Tag Archive | "Value investing"

Benefits of US Small Cap Shares


Last week we sent our Purposeful Investing Course subscribers the February 2020 ENR Extra Advisory Bulletin.  The entire bulletin is only available to ENR’s largest investors and Pi subscribers.

ENR is one of the very few SEC registered investment advisors that can help US investors bank and hold assets with non US banks. (1)

This month’s bulletin shows how value investments continue to offer extra potential… especially small cap value shares.

The bulletin said: Value equities in the United States remain far less expensive than growth stocks.

We’re still buying the Vanguard Small-Cap Value ETF (NYSE-VBR). Levying just 0.07% in annual fees,
VBR has declined 3.5% from its high and should be accumulated at a time when the American
domestic economy is improving. The Fund trades at 16.2 times trailing earnings or half of the
S&P 500 Index with a much stronger earnings growth rate in 2020. Investors pay a reasonable
1.7 times price-to-book.

enr asset mamangement

The US markets are not in the good value markets in the Pifolio.  Value investors who want to invest in US value equities should consider the Vanguard Small-Cap Value ETF (NYSE-VBR).

Gary

Subscribe to the Purposeful Investing Course and read the entire  ENR Advisory Extra Bulletin  for February 2020.

Prophet Words for Profit in 2020

Here’s ten most important words (and numbers) for the 2020 decade…  MSCI World Index All-Time High Valuation December 31, 1999.

Keep these word and numbers in mind when thinking about the stock market this year.

Here is the all time high valuation for this index.   Price to book 4.23.  Price Earnings Ratio 35.7. Average dividend yield 1.30%. 

Those were the all time high valuations for the Morgan Stanley Capital World Index in December 1999, just before the dot.com bubble burst.

Here is a chart of the Dow Jones Index for the past three decades.  You can see that bubble pop just before the beginning of the 2000 decade.

microtrends.com

Let’s compare some valuations.

                                                                                 Price to Book       P/E       Average Dividend

The All World MSCI World Growth Shares           5.22                28.4                 1.28%

MSCI  US Index                                                               3.65                 23.1                  1.83%

MSCI Word Index                                                           2.57                 20.0                  2.33%

MSCI World Index All-Time High                            4.23                  35.7                  1.30%

MSCI USA Index                                                            3.65                  23.1                   1.83%

These valuations create some important investing questions.

“Will the 2020 decade be more like the 2000s decade or the 2010 decade?”

“How close can the USA Index come to the all time high watermark before there is a correction?”

“Will the poor valuation of growth shares globally lead to a shift from growth shares to value shares?”

“Do shares world wide still have plenty of room to rise?”

Ask me again in January 2030 and I will know, but since no one knows the answers now, proceed with caution.

For the past four years, my strategy, to protect against the next stock market crash and yet gain from rising share prices is to invest in an equally weighted  of the value based portfolio of country ETFs we invest in and track in our Purposeful Investing Course is formulated.

The valuation of the top value portfolio we use as the basis of our portfolio is  now price to book  1.41, P/E ratio 14.4 and average dividend yield of 3.78%.

An equally weighted combination of top value markets offers the highest expectation of long-term risk-adjusted performance and the valuation of the top value portfolio is now undervalued by 37% compared to the MSCI World (Standard) Index, by 50% compared to the MSCI USA Index and by 62% compared to the MSCI World Growth Index.

Since no one knows what the future will bring, investing in value makes the most long term sense.

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 Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2019.

70% is diversified into developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the good value markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for almost every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (Pi).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

This year I 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 our seminar.

Those five decades of experience have taught me several incredibly valuable lessons.

The first lesson is that there is always something we do not know.

The second lesson is that stock market booms and busts always eventually return to value.

Third, the only sure way to succeed is to use time not timing.

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 $102 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.

 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.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197.

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

Gary

(1) http://www.enrassetmanagement.com/

Gaining the Value Premium


Choosing value over growth is a powerful math based way to get the best stocks while maintaining maxim safety. 

Last week I sent Purposeful Investing Course subscribers the 79 page Keppler Asset Management’s Good Value Developed Markets Analysis  for the winter of 2020. This analysis showed a “Value Premium” opportunity.

The analysis said:  Current annual earnings growth of the MSCI World Value Index of 3.5 % beats the earnings growth of the MSCI World Growth Index of -2.5 % by 6.0 percentage points.

This does not make sense considering that the MSCI World Growth Index now sells at a premium of 143 % to the MSCI World Value Index based on key fundamentals, e.g. book value, cash flow, earnings and dividends.

The market must adjust to these facts sooner rather than later.

Let’s shed more light on the Value Premium.  A Fidelity article “Comparing the results of value and growth stock market indexes explains the Value premium” and shows that value shares have a significant advantage over growth shares in the long term.

Fidelity shows that over the period 1990–2015, large-cap U.S. value stocks had a total dollar premium of over $9,200 more during this 26-year period (assuming a starting investment of $10,000). In other words investors who put $10,000 into value shares earnd $9,200 more than investors who put $10,000 in growth stocks at and for the same time.

For Midcap value shares the gap was even more.  The value premium was over $22,000 and small-cap value shares turned $10,000 into $124,669, or $44,791 more than the ending balance in small-cap growth shares over the 26 years.

The chart from Credit Suisse and the London Business School shows similar results from the years 1926 up to 2012.

Screen Shot 2020-02-01 at 7.42.24 AM

Then after the big stock market correction in the early 2010s, this chart from valuewalk.com (1) shows that growth shares surged ahead of value shares.

Screen Shot 2020-02-01 at 7.44.21 AM

This has created a huge distortion.   Keppler Asset Management (KAM) did the math on this distortion in the “Winter Developed Market Value Analysis” and said:

While the average developed market—as measured by the KAM Equally Weighted World Index—is now undervalued by 27% vs. the cap-weighted MSCI World Index based on traditional valuation measures, the Top Value Markets are now undervalued by 37% compared to the MSCI World (Standard) Index, by 50% compared to the MSCI USA Index and by a whopping 62% compared to the MSCI World Growth Index.

Value stocks worldwide have lagged growth stocks since the onset of the bull market ten years ago.  This creates a distortion.

I have repeatedly mentioned the difference in total returns over the last five years showing how value investments have lagged by a wide margin.

This means that currently, international value stocks remain among the cheapest in the world.

One ETF  that provides a way to easily invest globally in value shares is the iShares Edge MSCI Intl Value Factor ETF  (symbol IVLU) that tracks the investment results of an index composed of international developed large- and mid-capitalization stocks with value characteristics and relatively lower valuations.

Learn an even better way to invest in global value with our Purposeful Investing Course below.

Gary

Prophet Words for Profit in 2020

Here’s ten most important words (and numbers) for the 2020 decade…  MSCI World Index All-Time High Valuation December 31, 1999.

Keep these word and numbers in mind when thinking about the stock market this year.

Here is the all time high valuation for this index.   Price to book 4.23.  Price Earnings Ratio 35.7. Average dividend yield 1.30%. 

Those were the all time high valuations for the Morgan Stanley Capital World Index in December 1999, just before the dot.com bubble burst.

Here is a chart of the Dow Jones Index for the past three decades.  You can see that bubble pop just before the beginning of the 2000 decade.

microtrends.com

Let’s compare some valuations.

                                                                                 Price to Book       P/E       Average Dividend

The All World MSCI World Growth Shares           5.22                28.4                 1.28%

MSCI  US Index                                                               3.65                 23.1                  1.83%

MSCI Word Index                                                           2.57                 20.0                  2.33%

MSCI World Index All-Time High                            4.23                  35.7                  1.30%

MSCI USA Index                                                            3.65                  23.1                   1.83%

These valuations create some important investing questions.

“Will the 2020 decade be more like the 2000s decade or the 2010 decade?”

“How close can the USA Index come to the all time high watermark before there is a correction?”

“Will the poor valuation of growth shares globally lead to a shift from growth shares to value shares?”

“Do shares world wide still have plenty of room to rise?”

Ask me again in January 2030 and I will know, but since no one knows the answers now, proceed with caution.

For the past four years, my strategy, to protect against the next stock market crash and yet gain from rising share prices is to invest in an equally weighted  of the value based portfolio of country ETFs we invest in and track in our Purposeful Investing Course is formulated.

The valuation of the top value portfolio we use as the basis of our portfolio is  now price to book  1.41, P/E ratio 14.4 and average dividend yield of 3.78%.

