There is nothing we have to do that will be done better because we are up tight.
A message earlier this week The Loss of Words looked at how the sharp edge of modern communications has ripped the entire fabric of the global economy.
We are flooded with too much information and this problem is at its worst when it comes to investing. On any one day we can read, watch or hear hundreds of pundits, thousands perhaps, tell us how markets and the economy are ready to collapse. Other hundreds, or thousands, tell us how markets and the economy are ready to skyrocket higher.
Life becomes complex because we don’t know which words to believe.
The solution to this problem of complexity is simplicity.
Henry David Thoreau, summed up this fact when he said “Our life is frittered away by detail. Simplify, simplify.”
That’s why I use an easy solution to escape the global economic complexities created by word inflation in the news.
The simple solution is math!
I follow slow moving mathematical information rather than economic news.
My main source of math based economic value information comes from Keppler Asset Management.
The green line shows the performance of diversified value investing. From Keppler Asset Management July 2019 Developed Market Value Analysis.
This is why I have followed the global equity analysis of Keppler Asset Management Inc. (KAM) since it was founded by Michael Keppler in 1992. KAM is an SEC–registered investment advisory firm dedicated to finding and exploiting investment opportunities in the global equity markets. Based in New York, they advise institutional investors worldwide and help manage over twelve publish mutual funds with total assets exceeding two billion US dollars. Plus they advise many private pension funds by specializing in active quantitative portfolio strategies that aim to deliver superior long-term performance and seek to limit risk through a firm commitment to value.
Starting in 2009, KAM was named Best Fund Company in the Fund category, five years in a row, by Capital, a leading German business magazine.
Keppler explains why a Top Value Country Selection Strategy for equities is important and says in his analysis: Among the generally accepted reasons for taking a global perspective in investments is the historical fact that no nation can maintain economic and political pre-eminence ad infinitum.
Horace, who, in his Ars Poetica, predicted, “Many shall be restored that now are fallen and many shall fall that now are in honor,” has proved to be right over the last 2000 years and will probably be equally right for the next millennium.
Studies have shown that, regardless of the investor’s national market and currency, diversified global equity portfolios, over longer periods, offer higher returns at lower risk than investments in national markets.
The statistics below show the power of diversifying globally in value equity markets.
The annual returns in the chart above shows how value investing takes time. In the past ten years, dominated by growth rather than value sectors,value portfolios have not been the top performers.
Truth however is not created by repetition of an error. High performing markets are often forming a bubble and by their nature can be poor value markets.
We can see an example, in this chart from Keppler’s July 2019 Developed Equity Market Analysis that the top performing US market now hasa price to book that’s 2.5 times higher than The Top Value Developed market portfolio. There is little wonder that Keppler’s analysis shows the US as a poor value market.
Yet over the past several years, in the short term, portfolios invested only in the US market have shown better performance.
Keppler also makes projections.
The chart below shows the entire real-time forecasting history for the KAM Equally Weighted World Index, starting at the end of 1993. Our numbers are based on relationships between price and value over the previous fif-teen 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’s implicit three-to-five-year projection places the KAM Equally Weighted World Index at LC 15,701 by June 30, 2023, up from its current level of LC 12,350. This corresponds to a compound annual total return estimate of 6.2 % in local currencies—up by 0.1 percentage point from 6.1 % last March. The upper-band estimate of LC 18,841 by June 30, 2023 implies a compound annual total return of 11.1 % (unchanged from three months ago), while the lower-band estimate of LC 12,561 indicates a compound annual total return of 0.4 % (up from 0.3 % last quarter).
That’s my simplicity secret for keeping track of where to invest. Using Keppler’s data has served me well for 25 years, allowing me time to get on with life rather than being drowned in a sea of conflicting opinions about what investment to make next.
Gain From Pandemics – Riots & Election VolatilityOn top of the pandemic… and the riots, another election on its way… all the robo calls from politicians… the dirty tricks and the innumerable amounts of nonsense this vital process brings.
However America’s politics turn out, one thing is sure, there will be volatility in stock markets during the election process.
The first reason markets will bounce has nothing to do with politics or policies. A market correction was due regardless of the party or the person in office and COVID-19 was a pretty good excuse for it to suddenly drop. Expect plenty more volatility. Whether the economy recovers slowly or quickly, history suggests that the US market will do a lot of moving up and down.
Second the new politics has created an uncertain era. Everyone has been shaken over the past three years whether they are pleased with the government or not.
Nothing frightens markets like uncertainty.
What more could we ask for… an uncertain COVID-19 future and riots in 30 major cities.
Well interest rates could be a dark horse. I the massive government handouts create inflation, interest rates will rise and rising interest rates will push stock market prices down.
Despite these pitfalls, there is a way to profit using the strong US dollar and undervalued non dollar stock markets to pick up good value shares.
During nearly five decades of global investing I have noticed found that good value strategies are the best way to profit long term, through good politics and bad. The steps to take are simple.
The first tactic is to seek safety before profit.
We can look at Warren Buffett’s investing strategy as an example. Buffett success is talked about a lot, but rarely does anyone explain how he make so much money. That was the fact until some researchers really stripped his operation bare. They looked at everything and learned the deepest of Buffett’s wealth management secrets. Fortunately they published all in a research paper at Yale University’s website. that reveals important truths about extending wealth.
This research shows that the stocks Buffett 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. 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.
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 Buffett strategy integrates time and value for safety and profit.
A third tactic is using 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 limited leverage to invest in large purchases of “cheap, safe, quality stocks”. He limits 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.
