Tag Archive | "stock crash"

Good News or Ironic?


Well, there ya go.  We made it through October without a serious stock market crash.

That’s good because October has secured a reputation as a bad month for US stocks.

It has a black mark.  It’s the only month since 1950, that has twice had double digit declines.  The Dow dropped 21.67% in October 1987 and 16.79% in October 2008. Plus of course the worst stock crash of all began in October 1929.

In other words October is a scary month because investors are more likely to stampede with a sudden double digit downturn.

It’s the stampede that creates the serious cataclysmic drop.

In terms of average return, October is not a bad month.  It’s tied for the sixth best.

stockchimp

February is the month to be wary according to statistics from Moneychimp.com (1) 

Here are some statistics about  the Dow Jones Industrial Average average return by month since 1950.

 Month                          Up Years   Down Years   Average Return   # of double digit downs

November                          44                   23                     1.38%                              0
December                          50                   17                      1.54%                               0
January                              39                   29                     0.76%                               0
February                            38                   29                   – 0.05%                               1
March                                 43                   24                      1.14%                                1
April                                    46                   21                      1.34%                                0
May                                     39                   28                     0.15%                                 0
June                                    34                   33                    – 0.09%                               0
July                                     37                   30                       0.88%                               0
August                                37                   30                    – 0.27%                                1
September                         29                   38                    – 0.67%                                 1
October                             41                   26                       0.76%                                2

September is the worst month for returns in the US stock market, followed by August, June and February.

The good news.

November and December are the two best months of the year for the US stock market.

If this type of stock history is of any value, then we should not expect and serious retraction in the stock market until at least February.

Ironic.

Beware because markets are full of irony!

Won’t it be if a share crash comes along during these next best two months?

The Reality.

We won’t know till we know.  So we should always protect our investments.

There is three realities we can derive from these statistics.

#1:   Since 1950 the Dow Jones Average has risen an average of  6.87% per annum.

#2:   Since late 2008, the Dow Jones Average has risen almost 172% or 21.5% per annum.

#3:  Periods of high performance are followed by periods of low performance and vice versa.

Gary

Investing Beyond the Boom

Warren Buffet once warned against the Cinderella effect.

He said “Don’t be fooled by that Cinderella feeling you get from great returns.  Nothing sedates rationality like large doses of effortless money.  After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball.  They know the party must end but nevertheless hate to miss a single minute of what is one helluva party.  Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.”

Cinderella may have lost a shoe when she fled the party to meet a midnight curfew.  We can lose much more when we rush from a crashing stock market.

Most investors face emotional dangers that build in rising markets.

Almost everyone feels good.

But the he clock of economic reckoning is ticking.

No wants to see it.  Nothing rises forever and especially… not everything at the same time.

Yet no one wants to leave the party until the end.

But many edge closer to the door.

When the clock chimes there could be a stampede even though leaving in a hurry may be the worst way to go.

Here are seven steps that can help avoid this risk.

  • Choose investments based on markets instead of shares.
  • Diversify based on value.
  • Rely on financial information rather than economic news.
  • Keep investing simple.
  • Keep investing costs low.
  • Trade as little as possible.
  • Make the decision process during panics automatic.

One strategy is to invest in country ETFs that easily provide diversified, risk-controlled investments in countries with stock markets of good value.  These ETFs provide an easy, simple and effective approach to zeroing in on value.  Little management and less guesswork is required.  The expense ratios for most ETFs are lower than those of the average mutual funds.  Plus a single country ETF provides diversification equal to investing in dozens, even hundreds of shares.

A minimum of knowledge, time, management or guesswork are required.

The importance of…

easy…

transparent…

and inexpensive. 

Keeping investing simple is one of the most valuable, but least looked at, ways to avoid disaster.  Simple and easy investing saves time.  How much is your time worth?  Simple investing costs less and avoids fast decisions during stressful times in complex situations where we are most likely to get it wrong.

Fear, regret and greed are an investor’s chief problem.  Human nature causes  investors to sell winners too soon, and hold losers too long.

Easy to use, low cost, mathematically based habits and routines help protect against negative emotions and impulse investing.