An equally weighted combination of top value markets offers the highest expectation of long-term risk-adjusted performance and the valuation of the top value portfolio is now undervalued by 37% compared to the MSCI World (Standard) Index, by 50% compared to the MSCI USA Index and by 62% compared to the MSCI World Growth Index.

Since no one knows what the future will bring, investing in value makes the most long term sense.

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 Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2019.

70% is diversified into developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the good value markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for almost every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (Pi).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

This year I 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 our seminar.

Those five decades of experience have taught me several incredibly valuable lessons.

The first lesson is that there is always something we do not know.

The second lesson is that stock market booms and busts always eventually return to value.

Third, the only sure way to succeed is to use time not timing.

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 $102 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.

 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.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197.

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

Gary

(1) www.fidelity.com/learning-center/trading-investing/trading/value-investing-vs-growth-investing

(2) www.valuewalk.com/2018/02/performance-differential-growth-stocks-value-stocks-now-greater-time-history/

 

Where Stocks Will Be in 2023.


Here’s a powerful math based forecast for global stock markets.

I just sent Pi subscribers the 79 page Keppler Asset Management’s Good Value Developed Markets Analysis  for the winter of 2020.

Part of this analysis includes Keppler’s forecasts for global stock markets over the next four years.

I give this chart a great deal of attention as it’s based entirely on mathematics, not conjecture, guesswork or opinion.

You can see the entire real-time forecasting history for the KAM Equally Weighted World Index, starting at the end of 1993 in the forecast chart below.

Keppler’s numbers are based on relationships between price and value over the previous fifteen years moving forward in monthly increments and thus adjusting steadily to an ever-changing norm.

The chart includes two remarkable episodes: The five-year period (1997-2001) during which the KAM Equally Weighted World Index stayed above the upper forecast band, and the period starting in October 2008 when it fell below the lower forecast band, where it stayed through April 2014 (5 years and 7 months).

Since then, the Index (green line) fell slightly below the lower forecast band again twice in the first half of 2016. In the past, index levels below or slightly above the lower forecast band subsequently turned out to be attractive entry points for long-term investors.

keppler

I treat times when the green line drops below the lower grey line as an especially good time to invest in global equities.

Keppler’s implicit three-to-five-year projection places the KAM Equally Weighted World Index at 16,043 in local currencies (LC) by December 31, 2023, up from its current level of LC 13,114.

This corresponds to a compound annual total return estimate of 5.2 % in local currencies—down from 6.2 % last September. The upper-band estimate of LC 19,251 by December 31, 2023 implies a compound annual total return of 10.1 % (down 1.1 percentage points from three months ago),  while the lower-band estimate of LC 12,834 indicates a compound annual total return of minus 0.5 % (down from +0.5 % last quarter).

This forecast suggests that stock market prices globally are slowing down and over the next three years investors who are diversified in share around the world will earn between a 10.1% to a slight loss.

Gary

Profitable Investing Made EZ

There are only three steps to sustained, safe profits in investing.   Seek value.  Cut losses.  Take profits.

Quotes from three great value professional investors support this thought.

Be fearful when others are greedy, and greedy when others are fearful.” Warren Buffett

“In the short run, the market is a voting machine, but in the long run it is a weighing machine.” Ben Graham

We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” Charlie Munger

We do not have to be brilliant to preserve our wealth.  When it comes to investing, discipline can make professional investing EZ because you become smarter than the smartest man in the world.

newton

Sir Issac Newton

Sir Isaac Newton is widely regarded as one of the most influential scientists of all time.  His role was key in the scientific revolution.

His book “Mathematical Principles of Natural Philosophy” laid the foundations for mechanics.

He supplied a foundation to optics.

He helped develop modern calculus.

Newton formulated the laws of motion and gravitation and confirmed the heliocentric model of the cosmos.

Newton built the first practical reflecting telescope.

His theories about color and cooling and the speed of sound were spring boards in physics.

In math, Newton contributed to the study of power series, the binomial theorem to non-integer exponents, and a method for approximating the roots of a function.

He is said to have been the greatest genius who ever lived!

But Sir Issac Newton also lost his shirt in the stock market. 

Newton said: “I can calculate the motions of the heavenly bodies but not the madness of the people.”

Sir Issac forgot the intelligence in seeking value. He ignored the fact that buying and selling discipline is more important than being smart.

How can we gain this discipline?  Discipline comes from simple math which is why my Purposeful investing course (Pi) is based around mathematicians not economists.

I am happy to introduce an investing math program that instills investment discipline in our Pi course.

Use math and time, not emotion and timing to protect your wealth.

We need a strategy so our savings, investments & income are sufficient for a full lifetime which can be much longer than statistics suggest.  That’s really good to know but longer life expectancy is expected to worsen the shortfall in Social Security by 11 percent over the next 75 years.

What will a longer, active life do to our savings and budgets?

During nearly five decades of global investing I have noticed that some people, such as Warren Buffett, have a three point good value strategy that increases their wealth again and again.

What are the three tactics of this strategy?

The first tactic is to seek safety before profit.

A research paper that studied Warren Buffet’s investing strategy was published at Yale University’s website. This research shows that the stocks he 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).

The second tactic is to maintain staying power so you can let time do its work.  At times Buffet’s portfolio 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 outperformance 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.

The Buffet strategy integrates time and value for safety and profit.

A third, limited leveraging, tactic in the strategy boosts profit.  Buffett leverages his portfolio at a ratio of approximately 1.6 to 1.   The Yale published research paper shows the leveraging methods used by Warren Buffett to amass his $50 billion fortune.  The researchers found that the returns from Buffett’s investment company, Berkshire Hathaway, far outweighed those achieved by any rival that has operated for 30 years or more.  The research shows that neither luck nor magic are involved.  Instead, the paper shows that Buffet’s success hinges on using leverage at the rate of 1.6.

To sum up the strategy, Buffet uses value, time and leverage to buy and hold “cheap, safe, quality stocks”.  He uses limited leverage so he can hold on for very long periods of time, surviving rough periods where others might have been forced into a fire sale or a career shift.

You can learn how to use this type of three point strategy with the Purposeful investing Course (Pi).  This course is based on my 50 years of global investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.

Pi reveals investing secrets and the sciences that make investing easy, safer, less time consuming and increases the chances of profit.

Lessons from Pi are based on the creation and management of a Pi Model Portfolio.  There are no secrets about this portfolio except that it is based entirely on good math and uses time to take advantage of value.

The value analysis is used to create a portfolio of MSCI Country Benchmark Index ETFs that cover  stock markets that are undervalued.  I have combined my 50 years of investing experience with the study of the mathematical market value analysis of Michael Keppler, CEO of Keppler Asset Management.

In my opinion, Keppler is one of the best market statisticians in the world.  Numerous very large fund managers use his analysis to manage over $2.5 billion of funds.  However because Keppler’s roots are in Germany (though he lives and operates from New York) and most of his funds registered for the European Union, Americans cannot normally access his data.

I was lucky to have crossed paths with Michael about 25 years ago, so I am one of the few Americans who receive this data and you will not find his information readily available in the US.

In a moment you’ll see how to remedy this fact.

The Pifolio analysis begins with Keppler’s research that continually monitors 46 stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  Then Keppler takes market’s history into account.

Fwd: keppler

Michael Kepler CEO Keppler Asset Management.

Listen to Michael Keppler explain his philosophy for 6 minutes and 43 seconds here.

Michael’s analysis is rational, mathematical and does not cause worry about short term ups and downs.  Keppler’s strategy is to diversify into an equally weighted portfolio of the MSCI Indices of each good value (BUY) market.

This is an easy, simple and effective approach to zeroing in on value because little time, management and guesswork is required.  You are investing in a diversified portfolio of good value indices.

A BUY rating for an index does NOT imply that any one stock in that country is an attractive investment.  This eliminates the need for hours of research aimed at picking specific shares.  It is not appropriate or enough to instruct a stockbroker to simply select stocks in the BUY rated countries.  Investing in the index is like investing in all the shares in the index.  You save time because all you have to do is invest in the ETF to gain the profit potential of the entire market.

To achieve this goal of diversification the Pi portfolio consists of Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2020.

70% is diversified into Keppler’s good value (BUY rated) developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in Keppler’s good value (BUY rated) emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the MSCI indicies of the good value BUY markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (PI).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

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” 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” 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” about a leveraged speculation that can increase the returns in a safe portfolio by as much as eight times.

