einstein

Einstein

Another mathematical approach I have added to my investing armory is TradeStops created and operated by Richard Smith, a math PhD. who has created algorithms that set a Volatility Quotient (VQ) judging how much each share in its data base might rise or fall.   The VQ is used to provide suggested trailing stops.

john nash

John Nash

Thinking of  Euclid, Pythagoras. Einstein and Nash, I asked myself, “What if I combined Keppler’s analysis with Dr. Smith’s TradeStops?

This would help me and my readers using double the mathematical logic to choose when to buy and sell good value investments.

To test this theory, I used TradeStops to measure ETFs that are invested in Keppler Good Value Markets.  Two of the samples I used were iShares MSCI Germany (symbol EWG) and IShares China Large-Cap (Symbol FXI).

A part of the long term strategic trading strategy I use is to invest in low fee, diversified Index ETFs. This simplifies the search for value because it focuses research into simple, easy lumps.  These two ETFs represent investments into two of the largest, most dynamic economies in the world.

The beauty in this approach is that all we have to know is that these are large, dynamic, good value markets  You & I do not have to know much about Germany or China.  You do not have to know anything about any of the shares in these markets or how the stock markets work or are currently moving or anything like that.

What you do know is that the markets are huge players in the global scheme of things and that mathematically now is a good time to invest in them.

We’ll look at why Germany (if a good value market) below but let’s compare China first because it is the world’s second largest economy (maybe even the largest).

The iShares China Large-Cap ETF (symbol FXI) seeks to track the investment results of an index composed of large-capitalization Chinese equities that trade on the Hong Kong Stock Exchange.

The fund generally invests 90% or more of its assets in securities in an index that tracks the performance of the 50 largest companies (that are available to international investors) in the Chinese Equity Market.

A comparison of US versus Chinese Stock Market indexes gives an example of lump research and how to spot good value, low cost, diversified portfolios that offer maximum potential for profit as they reduce risk.

China has long been the world’s largest nation in terms of population.  Its economy has been growing faster than most other large nations.  In February 2011 it formally overtook Japan to become the world’s second-largest economy.  Given China’s higher economic growth rate, it has probably overtaken the US as the world’s largest economy, though statistics have not yet caught up with this fact.

China is one of the world’s top exporters and is attracting record amounts of foreign investment.  In turn, it is investing billions of dollars abroad.  Yet when compared to US shares, Chinese share prices are cheap.

China Stock Market Ratios.  Price to Book 1.61.   Price to Earnings 11.1.  Dividend 2.85.
USA Stock Market Ratios.   Price to Book 2.86.   Price to Earnings 20.0.   Dividend 1.99.

Chinese shares cost much less, compared to the values and earnings, than US shares.  Chinese shares (surprising for an emerging economy) also pay much higher dividends as well.

This is why according to Keppler’s analysis the Chinese Market is good value.

Then I looked at these iShare ETFs via TradeStops.

The iShare Germany ETF (EWG) has a 15.07% VQ.  This means that this share is a low risk market as it is not likely to fall more than 15.07%.   The trailing stop price of this ETF share is currently $26.01.  The price is currently over $30.  If the shares of this ETF drop to $26.01, TradeStops would recommend us to lock in our profits and later recommend when it’s time to invest again.

The China Large-Cap ETF (FXI) has a higher VQ of 17.68%.  This is still quite low risk for an emerging market.  The trailing stop price is  $43.39.   The price is currently over $51.  If the shares of the China Large-Cap ETF drops to  $43.39, TradeStops would recommend we lock in our profits and later recommend when its time to invest again.

TradeStops uses a new algorithm called “Smart Trailing Stops 2.0” (STS 2.0).  STS 2.0 is a step up from the typical trailing stop practice.  The difference is that STS 2.0 uses an automatically-detected “Best High Price from the Past” rather than using your entry date and entry price as the initial point from which to trail the stop.

A best high is a better indicator of value than your investing price because it relies on the dynamics of the market instead of our personal investing activity.  This is a better way to stop from buying high and selling low.

STS 2.0 sometimes “stops out” a share sooner than we might expect but having a best high, rather our investment price as the prime calculator, is a huge advance.

Dr. Smith’s smart trailing stops have always been based upon the concept of the normal expected volatility range for a stock  (the VQ).  Smart Trailing Stops 2.0 adds the benefit of automatically identifying the best high closing price from which to trail the stop.

This is valuable information!  The fact that the STS 2.0 algorithm stops out a share is a red flag that the stock is not behaving normally as it has recently suffered a relatively severe correction.  This gives us an early warning.

This allows us to maximize profits without leaving a good value platform and without having to know about or track any of the specific underlying shares!

Together, the combined mathematical expertise of Keppler and Smith give us a new powerful investing dynamic.  We can be intelligent and clever by letting mathematical wisdom aim us at good value investments and then protect our profits with mathematically sound trailing stops.