Take control of your investing.  Make decisions based on data and discipline, not gut feelings.  The Purposeful investing Course (Pi) teaches math based, low cost ways to diversify in good value markets and in ETFs  that cover these markets.  This course is 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.

Enjoy Repeated Wealth With Pi

Pi’s mission is to make it easy for anyone to have a strategy and tactics that continually maintain safety and turn market turmoil into extra profit.

One secret is to invest with a purpose beyond the immediate returns.  This helps create faith in a strategy that adds stickiness to the plan.

Another tactic is to invest with enough staying power so you’re never caught short.

Never have to sell depressed assets during periods of loss.

Lessons from Pi are based on the creation and management of Model Portfolios, called Pifolios.

The success of Pifolios is based on ignoring economic news (often created by someone with vested interests) and using financial math that reveals deeper economic truths.

One Pifolio covers all the good value developed markets.  Another covers the emerging good value markets.

The Pifolio analysis begins with a continual research of 46 major stock markets that compares their value based on:

#1:  Current book to price

#2:  Cash flow to price

#3:  Earnings to price

#4:  Average dividend yield

#5:  Return on equity

#6:  Cash flow return.

#7:  Market history

This is a complete and continual study of almost all the developed major and emerging stock markets.

This mathematical analysis forms the basis of a Good Value Stock Market Strategy.   The analysis is rational, mathematical and does not worry about short term ups and downs.

This strategy is easy for anyone to follow and use.  Pi reveals the best value markets and provides contacts to managers and analysts and Country Index ETFs so almost anyone can create and follow their own strategy.

The course examines and regularly reports on the hows and whys of seven professionally managed portfolios so we can learn how managers find and invest in good value.  The Pifolios are:

  • Keppler Good Value Developed and Emerging Market Pifolios
  • State Street Global Advantage Emerging & Developed Market Pifolios
  • Gold & Silver Dip Pifolio
  • ENR Advisory Extra Pifolio
  • Tradestops.com Trailing Stops Pifiolio

tradestops

As you can see in this image (click to enlarge) the top performing Pifolio we are tracking is the State Street Global Advantage Pifolio was up 43.15%.  Here is the breakdown of that current Pifolio.

pifolio

Learn how to invest like a pro from the inside out.

State Street is one of the largest fund managers in the world and their Global Advantage funds invest in good value shares in good value markets.

In the updates we review each portfolio, what has been purchased and sold, why, the ramifications for high risk, medium risk and low risk investors.

At the beginning of 2018 my personal Pifolio is based on select ETFs in the Keppler Developed and Emerging markets.  My Pifolio is invested in Country ETFs that cover seven developed and three emerging markets:

Norway
Australia
Hong Kong
Germany
Japan
Singapore
United Kingdom
Taiwan
South Korea
China

Don’t give up profit to gain ease and safety!

This portfolio has outperformed the US market (S&P 500) in 2017 as the chart below shows.

My portfolio blue.  S&P 500… green.

Screen Shot 2018-06-04 at 7.39.15 AM

Regardless of economic news, these markets represent good value and have been chosen based on four pillars of valuation.

  • Absolute Valuation
  • Relative Valuation
  • Current versus Historic Valuation
  • Current Relative versus Relative Historic Valuation

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 Silver Dip Strategy with platinum.   The “Silver Dip 2017” 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.

seminars

Tens of thousands have paid up to $999 to attend.

This year I celebrated my 50th 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.

stock-Charts

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.

keppler asset management chart

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.

ecuador-seminar

Triple Guarantee

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 “Silver 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.

Your subscription will be charged $299 a year from now, but you can cancel at any time.

Gary

 

 

 

 

 

(1)  www.moneychimp.com/features/monthly_returns.htm

 

3 Wall Street Warnings


Almost 50 years ago one of my client’s, a top foreign service officer at the US consulate in Hong Kong, approached me.

“Invest $10,000 in a commodity deal.  A Japanese broker gets inside information so we cannot lose. “

So he said.

A quick investigation revealed a sad fact… he was being scammed.

I warned him, “Avoid it like the plague” and  laid out exactly how the broker (aka con artist) would relieve him of his entire $10,000.