You also learn from the online 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.

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” and “Three Currency Patterns For 50% Profits or More” reports, and value investment seminar, plus begin receiving regular Pifolio update lessons 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

Do Everything – Doing Nothing


A little over four years ago, I took a challenge to start the most boring investment course… perhaps in the world.

Borrowing, but safe and profitable.

The course is called the Purposeful Investing Course.  We call it Pi and it has proven what we thought…. boring, but good if safety and profit mean more to you than excitement.   Pi is a course about the value of investing in good value stock markets and then just do nothing.

A friend in the publishing business said, “Gary you are crazy.  Investors want action.”  I realized he was right but have stuck to my guns because this is how  I invest and that’s what I always have written about for over 50 years.

I write about what I am doing.

This type of investing does have some advocates who invest big money.

Warren Buffet of course is the ultimate value investor.

value investing

Steve Edmundson, the investment chief for the Nevada Public Employees’ Retirement System

A Wall Street Journal article “What does Nevada’s 35 billion fund manager do all day nothing?” (1) reviews the activity of Steve Edmundson, the investment chief for the Nevada Public Employees’ Retirement System who also invests billions doing nothing.

Edmundson is my kind of guy, really low key.  He manages tens of billions but works alone and often eats leftovers at his desk for lunch.

Yet his investments regularly earn more than pension funds that have hundreds of staff.

The article says:  He generally doesn’t work outside 8 am to 5 pm hours.  His daily trading strategy: Do as little as possible, usually nothing.  The Nevada system’s stocks and bonds are all in low-cost funds that mimic indexes.  Mr. Edmundson may make one change to the portfolio a year.

News doesn’t matter much.  Will the 2016 elections affect his portfolio?  “No.”  Oil prices?  “No.”  He follows Fed Chairwoman Janet Yellen, but “there’s a difference between watching and acting.”  Mr. Edmundson, 44 years old, has until recently been a pension-world outlier.  Other state retirement systems turned to complicated investments and costly money managers to try to outperform markets with algorithms and smarts.

His strategy is to keep costs low and not try beating markets, he says.  “We’re bare bones.”  From his one-story office building in Carson City, Mr. Edmundson commands funds whose returns over one-year, three-year, five-year and 10-year periods ending June 30 bested the nation’s largest public pension, the California Public Employees’ Retirement System, or Calpers, and deeply-staffed plans of many other states.

“Doing nothing is harder than it looks,” says Ken Lambert, Mr. Edmundson’s predecessor an only outside investment-strategy consultant.  Harder, he says, because of the restraint needed to practice inaction.

In fact “Do nothing value investing” has become a huge trend.   Another Wall Street Journal article:  “Making Billions With One Belief: The Markets Can’t Be Beat” (2) is about the mutual fund manager DFA.  They are rising quickly as one of the largest fund managers in the USA, moving from eighth largest to sixth largest last year.  Their strategy is also “do nothing”.  Well, they do something about nothing, but a lot of trading and market timing is not part of that something.

The article says:  Dimensional Fund Advisors LP, is drawing nearly $2 billion in net assets per month at a time when investors are fleeing many other firms.

DFA, whose founders and advisers include leading purveyors of efficient-market theory, is built on the bedrock belief that active management practiced by traditional stock pickers is futile, if not an absurdity.  DFA’s founders are pioneers of index funds.  But these men concluded long ago that investors who respected efficient markets could nevertheless achieve better returns than plain index funds deliver.

The Austin, Texas firm remains all but unknown to the general public, since its funds are available exclusively through financial advisers or to big institutions.  But the firm manages $445 billion and already holds at least 5% of the total shares outstanding of 545 U.S.-listed companies, it says.

As of Dec 31, 2019, Dimensional Fund Advisor had nearly $609 billion of assets under management. For the past three decades, the company is providing investment management strategies to its clients.

You and I cannot invest direct in DFA, but we can learn how to do something about nothing.

This is how I invest, slowly.  In 2019  I only made one addition and no liquidations in my Pi portfolio.  This has been typical, to do little for greater safety, higher returns and extra time for all in life I consider more important than messing around with short term stock market moves.

You can learn more about Pi below.  Even if you never join our course to learn about “Do nothing value investing,”  get on the band wagon somehow.  Again and again investors are proving that less is more when it comes to investing in value shares.

Gary

Prophet Words for Profit in 2020

Here’s ten most important words (and numbers) for the 2020 decade…  MSCI World Index All-Time High Valuation December 31, 1999.

Keep these word and numbers in mind when thinking about the stock market this year.

Here is the all time high valuation for this index.   Price to book 4.23.  Price Earnings Ratio 35.7. Average dividend yield 1.30%. 

Those were the all time high valuations for the Morgan Stanley Capital World Index in December 1999, just before the dot.com bubble burst.

Here is a chart of the Dow Jones Index for the past three decades.  You can see that bubble pop just before the beginning of the 2000 decade.

microtrends.com

Let’s compare some valuations.

                                                                                 Price to Book       P/E       Average Dividend

The All World MSCI World Growth Shares           5.22                28.4                 1.28%

MSCI  US Index                                                               3.65                 23.1                  1.83%

MSCI Word Index                                                           2.57                 20.0                  2.33%

MSCI World Index All-Time High                            4.23                  35.7                  1.30%

MSCI USA Index                                                            3.65                  23.1                   1.83%

These valuations create some important investing questions.

“Will the 2020 decade be more like the 2000s decade or the 2010 decade?”

“How close can the USA Index come to the all time high watermark before there is a correction?”

“Will the poor valuation of growth shares globally lead to a shift from growth shares to value shares?”

“Do shares world wide still have plenty of room to rise?”

Ask me again in January 2030 and I will know, but since no one knows the answers now, proceed with caution.

For the past four years, my strategy, to protect against the next stock market crash and yet gain from rising share prices is to invest in an equally weighted  of the value based portfolio of country ETFs we invest in and track in our Purposeful Investing Course is formulated.

The valuation of the top value portfolio we use as the basis of our portfolio is  now price to book  1.41, P/E ratio 14.4 and average dividend yield of 3.78%.

An equally weighted combination of top value markets offers the highest expectation of long-term risk-adjusted performance and the valuation of the top value portfolio is now undervalued by 37% compared to the MSCI World (Standard) Index, by 50% compared to the MSCI USA Index and by 62% compared to the MSCI World Growth Index.

Since no one knows what the future will bring, investing in value makes the most long term sense.

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 Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2019.

70% is diversified into developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the good value markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for almost every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (Pi).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

This year I 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 our seminar.

Those five decades of experience have taught me several incredibly valuable lessons.

The first lesson is that there is always something we do not know.

The second lesson is that stock market booms and busts always eventually return to value.

Third, the only sure way to succeed is to use time not timing.

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 $102 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.

 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.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197.

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

Gary

(1) www.wsj.com/articles/what-does-nevadas-35-billion-fund-manager-do-all-day-nothing-1476887420

(2) www.wsj.com/articles/making-billions-with-one-belief-the-markets-cant-be-beat-1476989975

 

The Power in Long Term


A Purposeful Investing Course subscriber sent in this question. 

Please when you have questions, ask away!  That’s why I am here… to serve you.

Good Morning Gary.  I am a PI subscriber and have been doing my homework as I want to learn to invest myself by using the guidance you provide in PI.  In looking at your portfolio this year of 17 country ETFs plus silver and platinum and also looking at Kepplers 12 emerging market ETFs, I see that you include some of those ETFs but certainly not all.  Am I misreading this?  Thanks for any input.

This subscriber is correct that not all of the Keppler good value markets are in the Pifolio, plus one market that is neutral value (Canada) is included.

There are a couple of reasons for this.
First, I wanted to set up the Pifolio and leave it for 5 years to see the undisturbed long term results.
My thinking behind this decision is nicely summed up in a recent article “Value Investing Is A Long-Term Strategy And Should Be Judged Accordingly” (1)
Here’s some excerpt from that article:

When investing in unpopular stocks, which is where value often comes from, it often requires waiting until they become popular again before you reap your rewards through rising prices.

Almost by definition, value investing rarely performs well in the short run. This is especially true when you are in a strong bull market like we’ve been in since March 2009. Most companies as represented by the S&P 500 are currently trading at fundamental multiples that are significantly above historical norms. Below is a 20-year historical earnings and price correlated FAST Graph of the S&P 500. There are two valuation reference lines on the graph.