If I were given a day to spend with Pythagoras, Euclid, Einstein and Nash, I doubt that I would gain a thing, except maybe a headache.  I am no mathematician!

I am, however, an investor with almost 50 years experience and know that the best investing strategies are based on numbers rather than stories.  The most profitable long term investments are made with logic rather than emotion.

Keppler’s and Smith’s hard efforts combined with technology mean that all of us can gain from their mathematical wisdom, when it comes to investing.  All we have to do is be able to turn on our computers and let the numbers shape our investing for us.

Learn how to use TradeStops here.

Learn more about why and the best way to invest in Keppler’s good value markets below.

Gary

The Ultimate Investing Secret

The ultimate investing secret is the simple fact that investment opportunities come and go in cycles.  

Because we have been watching the trends for decades, we spot many distortions  we saw decades ago as they create repeat opportunities.  For example, our 1986 report “The Silver Dip” showed readers how to turn $250 into over $45,000 in a year.   When we spotted the same repeat distortion in silver’s price in 2015, we issued our report “Silver Dip 2015”.   Those who acted on the report made as much as 200% in 2016.

There is another phenomenal distortion that has been building for a number of years.   Here is how I (and you can as well) am cashing in on this trend.

“If I Live Long Enough, I’ll really cash in next time”.    I made this promise to myself in the 1980s.   A remarkable set of economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  I invested as much as I could handle then as the profits rolled in for about 17 years.

Then the cycle ended.  Warren Buffet 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!

Now I see those circumstances headed our way again.

The Dow Jones Industrial recently soared past 20,000 and reached an all time high.   So why aren’t average investors all rich?   There are several answers.  First, even though the Dow has peaked, for the last 17 years the US stock market has been in a bear trend.  You’ll see why in a moment.  Another reason why the investors have not done so well is because of currency loss.

One final reason why profits have not been so good.  Someone, probably someone you trust, has been stealing from you.

One of the biggest obstacles in profiting from the upcoming circumstances has been and remains the financial system.  The reality is that banks and brokers have been structuring investments that are sure to lose.  They sell you on these investments and then another division of the very same bank (or broker) that recommended the investment, bets against you.   The bank knows that the investment is toxic.  To add insult to injury, many of these same institutions cheat you on the way in and the way out (when you buy and sell a share) of the bad investment.  Most brokers and bankers are interested in your money making them rich, not in helping increase your wealth.

Three Patterns Create 50% profits.

Despite the predators on Wall Street who are waiting to take big gouges out of your savings and wealth, equities are still the best place to invest for the long term.  This chart from the 24 page Keppler Asset Management Asset Allocation Review shows that over the past 80+ years equities have dramatically outperformed other types of investments.

keppler

Click on image to enlarge.

Good investments require a relentless search for value.   Your investments have to be good enough to reap an outstanding profit even after the parasites siphon off their part.

To take advantage of the once every 17 year circumstances, I chose to track Keppler Asset Management who continually researches developed and emerging markets globally.  Keppler is one of the best market statisticians in the world and numerous very large fund managers use his analysis to manage funds such as State Street Global Advisors.  Keppler compares the value of each share in each market based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  From this study of monumental amounts of data Keppler develops a Good Value Stock Market Strategies.  The analysis is based on long term, rational, mathematical facts and does not worry about short term ups and downs.

From Keppler I learned that market timing is not the way to get these high profits.  Another graphic from the Keppler Asset Allocation Review explains why.

keppler

Click on image to enlarge.

A dollar invested 88 years ago in Treasury bills rose to $20.58.  The same dollar invested in U.S. stocks over the 88 years grew to be was worth $4,677, UNLESS you missed the best 43 months.  Literally all of the the Dow’s growth in 1,056 months came in 43 of those months.   Your odds have been one in 24, better than roulette perhaps, but not good enough.  Plus even after these odds, the predators are going to take their cut.  You have to ask, “Am I that good at timing?”

The better alternative to timing is to invest in long term indexing based on value.  Long term strategic investing in market indices reduces the amount of trading.  Low trading activity is important because trades are where investors are most vulnerable to predatory tactics.

A part of the long term strategic trading is to invest in low fee diversified Country Index ETFs.  This simplifies the search for value because it focuses research into lumps.

A comparison of US versus German stock market indexes gives an example of lump research and you can create good value, low cost, diversified portfolios that offer maximum potential for profit as they reduce risk.

Keppler’s research shows that Germany’s stock market is a good value market.  Keppler lumps all the shares (or at least 85% of the shares) into the calculations.  There is no attempt to select any one specific share.  Keppler’s research shows that the US stock market index (a lump of about 85% of all the US shares) is now a poor value.

Germany has the world’s fourth largest economy.  The country is the third largest exporter in the world and has recorded some of the highest trade surplus in the world making it the biggest capital exporter globally.  Yet German shares have been overlooked.  German share prices are good value.