Later he told me… with some embarrassment, that he had made the investment anyway.  He lost it all.  $10,000.

Just as I had warned.

Then he dropped a bombshell.

He had invested another $10,000.  The broker convinced him the loss was a fluke and he could get his money back.

He lost that as well…  in exactly the same way.

The whole deal was a bit nefarious.  This is the con artist’s trick… make the deal a bit outside the law.  He could not even file a complaint.

This was the perfect scam.  The client knew exactly what would happen, but did it any way.

Go figure.

Why?

Because the investor was desperate… to make more profit.

This leads me to three warnings about Wall Street.

Before I share these warnings let me add one more thing.

That client convinced me 50 years ago, that no matter what I write… no matter how much I shout… regardless of the logic…  not everyone will listen.

Fair enough.  I might be wrong.

Why listen to me anyway?

Instead I ask you, consider these beliefs I have developed over the past 50 years of my global investing.

No one knows when the super heated US stock market will begin its next bear trend.

But a bear will again descend on Wall Street.

The autumn and winter months ahead are a likely time for the crash to begin.

Yet we cannot be sure.

We can still see profits and growth in US shares and we will… until we won’t.

The volatility quotient of the DJI is about 10%,  so at 22,800, a volatility stop loss should be around 20,500.

The trend is bullish so the trend won’t really break until the DJI drops below 21,500.

Watch carefully.  Be concerned.

Below 20,500, the risk of a crash is very high.

At 20,500, hedge or get out.

Quickly.

Do not delay.  That a sudden crash can take happen in minutes, even tomorrow… or this afternoon or any day.

This warning is not about the market… because equity markets, as rigged as they are, ultimately are rational.

The warning is about ourselves…  our fears. our dreams.  our desires.

Our reactions.

Our weakness is the urge to invest irrationally in a rational market.

That is why we can see a warning in the Wall Street Journal article “Income Investors: It’s OK to Be Sad, But Don’t Get Desperate” (1).

This article warns that markets will ignore your needs.

The article says:  Old bull markets don’t produce new ideas. They just produce new ways for investors to hurt themselves with old ideas.

With stocks at record highs and the income on bonds not far from record lows, circumstantial evidence suggests investors are getting restless — if not desperate.

Chasing “yield,” or trying to get higher investment income, is one form of desperation. Last month, $1.6 billion in new money poured into exchange-traded funds holding high-yield corporate bonds, according to FactSet.

The article explains how a survey of investors found that they “need” returns of 8.5%.  Since 1926, the return on U.S. stocks after inflation has averaged about 7% annually.

What return do you really need?

Markets do not care what you want or need it to do.

The desire for unrealistic returns can prompt us to take dangerous risks.  Just about any get-rich-quick story looks good, as it did for my client in Hong Kong, 50 years ago.

A symptom of an overheated market is when desperate investors are willing to buy blindly without knowing when or whether they will be able to sell.

The US market is at this point.

Overheated.

There is another warning in yesterday’s Wall Street Journal article “Junk Bond Boom Reaches Far Corners of the World” (2).  This tells how frenzied buying of risky assets predicts market turning points.  (underlines and bolds are mine).

The article says: Investors’ thirst for income is enabling governments and companies in some of the world’s poorest countries to sell debt at lower and lower interest rates.

And the global bond boom has even reached Tajikistan.

Tajikistan’s bonds were rated B- by S&P, six notches below investment grade. The ratings firm estimated the country’s per capita gross domestic product at $900, putting it among the lowest of the sovereign nations it rates, but said it sees Tajikistan’s growth prospects improving gradually.

The central Asian country last month raised $500 million in its first-ever international bond sale, paying just 7.125% in annual interest on the debt after the U.S.-dollar offering drew a swarm of American and European buyers.

Greece, which was on the brink of default a few years ago, issued new bonds this past summer, and the National Bank of Greece launched a bond sale Tuesday, marking the first visit of a Greek bank to the credit markets since the country’s sovereign-debt crisis.

And June saw the bond-market debut of the Maldives, a tiny nation in the Indian Ocean that raised $200 million in a sale of five-year bonds with a 7% coupon.