The dark blue valuation reference line represents a normal P/E ratio of 18.12. The orange valuation reference line represents a fair value P/E ratio of 15. As you can see, for most of that time frame market prices traded between those valuation references. However, note the two outliers calendar year 2000 to the beginning of 2002 and calendar years 2017 to current. Clearly, current valuations are high. Not necessarily crazily high as some people believe, but undoubtedly higher than historical norms nevertheless.

share charts

However, I have a second portfolio because when we started the MOTIF Pifolio, I also had our banker invest exactly the same amounts in my personal account at exactly the same time as we executed the MOTIF Pifolio.   I wanted to test whether MOTIF, which has very low trading fees, was adding hidden costs at purchase.  They were not.
So I have an account at my bank that had an identical portfolio at inception appx. four years ago.
I have added some of the missing markets in my personal acct.
Next January, after 5 years of the Pifolio I plan to examine the differences between buy and update, as markets rise and fall in value, versus a buy and hold for five years approach.
Keep in mind most of the markets that were (or were not) good value, have changed very little.  France for example shifted from good value to neutral.  Each investor can make up their mind abouth whether to sell in a shift of this sort.  I have not sold the France ETF in my accoun.
The Pi system is much more  a “buy and hold” than “trade a lot” system.
To date there has not been much difference in performance between my personal portfolio and the Pifolio.
Here is a review of the Keppler good value markets and the ETFs within the Pifolio and departures in the Pifolio.
The good value developed markets are: Australia, Austria, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom
Canada.  Canada is a neutral value market, but has near good value values.  I hold iShares MSCI Canada Index ETF  in my personal portfolio but it is not in the Pifolio.
France. The iShares France Index ETF was good value when Pi began, but is still in the Pifolio even though it has dropped to neutral value.

Germany.  The iShares MSCI Germany Index ETF is in both portfolios.

Norway.  The Norway Global X MSCI Norway is in both portfolios and is overweighted.  See why here.
The good value emerging markets are:  Brazil, Chile, China, Colombia, the Czech Republic, Korea,Malaysia, Mexico, Poland, Russia,Taiwan and Turkey 
China.  We are overweighted in China with the iShares FTSE/Xinhua China 25 Index Fund (a Keppler Emerging Market)  because I treat China as a developed market).
The Czech Republic, Poland and Russia are not included as they were not good value or there was no ETF that represented the market.

Gary

Prophet Words for Profit in 2020

Here’s ten most important words (and numbers) for the 2020 decade…  MSCI World Index All-Time High Valuation December 31, 1999.

Keep these word and numbers in mind when thinking about the stock market this year.

Here is the all time high valuation for this index.   Price to book 4.23.  Price Earnings Ratio 35.7. Average dividend yield 1.30%. 

Those were the all time high valuations for the Morgan Stanley Capital World Index in December 1999, just before the dot.com bubble burst.

Here is a chart of the Dow Jones Index for the past three decades.  You can see that bubble pop just before the beginning of the 2000 decade.

microtrends.com

Let’s compare some valuations.

                                                                                 Price to Book       P/E       Average Dividend

The All World MSCI World Growth Shares           5.22                28.4                 1.28%

MSCI  US Index                                                               3.65                 23.1                  1.83%

MSCI Word Index                                                           2.57                 20.0                  2.33%

MSCI World Index All-Time High                            4.23                  35.7                  1.30%

MSCI USA Index                                                            3.65                  23.1                   1.83%

These valuations create some important investing questions.

“Will the 2020 decade be more like the 2000s decade or the 2010 decade?”

“How close can the USA Index come to the all time high watermark before there is a correction?”

“Will the poor valuation of growth shares globally lead to a shift from growth shares to value shares?”

“Do shares world wide still have plenty of room to rise?”

Ask me again in January 2030 and I will know, but since no one knows the answers now, proceed with caution.

For the past four years, my strategy, to protect against the next stock market crash and yet gain from rising share prices is to invest in an equally weighted  of the value based portfolio of country ETFs we invest in and track in our Purposeful Investing Course is formulated.

The valuation of the top value portfolio we use as the basis of our portfolio is  now price to book  1.41, P/E ratio 14.4 and average dividend yield of 3.78%.

An equally weighted combination of top value markets offers the highest expectation of long-term risk-adjusted performance and the valuation of the top value portfolio is now undervalued by 37% compared to the MSCI World (Standard) Index, by 50% compared to the MSCI USA Index and by 62% compared to the MSCI World Growth Index.

Since no one knows what the future will bring, investing in value makes the most long term sense.

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 Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2019.

70% is diversified into developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the good value markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for almost every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (Pi).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

This year I 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 our seminar.

Those five decades of experience have taught me several incredibly valuable lessons.

The first lesson is that there is always something we do not know.

The second lesson is that stock market booms and busts always eventually return to value.

Third, the only sure way to succeed is to use time not timing.

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 $102 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.

 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.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197.

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

Gary

(1)  Value investing is a long term strategy and should be judged accordingly

Speculation Opportunity in Norway


Last month I sent this lesson to Purposeful Investing Course (Pi) subscribers.

Now is a time, more than normal, to exercise caution in stock markets and maintain one’s value investing disciplines, but there are also seeds for value based speculation.

This chart of the S&P 500 performance for the past 30 years shows that the US market did exceptionally well in the 1990s, then was horrible in the 2000s and then did really well again in the 2010s.

No one knows what will happen in the 2020s, but chances are this will be a decade that ruins many investors.

microtrends.com

However there will be investing  opportunities and good value discipline includes the courage to buy when a market or currency is out of sync with mathematical reality. 

The December Market Outlook (1), we share with Pi subscribers, reveals such a speculative opportunity (bolds are mine):

The NOK or Norwegian krone in October hit a record intraday low of 10.31 to the EUR. Its decline is hard to decipher. The krone is undervalued by many common measures. Norway’s economic performance is solid while budget and trade balances are in surplus.

The Norges Bank is the only European central bank hiking rates four times this year. The NOK should be strengthening, not declining. Though the NOK has long been correlated to oil prices, the export-dependency on salmon has increased markedly over the last decade. Having almost doubled since 2008, salmon prices have plunged 20% this year. Ten years ago, Norway exported about 15 times more oil than fish but that ratio has narrowed considerably to just 3.5 times, according to Nordea Bankin Oslo.

The chart below from www.finance.yahoo.com shows how the US dollar has risen continually against the Norwegian economy.

yahoo.com

The chart below from Economist.com shows that Norway’s economic conditions are one of the strongest in the world.

economist.com

Norway’s current account balance at +7.1% of GDP (versus -2.4% for the US) is among the highest of all developed markets.

The Norwegian government’s budget balance at a +6.6 (versus -4.7% for the US) is by far the strongest.

The kroner interest rate on ten year gvt bonds at 1.1% is below the US rate of 1.7%, but if the krone appreciates versus the US, the real return could be higher.

However beyond kroner bond investments, we can see speculative potential in the Norwegian stock market.

In 2019 all markets included in the MSCI World Index were up, but in the last month Norway was down -1.5%.

Yet we saw that Norway remains one of the good value developed markets.

The Good Value Developed Markets are: There is no change in our country ratings this month. The Top Value Model Portfolio holds the ten “Buy”-rated markets Australia, Austria, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom at equal weights.

This is where the special speculation opportunity comes in.  The Norwegian Krone is under priced and the Norwegian market  is a good value market.

yahoo.com

The chart above from www.finance.yahoo.com shows how the Norwegian stock markets as evidenced via the iShares MSCI Norway ETF (symbol ENOR) performed in a similar pattern to the S&P500 from 2015 to 2018, but lagged seriously behind after.

Norwegian markets has overwhelming value stats compared with the US market.  Norway’s price to book is in the 1.8 range versus over 3 for the US.  The average dividend is 4.47% vs. 1.86%.

Long term, Keppler’s research suggests an equally weighted portfolio provides the best risk adjusted profit, but in instances of this nature, an overweighting in the Norwegian market is a healthy value oriented speculation.

I personally have an overweight position in ENOR.

Gary

Prophet Words for Profit in 2020

Here’s ten most important words (and numbers) for the 2020 decade…  MSCI World Index All-Time High Valuation December 31, 1999.

Keep these word and numbers in mind when thinking about the stock market this year.