For example, recently the German Stock Market had a relative price to book value ratio of  .78,  a relative price earnings ratio of  0.87 and a relative dividend yield of 1.12.  The US Stock Market has a much higher relative price to book value ratio of 1.29, a relative price earnings ratio of 1.07 and a relative dividend yield of 0.81.  German shares cost much less, compared to the values and earnings.  German shares pay much higher dividends as well.

Keppler predicts that the US Stock Market (which is ranked as a sell market by Keppler) will have an annual index gain for the next five years of  3.1% and a total return (with dividends) or a total five year return of 21.7%.  The same calculations for the German Market predicts an average annual index gain over the next five years of 7.5% and a total return (with dividends) or a total five year return of 47.3%.

Which would you rather buy,  a 47.3% return sold for 78 cents on the dollar or a 21.7% return sold for $1.29 on the dollar?

You can forget about any specific share in the US or Germany and invest into an index (in this case the Morgan Stanley Capital Index) which represents about 85% of all the shares traded on the exchange.

You can invest in ETFs that passively invest in all the shares of the index in stock markets that offer good value.  iShares investment company for example has  an ETF that invests in 85% of the shares traded on Wall Street.

ishres

This ETF is called the iShares USA (symbol EUSA) and in this example rose from $22.91 to $43.40 or 89% in the past five years.

iShares also offers an ETF that invests in about 85% of the stocks listed on the German Stock Exchange (Symbol EWG).  EWG rose  from $19.70 to $28.13  or 42% in the past five years.

ishares

Keppler’s lump research shows that Germany is a good value market.   One simple (even very small) investment in iShares Germany MSCI Index ETF gives you a portfolio  of almost all the shares traded on Germany’s largest stock exchange in Frankfurt.  This ETF is a share traded on the New York Stock Exchange.  The ETF invests in 85% of the shares in Germany.  This ETF is a passive fund that does not try to outperform the growth of the German Stock Market.  The managers simply track the investment results of the MSCI Germany Index.  The MSCI Germany Index is designed to measure the performance of the large and mid cap segments of the German Index which is composed of the stocks of 54 different German companies and covers about 85% of all the German equities.  Germany’s ten largest companies compose about 60% of the index.  These ten companies are:  BAYER (Health Care) composes 9.91% of the index – SIEMENS (Industrials) 7.89% – DAIMLER (Consumer Discretionary) 7.04% – BASF (Materials)  6.81% – ALLIANZ (Financials) 6.65% – SAP STAMM (Info Tech) 5.69% – DEUTSCHE TELEKOM (Telecom Srvcs) 4.46% – DEUTSCHE BANK NAMEN  (Financials) 3.66%  – VOLKSWAGEN VORZUG (Consumer Discretionary) 3.18% – BMW STAM (Consumer Discretionary)  3.15%.

You lump your research.  You lump your investment.  This makes it easy to capture the powerful economic circumstances that are unfolding now.

Just investing in Germany is not enough.  There are currently ten good value developed markets, Australia, Austria, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore and the United Kingdom.   Plus there are 11 good value emerging markets.  With even a couple of thousand dollars you can easily create a diversified portfolio in each or all of these countries with Country Index ETFs.

Investing in many stock markets through ETFs gives you opportunity in the second pattern of the falling US dollar.  Preserving the purchasing power of your savings and wealth requires currency diversification.

The strength of the US dollar over recent years is a second remarkable similarity to 30 years ago.   In 1980, the 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 has been growing, is seriously overdue and could create up to 50% extra profit if you start using strong dollars to accumulate good value stock market ETFs in other currencies.

For example because of fears about the euro, EWG, the German ETF dropped 9 percent in 12 months.  These declines are created by currency concerns.  When the euro regains strength, the shares have the potential to appreciate even more.

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 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 includes links to 153 pages of Keppler Asset Stock Market and Asset Allocation Analysis so you can keep this as simple or as complex as you desire.

The report shows 22 good value investments and a really powerful tactic to use that allows you to accumulate these bargains now even in very small amounts (even $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

Research shows that most people worry about having enough money if they live long enough.   I never thought of that.   I just wanted to live long enough to see the remarkable economic opportunity that started in 1980 come again so I could hot the jackpot.  This powerful profit wave has begun.  I have made the investment myself  suggest you investigate this in my report “Three Currency Patterns For 50% Profits or More.”

Order the report here $29.95

My Guarantee

Order now and I’ll email the online report “Three Currency Patterns For 50% Profits or More” in a .pdf  file right away. 

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 purposeful investing.  If you are not totally happy, simply let me know within 60 days and I’ll refund your subscription fee in full, no questions asked.

You can keep “Three Currency Patterns for 50% Profits or More”  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.

Order the report here $29.95

I look forward to the next 17 years and sharing how to have more than enough money for the rest of your life.

Gary