Stated in another way buffet uses logic (buy good value) to have the conviction, wherewithal, and skill to invest with leverage over many decades.
What do we do when we are not Warren Buffett?
May I introduce the Purposeful Investing Course (Pi) for those who want to invest like Warren Buffet, but know they are not. This course is based on my 50 plus years of investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.
Enjoy Extending Wealth
Pi’s mission is to make it easy for anyone to create a three point strategy, like Buffett’s even though they do not have a lot of time for or knowledge about investing.
Pi reveals investing secrets and the sciences that make investing easy, safer, less time consuming and increases the chances of profit.
One secret is to invest with a purpose beyond the cash. One tactic as mentioned is staying power. This means not being caught short and having to sell during a period of loss. This also means having enough faith in a strategy that we stick to the plan. When we invest with purpose, doing what we love, we enjoy the process more and are more likely to hold on during down times, when most poor investors panic and sell.
Slow, Worry Free, Good Value Investing
Stress, worry and fear are three of an investor’s worst enemies. They create the Behavior Gap, a trait exhibited by most investors, that causes them to underperform any market sector they choose. The behavior gap is created by natural human responses to fear. Pi helps create profitable strategies that avoid losses from this gap.
Spanning the Behavior Gap
Behavior gaps are among the biggest reasons why so many investors fail. Human evolution makes fear the second most powerful motivator. (Greed is the third.) Fear creates investment losses due to behavior gaps. Fear motivates us more strongly than desire. By nature investors are risk adverse.
Winning investors though embrace risk because they have a plan based on good value.
Purpose is the most powerful motivator, stronger than fear and greed, so a strategy with purpose is the most powerful of all.
Combine your needs and capabilities with good value secrets and the math to back up your value selections through the Pifolio – The Pi Model Portfolio
Lessons from Pi are based on the creation and management of a Primary Pi Model Portfolio, called the Pifolio. There are no secrets about this portfolio except that it ignores the stories (often created by someone with vested interests) and is based entirely on good math.
The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets using my (almost) 50 years of global experience and my study of the analysis of four mathematical investing geniuses (and friends).
The Pifolio analysis begins with a continual research of international major stock markets that compares their value based on:
#1: Current book to price
#2: Cash flow to price
#3: Earnings to price
#4: Average dividend yield
#5: Return on equity
#6: Cash flow return.
#7: Market history
We follow this research of a brilliant mathematician and have tracked this analysis for over 20 years. This is a complete and continual study of international major and emerging stock markets.
This analysis forms the basis of a Good Value Stock Market Strategy. The analysis is rational, mathematical and does not worry about short term ups and downs. This strategy is easy for anyone to follow and use. Pi reveals the best value markets and provides contacts to managers and analysts and Country Index ETFs so almost anyone can create and follow their own strategy.
A country ETF provides diversification and cost efficiency by spreading one simple, even small investment into a basket of equities in a good value stock market. The costs are low and this type of ETF is one of the hardest for institutions to cheat. Expense ratios for most ETFs are lower than those of the average mutual fund.
Little knowledge, time, management or guesswork are required. The investment is simply a diversified portfolio of good value indices. Investments in an index are like investments in all the shares of a good value market.
Pi matches this mathematical certainty with my fifty years of experience. This opens insights to numerous long term cycles that most investors miss because they have not been investing long enough to see them.
For example 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! There are currently ten good value (non US) developed markets, plus 10 good value emerging markets.
Pi shows how to easily create a diversified, worry free portfolio in some of these good value markets using Country Index ETFs.
The current strength of the US dollar is a second remarkable similarity to 30 years ago. The dollar rose along with Wall Street. Profits came quickly over three years. Then the dollar dropped like a stone, by 51% in just two years. A repeat of this pattern 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. There is so much more to write and 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 you’ll receive the report “Three Currency Patterns For 50% Profits or More” FREE when you subscribe to Pi.
Pi also explains when leverage provides extra potential without undo risk. For example in 1986 I issued a report called “The Silver Dip” that showed how to borrow 12,000 British pounds (at almost 1.6 to 1 dollars per pound the loan created US$18,600) and use the loan to buy 3835 ounces of silver at around US$4.85 an ounce.
Silver had crashed, I mean really crashed from $48 per ounce. As prices decreased from early 1983 into 1986, total supply had fallen to 449.7 million ounces in 1986. Mine production was restricted by the low prices at this time, with silver reaching a low for this period of $4.85 in May 1986. Secondary recovery also was constricted by these low prices.
Then silver’s price skyrocketed to over $11 an ounce within a year. The $18,600 loan was now worth $42,185.
The loan was in pounds and in May 1986 the dollar pound rate was 1.55 dollars per pound. So the 12,000 pound loan purchased $18,600 of silver. The pound then crashed to 1.40 dollars per silver. The loan could be paid off for $13,285 immediately creating an extra $5,314 profit. The profit grew to $47,499 in just a year.
Here’s 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. 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.
You also receive a 100+ 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 of all 46 markets.
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 the Pi course.
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 $124.50 off the subscription.
Enroll in Pi. Get the basic training, the 46 market value report and access to all the updates of the past two years, plus all new updates over the next year.
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.
Due to the COVID-19 pandemic we have cut the subscription to $174.50. You save $124.50!
Then because this global recovery from the pandemic is going to take years, we’ll maintain your subscription at just $99 a year rather than $299. Your subscription will be autorenewed in 2021 at $99, though you can cancel at any time.
Subscribe to Pi today and you get a year’s subscription 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.