Here is the all time high valuation for this index.   Price to book 4.23.  Price Earnings Ratio 35.7. Average dividend yield 1.30%. 

Those were the all time high valuations for the Morgan Stanley Capital World Index in December 1999, just before the dot.com bubble burst.

Here is a chart of the Dow Jones Index for the past three decades.  You can see that bubble pop just before the beginning of the 2000 decade.

microtrends.com

Let’s compare some valuations.

                                                                                 Price to Book       P/E       Average Dividend

The All World MSCI World Growth Shares           5.22                28.4                 1.28%

MSCI  US Index                                                               3.65                 23.1                  1.83%

MSCI Word Index                                                           2.57                 20.0                  2.33%

MSCI World Index All-Time High                            4.23                  35.7                  1.30%

MSCI USA Index                                                            3.65                  23.1                   1.83%

These valuations create some important investing questions.

“Will the 2020 decade be more like the 2000s decade or the 2010 decade?”

“How close can the USA Index come to the all time high watermark before there is a correction?”

“Will the poor valuation of growth shares globally lead to a shift from growth shares to value shares?”

“Do shares world wide still have plenty of room to rise?”

Ask me again in January 2030 and I will know, but since no one knows the answers now, proceed with caution.

For the past four years, my strategy, to protect against the next stock market crash and yet gain from rising share prices is to invest in an equally weighted  of the value based portfolio of country ETFs we invest in and track in our Purposeful Investing Course is formulated.

The valuation of the top value portfolio we use as the basis of our portfolio is  now price to book  1.41, P/E ratio 14.4 and average dividend yield of 3.78%.

An equally weighted combination of top value markets offers the highest expectation of long-term risk-adjusted performance and the valuation of the top value portfolio is now undervalued by 37% compared to the MSCI World (Standard) Index, by 50% compared to the MSCI USA Index and by 62% compared to the MSCI World Growth Index.

Since no one knows what the future will bring, investing in value makes the most long term sense.

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 Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2019.

70% is diversified into developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the good value markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for almost every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (Pi).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

This year I 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 our seminar.

Those five decades of experience have taught me several incredibly valuable lessons.

The first lesson is that there is always something we do not know.

The second lesson is that stock market booms and busts always eventually return to value.

Third, the only sure way to succeed is to use time not timing.

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 $102 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.

 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.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197.

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

Gary

(1) Read the entire December edition of ENR Asset Management’s Market Outlook here.

If prompted for a username and password, please use the following case sensitive keywords:

Username: enr

Password: Montreal

China After the Deal


Last day for 50% discount on Pi subscription.  See below.

Let’s take a look at China.

Earlier this month I sent our Purposeful Investing Course subscribers an update on the Chinese stock market’s potential since conclusion of the Phase I trade deal.

I shared some thoughts from the January 2020 issue of the ENR Asset Management Market Outlook (1) about the US, China Trade Deal.

The Outlook says:

The United States and China agreed to terms of a ‘Phase One’ deal earlier in December, which includes a commitment by China to purchase $50 billion worth of agricultural goods in 2020 along with energy and other goods. The U.S. agreed it would reduce the tariff rate on many Chinese imports ranging from 15% to 25%. The United States will soon turn its focus on the European Union, which continues to build significant trade surpluses with the United States since the 1980s. In 2019, that trade deficit is projected to be about $150-$180 billion;

Though world markets welcome the limited détente between the United States and China, implementation of the Phase One trade accord will prove tricky to implement. Any improvement in relations is likely to be temporary with tensions on both trade and other issues like technology likely to remain confrontational.

Having lived in Hong Kong for 6 years (decades ago), I gained great respect for the tenacity and long range view of the Chinese philosophy.

The Chinese play a long game and the recent New York Times article “Trump Gets His Trade Deal, China Gets the Win” by Dr. Eswar Prasad (2), professor at Cornell University and a senior fellow at the Brookings Institution suggests their tactics in this recent agreement reflect this fact.

Here’s some excerpts from the article:  China has suffered short-term pain from the trade war, but it stands to gain in the long term.

The phase-one agreement leaves many issues unresolved, so tensions between the two countries may continue.

What has the deal accomplished? It will bring some significant changes but comes with a big price tag for the American economy. The long-term effects might end up favoring China.

As part of the deal, China has agreed to increase its purchases of products from the United States.

More important, China has agreed to beef up its protection of intellectual property rights, to refrain from forcing foreign companies operating in China to transfer their technology to domestic firms, and to open up more of its economy to foreign investment.

In return, the United States has reduced some tariffs on Chinese imports and canceled additional tariffs.

Why did China make these concessions? Therein lies a deep irony. Many elements of the deal will make the Chinese economy stronger. China wants to be a more dynamic, innovation-led economy, so better protection of intellectual property rights will help. Opening up parts of its economy, such as banking and insurance, will spur competition and innovation in, for example, the Chinese financial sector. Many of the ostensible concessions are in areas where Chinese reformers have long sought to create change for their country’s own good.

China’s economy will also get a short-term boost from the trade deal. Stimulus measures, such as more spending by local governments, lower taxes and more bank credit, have kept growth from stalling, but the economy remains fragile.

This is why I, my portfolio (the one we track in our Purposeful Investing Course Pi) treats China as a developed rather than emerging country.  As the value of the ETF I chose for the portfolio, has risen it, as of January 16, 2020 represents, 8.1% of the portfolio.

Hong Kong represents 7.9% of the portfolio as well, so 15.9% of the total investments are Chinese related.

Let’s look at these two Chinese related ETFs.

The iShares FTSE/Einhua China 25 Index (symbol FXI) invests in the 25 largest Chinese companies.  Here’s some data from my online broker Motif.

motif

This Chinese market ETF was up 13.4% in 2019.

The iShares Hong Kong Index ETF (symbol EWH) represents investments in a good value developed market.

motif 2020-01-16 at 7.15.03 AM

The fund rose 9.67% in 2019.

The largest economies after the US and China, are the UK, Germany, France and Japan.  All three European economies were boosted by the Marshall Plan in the 1940s right after WWII.

Marshall Plan type support was expanded in the 1950s to include Japan.  China was not included in support from the US economy until after President Nixon thawed East West tensions in the 1970s.   This delayed China’s economic expansion by 20 years.

My belief is that as China, the largest nation in the world by population (four times more people than the USA) continues to improve its productivity and GDP per person, will continue to rise faster than that of the Western world, for a bit longer.  Due to the huge population its economy is just too large to treat as a secondary market.

Keep in mind, all of the investment in both China and Hong Kong are predicated on value. 

My overweighting in China is based on my assumption of the future… an educated guess at best. My investments in China now are based on math.  The Chinese stock market is a good value market.

The decision to invest in the Chinese and Hong Kong markets are first and foremost based on the math that compares average Price to Book, Price Earnings Ratio and Dividend Yields of each market.

                Price to Book           P/E Ratio           Average Dividend Yield

USA                3.65                          23.1                                1.83%

China             1.81                           14.7                                 1.87%

Hong Kong   1.28                           14.4                                 3.03%

Gary

Prophet Words for Profit in 2020

Here’s ten most important words (and numbers) for the 2020 decade…  MSCI World Index All-Time High Valuation December 31, 1999.

Keep these word and numbers in mind when thinking about the stock market this year.

Here is the all time high valuation for this index.   Price to book 4.23.  Price Earnings Ratio 35.7. Average dividend yield 1.30%. 

Those were the all time high valuations for the Morgan Stanley Capital World Index in December 1999, just before the dot.com bubble burst.

Here is a chart of the Dow Jones Index for the past three decades.  You can see that bubble pop just before the beginning of the 2000 decade.

microtrends.com

Let’s compare some valuations.

                                                                                 Price to Book       P/E       Average Dividend

The All World MSCI World Growth Shares           5.22                28.4                 1.28%

MSCI  US Index                                                               3.65                 23.1                  1.83%

MSCI Word Index                                                           2.57                 20.0                  2.33%

MSCI World Index All-Time High                            4.23                  35.7                  1.30%

MSCI USA Index                                                            3.65                  23.1                   1.83%

These valuations create some important investing questions.

“Will the 2020 decade be more like the 2000s decade or the 2010 decade?”

“How close can the USA Index come to the all time high watermark before there is a correction?”

“Will the poor valuation of growth shares globally lead to a shift from growth shares to value shares?”

“Do shares world wide still have plenty of room to rise?”

