Global Investing & Major Market Value Update

by | Jul 20, 2010 | Archives

We’ll see a global investing major market value update in a moment.

First, let’s look at this important data that Thomas Fischer at Jyske Global Asset Management (JGAM) just shared.

Thomas Fischer is Senior Vice President of Jyske Global Asset Management.


Thomas began his banking career in 1975. In 1978  he started in the trading room as a Foreign Exchange dealer, and spent the next 22 years trading currencies. During this trading career he spent 2 years in London and 10 years in Germany where he was head of the international currency section of a major German brokerage company.

During his time in Germany he successfully completed an MBA focusing on the external environment and corporate finance.  In 2000 he joined Jyske Bank Private Banking and was promoted to Manager of International Client Relations in 2001.

In 2008 Thomas joined the newly established Portfolio Management Company Jyske Global Asset Management (JGAM), as Senior Vice President.  He is  a member of JGAM’s Investment Committee focusing on our Foreign Exchange strategy.  He travels the world giving presentations about the markets and the investment opportunities at JGAM.

Yesterday’s message Global Investment Portfolios Focus looked at JGAM’s medium risk international investment portfolio.

This portfolio has been updated and Thomas wrote:  On July 15 JGAM’s Investment Committee held its monthly meeting, deciding on how to invest our managed portfolios. All trades agreed at the meeting have now been carried out and therefore we can publish the changes we have made.

The overall asset allocation remained at a neutral position in all asset classes except for a small overweight position on cash in low and medium risk portfolios.

However Thomas added more. Here is information on what the future that we should all be thinking about.

The markets have been caught in a verbal fight between optimists and pessimists. The latter group most prominently presented by Princeton University Economist Paul Krugman, has warned policy makers that the world is heading for the worst depression since the thirties.

Mr. Krugman has on many occasions warned that the US is in danger of falling into a deflationary trap. He is advocating for a much more aggressive stimulus plan as unemployment remains stubbornly high, with little job creation at private companies.

The Federal Reserve Chairman Ben Bernanke however, has been more optimistic and recently expressed that the US economy is on track to continue to expand in 2010 and 2011. World trade is up 20% year-on-year but is recovering from extremely low levels.

The optimists also argue, that the corporate sector should start investing soon and thereby improve the employment picture. When the corporate sector increases spending, nominal growth should pick up and help improve budget deficits.

According to The Economist magazine, the recent uncertainty may be down to a fundamental battle between bond investors who benefit from a debt deflation solution to the current crisis; and equity investors who gain more from a nominal growth solution to deficits. The jury is still out and with no clear indication of where we are heading, uncertainty will rule the market. We still believe that we are heading for a recovery and a growth scenario, but as long as the “war” between optimists and pessimists are raging in the media we maintain our neutral positions.

After four consecutive quarters with rising equity prices, Global equities had their first down quarter since March 2009. In the second quarter 2010, the Morgan Stanley Capital International (MSCI) World Total Return Index (with net dividends reinvested, December 1969 = 100) declined 11.2 % in local currencies, 12.7 % in US dollars and 3.5 % in euros.

So who will win out… the optimists or the pessimists?

Personally  I am prepared for either scenario.  In our last International Investing & Business Conference we looked at seven places to inest now that can prosper in either a positive or negative economic scenario.

#1:  Value Markets

#2: Multi Currency Spreads Increase Cash

#3: Emerging Markets

#4: Wellness

#5: Water Alternate Energy

#6: Truth & Cohesion

#7: Real Estate

Value holds a special place for investors and business people… local or global because value is another way of seeing distortions.  Distortions are vacuums and nature abhors a vacuum.  Imbalances will always correct themselves. To have success in investing or business… one simply has to spot good value.

Understanding value is the tricky part. 

This is why once a quarter we look at a major equity market valuation analysis by Michael Keppler.

If you are a new multi currency subscriber learn about Keppler Asset Management here.

For the last quarter to the end of June 2010, Keppler points out that  year to date, the MSCI World Index lost 7.1 % in local currencies and 9.8 % in US dollars. However, due to the 14.6 percent decline of the US dollar to 1.2249 versus the euro, the world equity benchmark index gained 5.6 % during the last six months, if performance is measured in euros.