The euphoria is worrying some investors, who warn that frenzied buying of risky assets sometimes presages market turning points.

A third warning, also from the Wall Street Journal, shows that even junk bonds are not risky enough for many investors now.

The article, “Watch Out As Risky Loans Overtake Junk Bonds” (3) outlines how even riskier floating interest rates make loans attractive to investors but could cause pain down the road.

The article says: Yield-hungry investors have made borrowing easier than ever for riskier companies. One sign: this year loans have raced ahead of bonds as the preferred form of debt. But when interest rates rise, this preference could mean trouble.

The very thing that is attractive to investors will become a big problem if interest rates rise sharply.  For the borrowers, which are mainly companies owned by private-equity firms or others with high debt levels, the costs of servicing their debt will increase, cutting profits, or, worse, creating real cash-flow problems.

The stories above provide three signs that Wall Street equity prices could collapse at any time.

Remain alert.  Short-term trading algorithms can cause market trends to shift at astounding speed.

Prepare now what you will do if the markets panic.

Create a plan based on math that reveals good value economic data.

When the crash comes, stick to your plan.

Do not panic.

Turn on the auto pilot and normally add to your position.

Do not let feelings influence you too much.  Use logic and math instead.

Invest in value.

Gary

(1) wsj.com: Income investors don’t get desperate

(2) wsj.com: Junk bond boom reaches far corners of the world

(3) wsj.com: Watch 0ut as risky loans overtake junk bonds

 

Cyber Security The New Plastic


Seven sentences describe a prime way to get ahead now.  Find a way to earn in strong trends created by cycles of war.

The Graduate

Scene from “The Graduate” where Dustin Hoffman receives on the type of career to choose,

Seven sentences from the 1967 film “The Graduate” with Dustin Hoffman explained a prime opportunity for Boomers in the 1960s.

Mr. McGuire: I just want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Plastics.
Benjamin: Exactly how do you mean?

Plastics was the booming growth industry during the early days of the Boomer Era.

If that film were rewritten today, the word for “Plastics” should be “Cyber Security”.

So, how can we know what’s next?

We can get a good idea of what’s next through an understanding of the “Cycle of War”.

This is a story that only a handful of economic writers can tell from experience.   Just a few, like me, have been writing through the last two two cycles of war.  That’s bve=because they have taken almost 50 years.

Fwd: dji-chart tgas:"2011-12-17"

We can see the Cycles of War by looking at this chart of the Dow Jones Industrial Index.

The Cycle of War begins when there is a conflict between nations of such urgency that all concepts of return on profit are thrown out the window.  Huge resources are thrown at refining new technology to help win the struggle.  After the war, the technology shifts from military to domestic use and great increases of productivity are gained.  This productivity leads to new fortunes and starts an economic bubble.  The bubble overextends and bursts.  The burst leads to economic stress and new struggles.  Once again R&D accelerates and leads to new and refined technology.

The first Postwar Boom probably started in about 1865.  We cannot see this as the chart does not start until 1890. I am guessing the 1865 date because this was the end of the War between the States.  This war was a battle over cotton, the primary ingredient used in the water powered industrial revolution, an era dominated by textiles.  We can see this boom carrying on up through 1900.  The battles were fueled by steam power.   After the war, building railroads led to unimaginable wealth and affluence. The stock market was turned into a bubble by the robber barons.

The next fifteen years downwards cycle began in 1900 a downfall leading to WWI in 1914.  WWI was fought with the internal combustion engine.  At the end of WWI, we see the next post war boom fueled by the automotive industry which runs up to 1929.  Then the next fifteen years down cycle ran from 1929 to 1945.

WWII brought numerous new technologies, including TV, radar, jet engines, nuclear power, fertilizer and plastics.   These technologies introduced into the domestic economy created the largest postwar boom ever, from 1946 through 1968 once again followed by a fifteen year downfall.

1968 begins the next 15 year downwards cycle which was the run up to WWIII (Reagan-Thatcher versus the Evil Empire). There was no shooting in this cold war, but the struggle between the East and the West helped lead to the computer and internet.  These big technologies evolved and  kicked off a post war boom that ran for about 15 years until the .dotcom crash that began in 1999.