Ask me again in January 2030 and I will know, but since no one knows the answers now, proceed with caution.

For the past four years, my strategy, to protect against the next stock market crash and yet gain from rising share prices is to invest in an equally weighted  of the value based portfolio of country ETFs we invest in and track in our Purposeful Investing Course is formulated.

The valuation of the top value portfolio we use as the basis of our portfolio is  now price to book  1.41, P/E ratio 14.4 and average dividend yield of 3.78%.

An equally weighted combination of top value markets offers the highest expectation of long-term risk-adjusted performance and the valuation of the top value portfolio is now undervalued by 37% compared to the MSCI World (Standard) Index, by 50% compared to the MSCI USA Index and by 62% compared to the MSCI World Growth Index.

Since no one knows what the future will bring, investing in value makes the most long term sense.

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 Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2019.

70% is diversified into developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the good value markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for almost every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (Pi).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

This year I 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 our seminar.

Those five decades of experience have taught me several incredibly valuable lessons.

The first lesson is that there is always something we do not know.

The second lesson is that stock market booms and busts always eventually return to value.

Third, the only sure way to succeed is to use time not timing.

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 $102 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.

 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.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197.

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

Gary

(1) ENR Market Outlook at http://www.enrassetmanagement.com/marketoutlook.html.

If prompted for a username and password, please use the following case sensitive keywords:

Username: enr

Password: Montreal

(2) www.nytimes.com/2020/01/15/opinion/china-trade-deal-trump.html?nl=todaysheadlines&emc=edit_th_200116?campaign_id=2&instance_id=15127&segment_id=20368&user_id=208b2cbe62eb7b536babab791d172bc7&regi_id=483172790116

 

Guessing and Investing


This weekend is the last chance to save 50% off our subscriptions this week due to our webmaster’s error.  See why below.

First, here’s why value is so important when we invest in this modern era.  An economic transformation, taken place over the past four decades, forces most investors into “guessing and investing” tactics that increase their risk.

That change is an incredible improvement in productivity.

When I first began business abroad (over 50 years ago), to make a call to another country, I had to book the call and wait for an operator to call back. Often it took days to get through.  The only alternative was a terribly expensive telex machine.

Direct dialing was a big deal innovation that dramatically improved productivity.  Then came the fax and then computers and then the internet and cell phones.

Now I am always connected.

Maybe that’s good, maybe not, but it does increase my productivity.

quote

 

Technological improvements don’t automatically make our lives better.  Most of us work harder, but we are also much more efficient and productive.

Just a couple decades ago to get this message to you required, me, an editor, a typesetter, a printing company and the US post office and maybe another post office if you were outside the USA.

To share an idea might take two weeks at the least.

Now just me and my computer can do the same thing in an hour.

While productivity really shot up, interest rates began to fall and have continued to do so for 40 years.

tradingeconomics.com

US dollar interest rate

This rapid change in century long traditions of productivity and the cost of money has so dramatically changed the way money is used, that old traditional patterns for investors no work.

In the past, investors had three choices, cash, bonds or shares.

Now cash and bonds pay such low returns that many investors are forced into equities when they would prefer lower risk cash or bonds.

Yet the changes in how the world lives and works have altered so quickly that investors don’t know which equities to hold.  Investors in blue chips like Xerox, Kodak and Sears for example have missed the green and certainly have the blues!

The modern day winners, such as Apple, Microsoft, Google and Amazon are really expensive, so investors are forced into guessing “what’s the next big thing”.

They end up taking enormous risks as is evidenced in the recent Wall Street Journal article “Money-Losing Companies Mushroom Even as Stocks Hit New Highs” (1).

The article says: The percentage of listed companies in the red is close to 40%

Tesla Inc. shares have doubled in three months, while General Electric Co. shares are up 44%. The pair are the two most valuable loss-making companies, part of a shockingly high proportion of listed companies that have been losing money—despite, or perhaps because of, the long bull market.

While Tesla and GE couldn’t be more different, they are exemplars of two trends driving the rising number of loss makers. Tesla shows a desire by investors to back disruptive companies as they build their sales. GE represents a growing number of companies struggling to make money from traditional businesses—although GE bucks a third trend, which is that many of the unloved losers are small companies being squeezed by the growth of giant corporations.

The combination of forces has pushed the percentage of listed companies in the U.S. losing money over 12 months to close to 40%, its highest level since the late 1990s outside of post recession periods.

Since we cannot see into the future… guessing which disruptive companies will be the next big winners is a highly inaccurate process that requires discipline and diversification.

Choosing ETFs that represent entire top value stock markets gives maximum diversification and is an easy, simple discipline that diversifies into both big and small, traditional and disruptive businesses.

Here’s a simple formula.

Do What You Love and Create PIEC Wealth

There is a three path strategy that we follow for fulfillment and wealth called PIEC  Investing (Personal Income Earning Corridor).

PIEC concepts of financial prudence differ from traditional approaches of accumulating wealth because the first investment in our investment strategy is our passion.  Our total PIEC portfolio comes in three layers: a fulfilling micro business, then a layer of very safe investments followed by a third, much smaller layer of speculative deals.

The first layer of our PIEC is a fulfilling micro business.  When we do what we love, our own micro business is the most important financial asset we can have.  PIEC investors reverse the priorities.  Instead of working for money to save and invest.  They focus their prime effort on doing something they enjoy.  Then they learn how to enjoy the effort in some profitable way by combining lifestyle with the necessary task of accumulating wealth.

The ability to provide a service or a skill is the safest as well as most meaningful investment of all.  This combines our money with time, energy and our desires.  There is no more effective way to combine wealth, health and a fulfilled lifestyle.

The more personal income you produce, the less likely you’ll have to put pressure on your portfolio at the wrong time.

The second step is to create a basic portfolio of good value.  The majority of our PIEC diversification is our basic good value portfolio of country ETFs.  You can see that portfolio here.

The third layer of diversification is our speculation.   This is the place for investing in money losing companies that “might” become the next Microsoft or Apple or Google or Amazon.com.  Modern portfolio theory suggests that safe investments are enhanced and made safer by adding a small amount of higher risk deals.  This also allows us to fulfill any casino mentality we might have left if having our own business is not enough.

Our speculations currently include extra weighting in China, extra weighting in the UK  extra weighting in Norway, plus the the silver ETF SLV and the platinum ETF PPLT.

This three step strategy enhances our investing safety, increases our odds of extra profit, but most importantly brings greater satisfaction and fulfillment into our lives.

See how I implement this strategy below.

Gary

Special half price offer January 1, 2020 to January 20, 2020.

To share the experiences we have gained in 51 years of global travel, business and investing our webmaster set up a coupon code NY2020 to run from January 1 through January 6th to save an additional 50% of this initial course fee.  Yet when David took off on a New Year vacation he forgot to turn the coupon code off and I don’t know how to do it myself.   When David returns After Martin Luther King Day, the code will expire.

Subscribe to a Pi annual subscription for $197.   Use the coupon code this week and you can still save 50% off.

See why our system of value investing offers the best odds for safety and long term profit.

Profitable Investing Made EZ

There are only three steps to sustained, safe profits in investing.   Seek value.  Cut losses.  Take profits.

Quotes from three great value professional investors support this thought.

Be fearful when others are greedy, and greedy when others are fearful.” Warren Buffett

“In the short run, the market is a voting machine, but in the long run it is a weighing machine.” Ben Graham

We don’t have to be smarter than the rest. We have to be more disciplined than the rest.” Charlie Munger

We do not have to be brilliant to preserve our wealth.  When it comes to investing, discipline can make professional investing EZ because you become smarter than the smartest man in the world.

newton

Sir Issac Newton

Sir Isaac Newton is widely regarded as one of the most influential scientists of all time.  His role was key in the scientific revolution.

His book “Mathematical Principles of Natural Philosophy” laid the foundations for mechanics.

He supplied a foundation to optics.

He helped develop modern calculus.

Newton formulated the laws of motion and gravitation and confirmed the heliocentric model of the cosmos.

Newton built the first practical reflecting telescope.

His theories about color and cooling and the speed of sound were spring boards in physics.

In math, Newton contributed to the study of power series, the binomial theorem to non-integer exponents, and a method for approximating the roots of a function.

He is said to have been the greatest genius who ever lived!

But Sir Issac Newton also lost his shirt in the stock market. 

