My 50+ years of global investing and business have been based on looking for distortions that can lead to new trends.
For example in the 1970s I saw that London real estate prices remained low while US and European property skyrocketed. Then in the early 1980s I saw that Miami, Ft Lauderdale and Palm beach real estate was high compared to Naples Florida (and that Naples had the better beaches). Then when Naples property went crazy, I saw Ecuador prices at stupidly low levels compared to Florida.
I invested, wrote about these distortions and the trends they would create. Plus Merri and I took thousands of readers to these places.
Those examples are just a fraction of the imbalances we have spotted and invested in over the past five decades as the world’s hierarchy has tried to gain a better equilibrium after WWII.
Gains have been made, but the Bloomberg article. ” The 50 Richest Americans Are Worth as Much as the Poorest 165 Million” (1) suggests that we have a long way to go.
The article says: A look at U.S. wealth data through the first half of 2020 shows stark disparities by race, age and class.
The 50 richest Americans now hold almost as much wealth as half of the U.S., as Covid-19 transforms the economy in ways that have disproportionately rewarded a small class of billionaires.
The articles reveals some astounding contrasts!
For example recent data from the U.S. Federal Reserve, through the first half of 2020, shows that the top 1% of Americans have a combined net worth of $34.2 trillion, while the poorest 50% — about 165 million people — hold just $2.08 trillion, just 1.9% of all household wealth.
There is another incredible figure revealed in the article. This shows one of the worst distortions in the United States that I don’t even think this has even been fit into the national dialogue yet.
The article says: The Fed data also show that the Millennial generation, born between 1981 and 1996, control just 4.6% of U.S. wealth even though they are the largest in the workforce with 72 million members.
Like the country as a whole, young Americans’ wealth is concentrated in just a few hands. Three Millennials — Facebook Inc. co-founders Mark Zuckerberg and Dustin Moskovitz, along with Walmart Inc. heir Lukas Walton — personally control one out of every $40 held by their generational cohort.
I am just astounded that the older generations in our nation, (the U.S.) can expect the younger generations, that we now need to support our socio-economic structure, can do without sharing our wealth more equally. The fact that just three Millennials control 2.5% of that cohort’s wealth seems simply unbelievable.
This is not just an American story. The wealth distortion seems to be growing everywhere.
Excerpts from a New Yorker article by Yuvaal Harari, author of “Sapiens” and “Homo Deuce” posted at the Linn-Benton College website (2) can help us understand how this global distortion is widening.
Harari wrote: The Liberal Story says that if we only liberalize and globalize our political and economic systems, we will produce paradise on earth, or at least peace and prosperity for all.
The plot line of this story, however, began to lose credibility starting with the 2008 global financial crisis. People who, in the nineteen-nineties and two-thousands, expected that playing by the rules would allow them to rise and flourish suddenly began to fear that they had been duped, and that the system did not work for them. The Arab Spring has turned into an Islamic Winter; authoritarian regimes in Moscow, Ankara, and Jerusalem are abandoning liberal-democratic values in favor of chauvinistic nationalism and religious extremism; and even in the liberal strongholds of Western Europe people are having second thoughts. Now the tidal wave of disillusionment is making its way to the very country that has pushed the Liberal Story to the rest of the planet, sometimes at gunpoint—the United States.
Why are people losing faith in the Liberal Story? One explanation is that this story has indeed been a sham, and that, instead of peace and prosperity, the liberal prescription has produced little more than violence and poverty. This, however, is easily refuted. From a historical perspective, it seems evident that humankind is actually enjoying the most peaceful and prosperous era ever. In the early twenty-first century, for the first time in history, more people die from eating too much than from eating too little; more people die from old age than from epidemics; and more people commit suicide than are killed by war, crime, and terrorism put together. During the latter part of the twentieth century, each generation—whether in Houston, Shanghai, Istanbul, or São Paulo—enjoyed better education, superior health care, and larger real incomes than its parents. In coming decades, however, owing to a combination of ecological meltdown and technological disruption, the younger generation might be lucky to just stay in place. As people lose faith in the system’s ability to fulfill their expectations, they become disillusioned even amid unprecedented peace and prosperity.