The “Cycle of War” theory suggests that WWIV has begun.  We should ask “Where is WWIV?”   What struggle is so intense that it will lead to a new disruptive technology that will change everything?  That struggle could well be over Cyber Security.

There are two economic factors so important to the world that if disrupted, the global economy could collapse.   Banks would close. Stock prices would plunge.  Even Social Security could stop.  Stores shelves would be empty if we could even get to the store.  Traffic will dwindle as gas pumps run dry and America’s highways will become eerily quiet.

The two factors are globalization and networking.  Consumers everywhere are almost entirely on global trade and on the convenience created by computerized networks.  Everything we do, from getting electricity to a phone to the internet is based on a structure of easy, instant, free networking.

Our affluence, even our day to day existence is dependent on global trade, computers and the internet.  However, there are several risks that this vital system faces every day.

The first risk is an EMP attack.  A solar geomagnetic storm could cause the catastrophe.  Such a storm occurred in 1859.  Known as the Carrington Event it caused telegraph systems all over Europe and North America to fail.  Some telegraph operators received electric shocks.  Telegraph pylons threw sparks.

In 1989, a minor storm of this nature left six million people without power in Eastern Canada and the U.S.

A solar storm in 2012 was equal to the 1859 deluge but missed the Earth by a narrow margin of approximately nine days.  The region that produced the outburst was not pointed directly enough at  Earth to create devastation.  Economic existence as we know it was saved.

Had this storm hit the Earth, it is likely that it would have inflicted serious damage to electronic systems on a global scale.  A 2013 study estimated that the cost to America alone could have reached nearly three trillion dollars and  the recovery time would have been up to  ten years.  The solar storm next is unpredictable.

An electromagnetic pulse triggered by a terrorist A-bomb, is also capable of disabling every unprotected computer in America or China or Europe.   The US Federal Energy Regulatory Commission (FERC) report “Electromagnetic Pulse: Effects on the U.S. Power Grid” (12) says  “HEMP (high altitude EMP) is produced by a nuclear weapon detonated above the atmosphere.  No blast, shock or radiation is felt at the Earth’s surface; however, electromagnetic fields do reach the surface.

“In addition to causing the immediate damage and failure of transformers, there is also  evidence that GIC may be responsible for the onset of long-term damage to transformers and other key power grid assets.  Currently most large transformers are manufactured in foreign countries and replacements would likely involve long production lead times in excess of a year.  The long-term power outages associated with such a delay would pose unacceptable societal burdens.”

emp risk

Areas at risk according to FERC

One  scenario is known as a Scud-in-a-Bucket where a rogue state shoots a short range missile – a Scud from a fishing boat (the bucket) in US waters.  A single nuclear bomb exploded over the Midwest, if high enough could generate an electromagnetic pulse that would destroy every unprotected chip in the continental USA.   North Korea’s rocket launch from the Sohae  site is ominous.  This leaves numerous countries open to attack-no boat required.  Japan, the world’s third largest economy, is especially vulnerable.  China and South Korea are is at risk as well.

Europe has a different risk, being close enough to Iran and other radicals in the Middle East.  If any of the big economies lose their communications and computer infrastructure, panic will begin.

Our system today succeeds because the economy is global and connected.  Break any one link and the entire chain will pull apart.

That EMP, by the way may not come from an enemy, but an error.  In 2013, a secret document, published in declassified form, was published by the Guardian newspaper.  The report revealed that in 1961 the US Air Force came close to detonating an atom bomb over North Carolina that would have been 260 times more powerful than the device that devastated Hiroshima.  Two bombs were released from a B52 in trouble and three of the four safety mechanisms in one bomb failed.

More likely… a hack attack.

Solar flares or bombs could cause a breakdown, but hack attacks are taking place every day.  This war is on.  This risk is so great that the US air force has created a functional Cyberspace Security and Control System as a weapon just to provide 24/7/365 Department of Defense Information Network operations and provide defensive cyberspace operations (DCO) within those Air Force Networks.  This weapon has been deployed to Air Force bases worldwide.

New Hacking Technology will eventually change everything for sure. 