Newton said: “I can calculate the motions of the heavenly bodies but not the madness of the people.”

Sir Issac forgot the intelligence in seeking value. He ignored the fact that buying and selling discipline is more important than being smart.

How can we gain this discipline?  Discipline comes from simple math which is why my Purposeful investing course (Pi) is based around mathematicians not economists.

I am happy to introduce an investing math program that instills investment discipline in our Pi course.

Use math and time, not emotion and timing to protect your wealth.

We need a strategy so our savings, investments & income are sufficient for a full lifetime which can be much longer than statistics suggest.  That’s really good to know but longer life expectancy is expected to worsen the shortfall in Social Security by 11 percent over the next 75 years.

What will a longer, active life do to our savings and budgets?

During nearly five decades of global investing I have noticed that some people, such as Warren Buffett, have a three point good value strategy that increases their wealth again and again.

What are the three tactics of this strategy?

The first tactic is to seek safety before profit.

A research paper that studied Warren Buffet’s investing strategy was published at Yale University’s website. This research shows that the stocks he 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).

The second tactic is to maintain staying power so you can let time do its work.  At times Buffet’s portfolio 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 outperformance 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.

The Buffet strategy integrates time and value for safety and profit.

A third, limited leveraging, tactic in the strategy boosts profit.  Buffett leverages his portfolio at a ratio of approximately 1.6 to 1.   The Yale published research paper shows the leveraging methods used by Warren Buffett to amass his $50 billion fortune.  The researchers found that the returns from Buffett’s investment company, Berkshire Hathaway, far outweighed those achieved by any rival that has operated for 30 years or more.  The research shows that neither luck nor magic are involved.  Instead, the paper shows that Buffet’s success hinges on using leverage at the rate of 1.6.

To sum up the strategy, Buffet uses value, time and leverage to buy and hold “cheap, safe, quality stocks”.  He uses limited leverage so he can hold on for very long periods of time, surviving rough periods where others might have been forced into a fire sale or a career shift.

You can learn how to use this type of three point strategy with the Purposeful investing Course (Pi).  This course is based on my 50 years of global investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.

Pi reveals investing secrets and the sciences that make investing easy, safer, less time consuming and increases the chances of profit.

Lessons from Pi are based on the creation and management of a Pi Model Portfolio.  There are no secrets about this portfolio except that it is based entirely on good math and uses time to take advantage of value.

The value analysis is used to create a portfolio of MSCI Country Benchmark Index ETFs that cover  stock markets that are undervalued.  I have combined my 50 years of investing experience with the study of the mathematical market value analysis of Michael Keppler, CEO of Keppler Asset Management.

In my opinion, Keppler is one of the best market statisticians in the world.  Numerous very large fund managers use his analysis to manage over $2.5 billion of funds.  However because Keppler’s roots are in Germany (though he lives and operates from New York) and most of his funds registered for the European Union, Americans cannot normally access his data.

I was lucky to have crossed paths with Michael about 25 years ago, so I am one of the few Americans who receive this data and you will not find his information readily available in the US.

In a moment you’ll see how to remedy this fact.

The Pifolio analysis begins with Keppler’s research that continually monitors 46 stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  Then Keppler takes market’s history into account.

Fwd: keppler

Michael Kepler CEO Keppler Asset Management.

Listen to Michael Keppler explain his philosophy for 6 minutes and 43 seconds here.

Michael’s analysis is rational, mathematical and does not cause worry about short term ups and downs.  Keppler’s strategy is to diversify into an equally weighted portfolio of the MSCI Indices of each good value (BUY) market.

This is an easy, simple and effective approach to zeroing in on value because little time, management and guesswork is required.  You are investing in a diversified portfolio of good value indices.

A BUY rating for an index does NOT imply that any one stock in that country is an attractive investment.  This eliminates the need for hours of research aimed at picking specific shares.  It is not appropriate or enough to instruct a stockbroker to simply select stocks in the BUY rated countries.  Investing in the index is like investing in all the shares in the index.  You save time because all you have to do is invest in the ETF to gain the profit potential of the entire market.

To achieve this goal of diversification the Pi portfolio consists of Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2020.

70% is diversified into Keppler’s good value (BUY rated) developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in Keppler’s good value (BUY rated) emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the MSCI indicies of the good value BUY markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (PI).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

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” 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” 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” about a leveraged speculation that can increase the returns in a safe portfolio by as much as eight times.

You also learn from the online 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.

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” and “Three Currency Patterns For 50% Profits or More” reports, and value investment seminar, plus begin receiving regular Pifolio update lessons 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.wsj.com/articles/money-losing-companies-mushroom-even-as-stocks-hit-new-highs-11578608209?mod=itp_wsj&mod=&mod=djemITP_h

Invest Better Than a Hedge Fund Manager


I started the Purposeful Investing Course December 2015 when I realized that odds are you can , very easily and simply manage money better than a hedge fund manager.  

In 2015, an Economist article “Roaring Head” (1) explained that since the early 2000s ETFs (non active funds) had performed better than hedge funds.   For a decade hedge funds managers had been under performing ETFs.

hedge fund chart economist

Chart from Economist article about ETFs versus hedge funds “Roaring Ahead”.

A half decade later nothing much has changed.

In 2019 the top hedge funds did perform better than the top ETFs, but a look at three year performance shows that ETFs are still superior investments when it comes to increasing wealth.

Here’s a comparison of top performing hedge funds and ETFs for 2019, but showing their three year instead of just one performance.

Hedge Fund                   Three Year Performance             ETF                                  Three Year Performance

Kerrisdale Advisers                     32.85%              Market Vectors-Rupee/USD (INR)             81.57%

Sylebra HK                                       28.9%                 Invesco Solar (TAN)                                      76.03%

Whale Rock Capital Mgt.            27.48%             iShares US Home Construction                    68.15%

Aisling Capital                               27.42%              VanEck Vectors Semiconductor (SMH)      95.95%

Scge Management                         25.64%              SPDR S&P Semiconductor (XSD)                 84.84%

Dorsey Asset Management          25.15%              Aberdeen Std Physical Palladium (PALL)  145.83%

Night Owl Capital Management 24.16%            iShares PHLX Semiconductor (SOXX)        104.10%

There are a variety of important investing conclusions we can draw from these results.

First and foremost… low cost inactive ETFs still provide better medium term performance overall.  All seven of the best performing hedge funds for 2019 strongly over performed the top performing ETFs for 2019, but once you start looking at longer periods of performance, the ETFs have greater strength.

Second we can see that picking the correct sector makes a huge difference.  Anyone who selected palladium, semiconductors or US home construction as their sector of choice three years ago… looks like a genius.

Obviously it was non of the hedge fund managers.

How do we choose the correct sector?

Therein lies the problem . We cannot know which sectors will perform best in 2020.

Due to our experience, we may know something about something that helps us select a sector that will do well in the year ahead.

For example, someone in the car manufacturing business might have known something about catalytic converters that would increase demand for palladium (more than half the supply of palladium is used in catalytic converters).  Or a person in the semiconductor might know something that would cause a price increase in semiconductor shares.  Ditto for those in the US home building industry.

You might have insights into some particular situation that suggests a promising sector in the year ahead.

Yet seeing the future is like predicting the weather.  The further you see, the poorer the vision.

The future is unknown… hence value investing.

“Long ago, Ben Graham taught me that ‘Price is what you pay; value is what you get.’ Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”  Warren Buffett

We cannot see into the future, but we can depend on nature seeking the path of least resistance.  We can see the price we are paying for future profits now.

Gary

Here’s ten most important words (and numbers) for the 2020 decade…  MSCI World Index All-Time High Valuation December 31, 1999.

Keep these word and numbers in mind when thinking about the stock market this year.

Here is the all time high valuation for this index.   Price to book 4.23.  Price Earnings Ratio 35.7. Average dividend yield 1.30%. 

Those were the all time high valuations for the Morgan Stanley Capital World Index in December 1999, just before the dot.com bubble burst.

Here is a chart from macrotrends.com (2) of the Dow Jones Index for the past three decades.  You can see that bubble pop just before the beginning of the 2000 decade.

microtrends.com

Let’s compare some valuations.

                                                                                 Price to Book       P/E       Average Dividend

The All World MSCI World Growth Shares           5.22                28.4                 1.28%

MSCI  US Index                                                               3.65                 23.1                  1.83%

MSCI Word Index                                                           2.57                 20.0                  2.33%

MSCI World Index All-Time High                            4.23                  35.7                  1.30%

MSCI USA Index                                                            3.65                  23.1                   1.83%

These valuations create some important investing questions.