Wealth inequities are causing disruption globally.
We see the results of the growing division between the rich and the poor in Hong Kong, in US cities like Portland, Oregon and Chicago. China and the Middle East suffers from these distortions as does Russia and it former Soviet neighbors.
The reason given for the disruptions are numerous. Dig through the verbal dross and you’ll see the same root… a disparity of wealth and opportunity.
The image from a recent article about Russia’s difficulties show we humans react when forced into too much unfairness.
Here’s what happens when too many have not much left to lose.
In this image lays a real power that has come through again and again when the top of a hierarchy (the ones who say “let them eat cake”) fail to heed the true power of pent up frustration, poverty and unfulfilled expectations.
If we, as a global society do not distribute our wealth more fairly, we can expect increased turmoil and even revolution.
I hate seeing the divisions, the arguments, the bias that is spread through social media and the news. The growth and hostility of these divisions do not lead to peaceful, productive solutions.
Yet I keep asking, what can I do that will help and that will preserve my wealth in a win-win way.
Positive answers are elusive, but one fact about investing remains… the stock market is one of the best ways to maintain wealth.
The Bloomberg article mentioned above clarified this fact: Another key reason for the wealth disparity is that the vast majority of Americans aren’t benefiting from rising stock prices. The bottom 90%’s exposure to the stock market has been dropping for almost two decades. Since peaking at 21.4% in 2002, upper middle class Americans have seen a 10 percentage point decline in their equity interest in companies. A similar pattern is seen among the bottom half.
The wealthiest 1% own more than 50% of the equity in corporations and in mutual fund shares, the Fed data show. The next 9% of the wealthiest own more than a third of equity positions — meaning that the top 10% of Americans hold more than 88% of shares.
My simple solution is to make as much money as I can by paying much more than the minimum to those who help in the process.
Some might call my approach excessive generosity. If so, those who say this fail to understand that a castle built on the bones of the builders, will never stand strong.
Work hard, be productive, earn by resoling contrasts and distortions and share your success with those involved.
The more we can help the public invest in stock markets everywhere… the better we can maintain our purchasing power and help increase everyone’s wealth.
So if you don’t invest in shares, consider doing so. You can learn a safe way to own equities globally, with the best long term chances of fair returns below.
Coronavirus and the Stock Market Round TwoCoronavirus and the stock market. Round Two is coming.
This virus and the market faced off in the spring. The market won. As the chart below shows, after a huge March 2020 collapse,the DJIA is almost back to its December 2019 level.
The market’s back up, but history suggests that we’ll see volatility in the ten years ahead.
Here is a chart of the Dow Jones Index for the past three decades. The .dotcom bubble burst just before the beginning of the 2000 decade.
The market then went nowhere from 2000 to 2014. Finally it started reaching new high levels.
Such decades long sideways movement after a severe correction is nothing new in the stock market.
So everything’s in order… except the pandemic. The ravages of the coronavirus dramatically increase the unknown and this uncertainty is the greatest purveyor of weakness that a stock market can have.
Such delays have profound implications for older generations who may need to cash in equities for income. How do we maximize the return on your savings and investments during this extremely dangerous time?
For the past five years, my strategy, to protect against the next stock market crash and yet gain income and appreciation from rising share prices is to invest in an equally weighted portfolio of the value based country ETFs.
We track 46 stock markets around the world in our Purposeful Investing Course (Pi) to determine which markets offer the best value so we can be in a perfect position to take advantage of stock market corrections all over the world.
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 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. Now I am updating my plan to decide when it’s best to invest more.
70% is diversified into developed markets: Austria, Canada, China, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom.
30% of the Pifolio is invested in emerging markets: Brazil, Chile, Colombia, South Korea, Malaysia and Taiwan.
iShares Country ETFs make it easy to invest in each of the good value markets.
The ETFs provide incredible diversification for safety. For example, the iShares MSCI Japan (symbol EWJ) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Japan Index which is composed mainly of large cap and small cap stocks traded primarily on the Tokyo Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Japan so an investment in the ETF is an investment in hundreds of different Japanese shares.
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.
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.
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.
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 during the pandemic to introduce you to this online course 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.
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 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.