Two markets advanced in the second quarter and sixteen declined. Denmark (+4.5 %), Sweden (+0.3 %) and Singapore (-0.1 %) performed best.

Japan (-14.8 %), Austria (-14.3 %) and Italy (-13.4 %) came in at the bottom.

Year-to-date, four markets are up and fourteen markets are down. The best performing markets in the first half of 2010 were Denmark (+21.7 %), Sweden (+8.8 %) and Belgium (+1.2 %). Spain (-21.4 %), Italy (-14.8 %) and Norway (-13.7 %) performed worst year-to-date.

Performance numbers are in local currencies unless mentioned otherwise.

The Top Value Model Portfolio currently contains the following six “buy” rated countries at equal weights:  Austria, France, Germany, Italy, Singapore and the United Kingdom. Keppler’s current ratings suggest that a combination of these markets offers the highest expectation of long-term risk-adjusted returns.

Keppler’s neutral value markets are now: Australia, Japan, Netherlands, Norway, Spain.

The low value (sell) markets are:  Belgium,  Canada, Denmark, Hong Kong,  Sweden, Switzerland and USA.

Keppler also added:  As the chart below indicates, our implicit three-to-five-year projection for the average annual gain of the Equally-Weighted World Index now stands at 14.3 % p.a., up from 11.9 % three months ago.  The two main reasons for this increase are (1) the Index dropped by 9 % during the second quarter and (2) fundamentals have improved: Earnings are up 16.6 % — the larger part of the increase coming from disappearing write-offs — and dividends grew by 4.1 %. In addition, the low interest rate environment makes stocks look attractive.


Keppler’s implicit three-to-five- year projection provides some profound clues about how to invest and conduct business ahead.

His statistics suggest to me that the economy and markets are still going to grow.  The pessimists… according to my interpretation of these numbers… lose.

This is not the only indicator I track that suggests positive days ahead… not immediately… but over the next three to five years.

From now until October offers a special micro window of opportunity…. maybe one of two before 2002… when the next 15 to 17 year bull cycle will begin.

Right now seasonality is dragging markets down until around November.  Perhaps we’ll see one more good bear pull April to November 2011.  Then the recovery will begin in earnest. From now until then, history suggests times will be bleakest… a great time to find good value.

Thomas Fischer also mentioned the beauty of Denmark’s summer and wrote:

Summer has arrived in Denmark and we are basking in glorious sunshine. We hope the weather will “perform” for the next few months and thus create a warm background for our August Copenhagen seminar.

We have a range of world class speakers and should have some really exciting presentations. We will furthermore have excursions allowing you to get a closer look at our beautiful city. We will conclude the seminar Saturday evening with a gala dinner and opera arias performed by some of the best Danish opera singers from The Royal Danish Opera. We hope you will take this opportunity to come to Copenhagen and experience some renowned Danish “hygge”/coziness. You can see the whole program and a short video at the below link at

When we forwarded the invitation in April the price was approx. $2,050 per person in a double room, but since then the USD has strengthened against the Danish Kroner and the price today is approx. $1,700. The price includes accommodation including breakfast at the Copenhagen Marriott Hotel just voted the best hotel in Denmark, reception at our offices, seminar fee, excursions, lunches and a gala dinner with entertainment and dancing.

Danes have been voted the happiest people in the world and now we also have the best restaurant in the World. The restaurant is called NOMA which is a concatenation of the two Nordic names Nordisk (Nordic) and mad (food). The chef, Rene Redzepi, uses only Scandinavian ingredients and how about this for a starter: crunchy baby carrots served with edible “soil” made from malt, hazelnuts and beer, with a cream herb emulsion beneath.

Our slogan “Global investments with a personal touch” is not just a slogan we really enjoy any opportunity to meet with our clients and friends. We sincerely hope that you will join us in August in Wonderful Copenhagen.

See details on how to join Merri and me at Jyske’s bi annual Copenhagen seminar here Global Wealth Management Seminar.

Merri and I walk  the waterfront every day when we are in Copenhagen.  We love…


the sights, the…


cafes and…


open air.

Merri and I hope to meet you in Denmark in August!


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