“Will the 2020 decade be more like the 2000s decade or the 2010 decade?”

“How close can the USA Index come to the all time high watermark before there is a correction?”

“Will the poor valuation of growth shares globally lead to a shift from growth shares to value shares?”

“Do shares world wide still have plenty of room to rise?”

Ask me again in January 2030 and I will know, but since no one knows the answers now, proceed with caution.

For the past four years, my strategy, to protect against the next stock market crash and yet gain from rising share prices is to invest in an equally weighted  of the value based portfolio of country ETFs we invest in and track in our Purposeful Investing Course is formulated.

The valuation of the top value portfolio we use as the basis of our portfolio is  now price to book  1.41, P/E ratio 14.4 and average dividend yield of 3.78%.

An equally weighted combination of top value markets offers the highest expectation of long-term risk-adjusted performance and the valuation of the top value portfolio is now undervalued by 37% compared to the MSCI World (Standard) Index, by 50% compared to the MSCI USA Index and by 62% compared to the MSCI World Growth Index.

Since no one knows what the future will bring, investing in value makes the most long term sense.

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 Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally hold at the beginning of 2020.

70% is diversified into developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the good value markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for almost every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (Pi).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

This year I 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 our seminar.

Those five decades of experience have taught me several incredibly valuable lessons.

The first lesson is that there is always something we do not know.

The second lesson is that stock market booms and busts always eventually return to value.

Third, the only sure way to succeed is to use time not timing.

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 $102 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.

 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.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197 and receive all the above.

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

Gary

(1)  Roaring Ahead

(2) www.macrotrends.net/1319/dow-jones-100-year-historical-chart

 

Seasonality Indicator


Seasonality can have a big impact on your wealth.

We recently reminded subscribers to our Purposeful Investing Course (Pi) that stock markets around the world are currently getting a boost from seasonality.

Due to increased turmoil in the Middle East we can use this seasonality as a special early warning stock market indicator for the year and perhaps even the decade ahead.

Screen Shot 2020-01-05 at 7.16.08 AM

The seasons affect almost everything in nature.

Screen Shot 2020-01-05 at 7.16.34 AM

Because markets are instruments of humans… our nature makes seasonality important in stock markets too.

November through May are the months when we can expect extra green in the stock market.

A statistical analysis was done some years ago by Michael Keppler at Keppler Asset Management.  This study shows that most appreciation in most major equity markets, is achieved from the beginning of November through the end of May.

Michael wrote: “Gary, We have done extensive research on seasonality and I am proud to announce that a shortened version of a major study which I have coauthored with our Director of Research, Dr. Xing Hong Xue, will be published in the Winter Issue of the Journal of Investing. Our research shows that basically in all major equity markets, nearly all returns are achieved from the beginning of November through the end of May. All the best to you and Merri. Michael

Keppler showed that over 30 Years Dow the Dow grew 8.16% overall.

There was 8.36% Growth in the months November through April.
There was 0.37 growth in the months May  to October.
$100 invested in the Dow grew to $848 overall over the 3o years.
$100 invested in the Dow grew to $1,067 if it were invested only in the months of November through April.

$100 invested in the Dow dropped to $79 if it were invested only in the months of May to October.

Here’s how we can use our understanding of seasonality as an early indicator now.

The tactic is simple.  Stock market performance should be strong now through May.  If it is not, treat your 2020 stock market investments with added caution.  Poor performance at a time that is historically good will suggest that the current high valuations in the market are dragging share prices down.

We have seen a warning sign already.  Turmoil in the Middle East has pulled markets down from all time highs last week.  If the market continues to sag… take extra care for the year and decade ahead.

Look for good value!

Gary

The Only 3 Reasons to Invest

garyheadshot

The stock market has always been the best place of places to protect and increase wealth over the long haul.   Yet it’s also been the worst place to lose money, a lot of it, quickly.

There are only three reasons why we should invest.  We invest for income.  We invest to resell our investments for more than we had invested.  We invest to make our world a better place.

The goal of investing should be to stabilize our security, bring feelings of comfort and elimination of stress!

We should not invest for fun, excitement or to get rich quickly. We should not divest in a panic due to market corrections.

This is why my core stock portfolio consists of 19 shares and this position has hardly changed in three years.  During this time we have been steadily accumulating the same 19 shares and have traded only three times.

motif

This portfolio is built around a strategy that’s taught in my Purposeful Investing Course (Pi).  I call these shares my Pifolio.

This portfolio more or less matched the S&P 500 until May 2018.  Then a stronger US dollar made the portfolio look like it was falling behind.   This currency illusion creates a special opportunity we’ll view in a moment.

This portfolio above is based on stock price to value analysis built around 91 years of stock market data.

The value analysis is used to create a portfolio of MSCI Country Benchmark Index ETFs that cover  stock markets that are undervalued.  I have combined my 50 years of investing experience with the study of the mathematical market value analysis of Michael Keppler, CEO of Keppler Asset Management.

In my opinion, Keppler is one of the best market statisticians in the world.  Numerous very large fund managers use his analysis to manage over $2.5 billion of funds.  However because Keppler’s roots are in Germany (though he lives and operates from New York) and most of his funds registered for the European Union, Americans cannot normally access his data.

I was lucky to have crossed paths with Michael about 25 years ago, so I am one of the few Americans who receive this data and you will not find his information readily available in the US.

In a moment you’ll see how to remedy this fact.

The Pifolio analysis begins with Keppler’s research that continually monitors 46 stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  Then Keppler takes market’s history into account.

Fwd: keppler

Michael Kepler CEO Keppler Asset Management.

Michael’s analysis is rational, mathematical and does not cause worry about short term ups and downs.  Keppler’s strategy is to diversify into an equally weighted portfolio of the MSCI Indices of each good value (BUY) market.

This is an easy, simple and effective approach to zeroing in on value because little time, management and guesswork is required.  You are investing in a diversified portfolio of good value indices.

A BUY rating for an index does NOT imply that any one stock in that country is an attractive investment.  This eliminates the need for hours of research aimed at picking specific shares.  It is not appropriate or enough to instruct a stockbroker to simply select stocks in the BUY rated countries.  Investing in the index is like investing in all the shares in the index.  You save time because all you have to do is invest in the ETF to gain the profit potential of the entire market.

To achieve this goal of diversification the Pifolio consists of Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally held at the beginning of 2019.

70% is diversified into Keppler’s good value (BUY rated) developed markets: Australia, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.

30% of the Pifolio is invested in Keppler’s good value (BUY rated) emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

iShares Country ETFs make it easy to invest in each of the MSCI indicies of the good value BUY markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

There is an iShares country ETF for every market.

How you can create your own good value strategy.

I would like to send you, on a no risk basis, a 130 page basic training course that teaches the good value strategy I use.   I call this strategy Purposeful Investing (PI).  You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You get this course when you enroll in our Purposeful Investing program (Pi) with a triple guarantee.

Triple Guarantee

Enroll in Pi.  Get the 130 page basic training, a 46 stock market value report, access to all the updates I have sent in the past three years, two more reports on investing (described below) and an online Value Investing Seminar right away. 

#1:  I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through slow, worry free, easy diversified investing.

If you are not totally happy, simply let me know.

#2:  I guarantee you can cancel your subscription within 60 days and I’ll refund your subscription fee in full, no questions asked.

#3:  You can keep the two reports and Value Investing Seminar as my thanks for trying.

You have nothing to lose except the fear.   You gain the ultimate form of financial security as you reduce risk and increase profit potential.

When you subscribe to Pi, you immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

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 2019” 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 2019” 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 2019” 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 51st anniversary of writing about global investing.  Our reports and seminars have helped readers have better lives, with less stress yet make fortunes during up and down markets for decades.  This information is invaluable to investors large and small because even small amounts can easily be invested in the good value shares we cover in our seminar.

Stock and currency markets are cyclical.  These cycles create extra profit for value investors who invest when everyone else has the markets wrong.  One special seminar session looks at how to spot value from cycles.  Stocks rise from the cycle of war, productivity and demographics.  Cycles create recurring profits.  Economies and stock markets cycle up and down around every 15 to 20 years as shown in this graph.

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.

Use time not timing.

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%.

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 2019” 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