Major Equity Market Valuations

by | Jan 21, 2008 | Archives

Major Equity Market Multi Currency Investments Major Market Value Analysis Dec. 2007 – Jan 2008.

You can read this message with pictures at Major market multi currency investing is one of the best ways to protect wealth if attention is paid to investing value.

The best way to create long term multi currency investment profits is to get good value in the shares you buy.

One way we keep track of value is to follow the analysis of our friend, Michael Keppler. Michael continually researches international major stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return. He compares each major stock market’s history. From this he develops his Good Value Major Stock Market Strategy. His analysis is rational, mathematical and does not worry about short ups and downs.

In my opinion, he is one of the best market statisticians in the world.

Numerous very large fund managers use his analysis to manage funds. In January, his company, Keppler Asset Management, was, for the third consecutive year, named Best Fund Company in the Fund Specialists’ category by Capital, a leading German business magazine. Keppler’s firm was one of only six out of 100 companies tested that received the highest five-star rating based on an independent evaluation of fund quality, management, and customer service by Feri Rating & Research and Steria Mummert Consulting.

Once a month we share Michael’s analysis with you.

Here is a summary of Keppler’s current comments on recent developments & outlook in international major markets.

Recent Developments & Outlook

Major Markets equities finished a volatile year on a weak note. In December, the Morgan Stanley Capital International (MSCI) World Index (with net dividends reinvested, December 1984=100) declined 0.8% in local currencies, 1.3% in US dollars and 0.9 % in euros.

In 2007 the benchmark for global equity investors advanced 4.7% in local currencies and 9% in US dollars. However, due to a decline of 9.8% of the US dollar versus the euro, it declined 1.7% if performance is measured in euros.

Seven markets had positive returns in December and eleven markets declined.

Performance is in local currency, unless mentioned otherwise.

Germany turned in the best monthly performance with a 2.1 % gain, followed by Canada (+1.4 %) and the Netherlands (+0.6 %).

Switzerland (-3.6 %), Japan (-3.3 %), Australia and Spain (both down 2.9 %) finished at the bottom range in December.

Last year, the four-year record — where all markets provided positive returns— was broken: Only twelve out of the eighteen markets covered here, finished the year 2007 in positive territory.

Hong Kong (+41.6 %), Germany (+21.9 %) and Singapore (+20.4 %) led the winners’ list 2007.

Belgium (-12.3 %), Japan (-10.2 %) and Austria (-7.8 %) were the “underperformers” of 2007.

As in the previous year, Japan again was particularly disappointing for European investors due both to declining stock prices and a weak currency.

2007 marked the fifth year in a row in which equal weighting of markets (+6.8 %) outperformed the market-cap. weighted MSCI World Index (+4.7 %), though the value added of 2.1 percentage points was smaller in 2007 than the historic annual average of 3.3 percentage points. This demonstrates that global diversification was again the name of the game for equity investors in 2007.

Year over year, the Top Value Model Portfolio gained 5.3% in local currencies, 15.3% in US dollars and 4% in euros, outperforming the MSCI World Index by between 0.6 and 6.3 percentage points — depending on the currency.

The following table shows how the Major Markets Top Value Model Portfolio compares to the MSCI World Index at year-end 2007.

There is one change in our performance ratings this month: Japan is upgraded to “Neutral” from “Sell”. During the five years and six months — June 30, 2002 through December 31, 2007 — Japan had been rated “Sell”, the MSCI Japan Total Return Index with net dividends reinvested underperformed the MSCI World Index by 12.7 % compounded annually.

There is no change in the composition of the Top Value Model Portfolio which contains Belgium , France , Germany , Italy , the Netherlands , Spain and the United Kingdom at equal weights.

Our current ratings suggest that these markets offer the highest expectation of risk-adjusted performance.

SELL CANDIDATES (Low Value) Austria , Canada , Denmark , Hong Kong , Singapore , Switzerland , U.S.A.

NEUTRALLY RATED MARKETS Australia , Japan , Norway , Sweden .

For more details on Keppler’s analysis, contact Roderick Cameron at 1-212-245-4304 or email

You can get ideas on shares in these top value emerging stock markets from Thomas Fischer at Jyske Bank at

Jyske Bank is the second largest Danish bank with 450,000 domestic clients, 35,000 international clients, USD 23 Billion in total assets, and a Moody’s rating of AA1. Jyske has over 35 years’ specialization in private banking and Denmark is ranked by Moody’s as the safest country in the world to have a bank account in.

Jyske Bank uses a good value system as well and their affiliated fund management company has been rated #1 by Morningstar. They use this value system to help us select shares for Multi-Currency Portfolio Educational Tracking Service. This has worked pretty well.

Here is the 2006 performance:

US Dollar Long 9.04%

US Dollar Short 10.43%

US Dollar Hedge 11.46%

Emerging Market 42.93%

Asia Emerging Market 114.16%

Here is the 2007 performance:

Dollar Neutral 38.67%

Dollar Short 48.19%

Swiss Samba 53.32%

Emerging Market 122.62%

Green 266.30%

However the 2008 portfolios we are now tracking have not been immune from the 2008 turmoil although the green portfolio continues to surge ahead.

See why this green portfolio continues to excel in downturns.

Learn how to see and learn from the performance of these portfolios at

Until next message, may all you global investments be good.


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