Even without attacks by nature or mankind, the electronic era, as we know it, is dead.  Do not doubt this. The question is not if, it’s when.  The battleship was a predominant power in WWI.  Submarines and airplanes changed that.  Aircraft carriers became a predominant power instrument in WWII.  Missiles changed that and are currently a predominant power.  The quantum computer will soon change this and anything and everything we know about the modern computer driven world.

The National Security Agency (NSA) has declared that the algorithms it had spent a decade to lock up secret data are not safe anymore due to the dangers  of quantum computers.  The NSA released this statement. “There is growing research in the area of quantum computing, and enough progress is being made that NSA must act now.”

This quantum shift may surprise us sooner than we realize.  There has been surprising progress in building small proof-of-concept quantum computers in the last couple of years and when cryptography is defeated internet security as we know it will end.

MIT reports that a tiny startup company is racing Google to build quantum computing chip by the end of 2017.   The chip is significantly more complex than those built by other groups.  Another startup called D-Wave has already sold a chip with more than a thousand qubits to clients including Lockheed Martin and Google.

The race to beat the quantum chip, or any of the attacks will put the world into “disruptive innovation” shock.  Imagine what happens when passwords and algorithms are no longer secure.  Anyone with the right computer can grab your money.  Rockets can be redirected back to their owner.  Airplanes can be stopped… mid air.  Control over computers and the internet will be a thing of the past.

These risks might sound improbable, but for almost 50 years I have watched economic dependence on global connectivity grow.   The change to computerized connectivity has dramatically increased productivity, but for this technology to work, everyone has to be connected.

This increased productivity has led to increased spending and borrowing, an entire house of cards built on a system that has one huge flaw. The flaw is security.    The growing expansion has been stretching and stretching at the fabric of our economic walls.   All that holds it together is the mud and cement of confidence.  One single break in this dam can cause a complete rending that is almost instantaneous.  If computers and/or the internet stop, for even a few moments, a global stock market and financial meltdown can come in just days, maybe even hours.

More likely, instead of total disintegration, we’ll see a sudden drop in wealth, a significant lowering of standards in the middle class and a wider inequality of income and wealth.  The middle class will become much poorer and the wealthy far richer.

What is the solution?  I do not know.  The outcome of such struggles are always obscured by the fogs of war.  There is no doubt though that the timing and the way the economy, political system and stock markets are acting, the battles are being fought now.

The way to survive and prosper from this scenario is to stay healthy (the health care and insurance systems rely on the internet and computers).  Second, invest in value.  Third, create a way to earn so if  the financial system falters temporarily, you can  hold on rather than be forced to sell assets at a loss.

Learn how to earn by writing to sell.

Gary

Investing Beyond the Boom

Warren Buffet once warned against the Cinderella effect.

He said “Don’t be fooled by that Cinderella feeling you get from great returns.  Nothing sedates rationality like large doses of effortless money.  After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball.  They know the party must end but nevertheless hate to miss a single minute of what is one helluva party.  Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.”

Cinderella may have lost a shoe when she fled the party to meet a midnight curfew.  We can lose much more when we rush from a crashing stock market.

Most investors face emotional dangers that build in rising markets.

Almost everyone feels good.

But the he clock of economic reckoning is ticking.

No wants to see it.  Nothing rises forever and especially… not everything at the same time.

Yet no one wants to leave the party until the end.

But many edge closer to the door.

When the clock chimes there could be a stampede even though leaving in a hurry may be the worst way to go.

Here are seven steps that can help avoid this risk.

  • Choose investments based on markets instead of shares.
  • Diversify based on value.
  • Rely on financial information rather than economic news.
  • Keep investing simple.
  • Keep investing costs low.
  • Trade as little as possible.
  • Make the decision process during panics automatic.

One strategy is to invest in country ETFs that easily provide diversified, risk-controlled investments in countries with stock markets of good value.  These ETFs provide an easy, simple and effective approach to zeroing in on value.  Little management and less guesswork is required.  The expense ratios for most ETFs are lower than those of the average mutual funds.  Plus a single country ETF provides diversification equal to investing in dozens, even hundreds of shares.

A minimum of knowledge, time, management or guesswork are required.

The importance of…

easy…

transparent…

and inexpensive. 

Keeping investing simple is one of the most valuable, but least looked at, ways to avoid disaster.  Simple and easy investing saves time.  How much is your time worth?  Simple investing costs less and avoids fast decisions during stressful times in complex situations where we are most likely to get it wrong.

Fear, regret and greed are an investor’s chief problem.  Human nature causes  investors to sell winners too soon, and hold losers too long.

Easy to use, low cost, mathematically based habits and routines help protect against negative emotions and impulse investing.

Take control of your investing.  Make decisions based on data and discipline, not gut feelings.  The Purposeful investing Course (Pi) teaches math based, low cost ways to diversify in good value markets and in ETFs  that cover these markets.  This course is 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.

Enjoy Repeated Wealth With Pi

Pi’s mission is to make it easy for anyone to have a strategy and tactics that continually maintain safety and turn market turmoil into extra profit.

One secret is to invest with a purpose beyond the immediate returns.  This helps create faith in a strategy that adds stickiness to the plan.

Another tactic is to invest with enough staying power so you’re never caught short.

Never have to sell depressed assets during periods of loss.

Lessons from Pi are based on the creation and management of Model Portfolios, called Pifolios.

The success of Pifolios is based on ignoring economic news (often created by someone with vested interests) and using financial math that reveals deeper economic truths.

One Pifolio covers all the good value developed markets.  Another covers the emerging good value markets.

The Pifolio analysis begins with a continual research of 46 major stock markets that compares their value based on:

#1:  Current book to price

#2:  Cash flow to price

#3:  Earnings to price

#4:  Average dividend yield

#5:  Return on equity

#6:  Cash flow return.

#7:  Market history

This is a complete and continual study of almost all the developed major and emerging stock markets.

This mathematical analysis forms the basis of a Good Value Stock Market Strategy.   The analysis is rational, mathematical and does not worry about short term ups and downs.

This strategy is easy for anyone to follow and use.  Pi reveals the best value markets and provides contacts to managers and analysts and Country Index ETFs so almost anyone can create and follow their own strategy.

The course examines and regularly reports on the hows and whys of seven professionally managed portfolios so we can learn how managers find and invest in good value.  The Pifolios are:

  • Keppler Good Value Developed and Emerging Market Pifolios
  • State Street Global Advantage Emerging & Developed Market Pifolios
  • Gold & Silver Dip Pifolio
  • ENR Advisory Extra Pifolio
  • Tradestops.com Trailing Stops Pifiolio

tradestops

As you can see in this image (click to enlarge) the top performing Pifolio we are tracking is the State Street Global Advantage Pifolio was up 43.15%.  Here is the breakdown of that current Pifolio.

pifolio

Learn how to invest like a pro from the inside out.

State Street is one of the largest fund managers in the world and their Global Advantage funds invest in good value shares in good value markets.

In the updates we review each portfolio, what has been purchased and sold, why, the ramifications for high risk, medium risk and low risk investors.

At the beginning of 2018 my personal Pifolio is based on select ETFs in the Keppler Developed and Emerging markets.  My Pifolio is invested in Country ETFs that cover seven developed and three emerging markets:

Norway
Australia
Hong Kong
Germany
Japan
Singapore
United Kingdom
Taiwan
South Korea
China

Don’t give up profit to gain ease and safety!

This portfolio has outperformed the US market (S&P 500) in 2017 as the chart below shows.

My portfolio blue.  S&P 500… green.

Screen Shot 2018-06-04 at 7.39.15 AM

Regardless of economic news, these markets represent good value and have been chosen based on four pillars of valuation.

  • Absolute Valuation
  • Relative Valuation
  • Current versus Historic Valuation
  • Current Relative versus Relative Historic Valuation

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 Silver Dip Strategy with platinum.   The “Silver Dip 2017” 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.

seminars

Tens of thousands have paid up to $999 to attend.

This year I celebrated my 50th 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.

stock-Charts

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.

keppler asset management chart

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.

ecuador-seminar

Triple Guarantee

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 “Silver 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.

Your subscription will be charged $299 a year from now, but you can cancel at any time.

Gary