In this era of divisive media and fake news, it’s increasingly hard to know who and what to trust.
This is why, when it comes to choosing equities, I increasingly rely on math rather than stories.
Individual investors tend to think in terms of stories and act upon emotional responses to these tales. This makes them fodder for institutional investors who select equities based on math. The big boys react to changes in numbers not conjecture and opinion so they slaughter those who invest based on the rumor mill. Thus the rich get richer.
If I were to speculate in any stock right now, I would use math to choose an ETF that covers the best value stock market in the world, based on price-to-book.
Most often the least expensive market is an emerging market, but not right now.
The chart below shows the 26 emerging markets monitored by Keppler Asst Management.
The best value emerging market based on price-to-book is Pakistan with a 0.81 price-to-book.
However, the Pakistani exchange has volatility that is sky high: Last year Bloomberg called it the “world’s worst stock market,” noting that values had halved in 2019.
The chart from www.finance.yahoo.com below shows the performance of the Global X MSCI Pakistan ETF (PAK) that provides investors access to the largest, most liquid companies in Pakistan.
Poor performing markets can bounce back. This ETF that invests entirely in Pakistan equities is up 38.40% in the last six months.
Yet I would limit investments in Pakistan shares.
First there is the political risk. Just three months ago (June 29), four gunmen stormed the Pakistan stock Exchange shooting bullets and grenades. Eight people died.
Attacks on Wall Street or any stock exchange are not unthinkable of course. Even 100 years ago 143 died when Wall Street was bombed. The FBI has broken up recent plots to bomb the exchange as well.
Still Pakistan’s political situation might be a little less stable than many developed countries.
The Pakistan market is also very volatile due to the lack of an active investor base and liquidity in the market.
There is a developed market that has an even better price-to-book at this time.
Take a look at the developed value markets tracked by Keppler and you’ll see that Austria is the best value stock market with a price-to-book of 0.71.
The iShares MSCI Austria ETF seeks to track the investment results of a broad-based index composed of Austrian equities.
About iShares MSCI Austria ETF
The investment seeks to track the investment results of the MSCI Austria IMI 25/50 Index. The fund generally invests at least 90% of its assets in the securities of its underlying index and in depositary receipts representing securities in its underlying index. The index is a free float-adjusted market capitalization-weighted index with a capping methodology applied to issuer weights so that no single issuer exceeds 25% of the underlying index weight, and all issuers with a weight above 5% do not cumulatively exceed 50% of the underlying index weight. The fund is non-diversified.
With the plunge of 37% in late 2019, the Austrian market could offer some extra profit in a recovery.
This would be a speculation. Austria is not a top value market based on Keppler Asset management analyses.
The top value markets are Germany, Hong Kong, Italy, Japan, Norway, Singapore, Spain and the United Kingdom at equal weights.
According to Kepler’s analyses, an equally weighted combination of these markets offers the highest expectation of long-term risk-adjusted performance.
My strategy is based on investing in ETFs that invest in good value markets, based on their price-to-book, P/E ratio and average dividend.
By trusting numbers we can create a plan based on math based, good value economic data, instead of guesswork.
Every type of analysis shows that by keeping costs down and investing in good value equities for the long term, provides maximum safety and profit in stock markets.
Yet Boomers can’t always have a long term perspective.
Thinking long term and keeping costs down are two of the vital components of a calm investing strategy so I have a special offer for Boomers on my birthday.
Enroll in our Purposeful Investing Course (Pi) at any price you feel you can afford
Stock market have always been the best place 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 16 shares and this position has hardly changed in three years. During this time we have been steadily accumulating the same 16 shares and have traded only three times.
This portfolio is built around a strategy that’s taught in my Purposeful Investing Course (Pi). I call these shares my Pifolio.
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.
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. The fact you don’t have to seek out specific shares eliminates the need for hours of research aimed at picking specific shares. 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 from 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 right now in October 2020.
70% is diversified into Keppler’s good value (BUY rated) developed markets: 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, 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 German (symbol EWG) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI German Index which is composed mainly of large cap and small cap German stocks.
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 in our Pifolio.
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.
Enroll in Pi for any amount you choose. You get the 130 page basic training, plus you receive a 120 page 46 stock market value report, and access to all the updates I have sent in the past three 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.
You also begin receiving regular emailed Pifiolio updates, usually 6 to 8 reports a month. 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 have nothing to lose except the fear. You gain the ultimate form of financial security as you reduce risk and increase profit potential.
This year I celebrated my 52nd 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.
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.
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 to plan in a way so you never run out of money. Learn 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.
Pi 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.
In this special birthday offer you can subscribe to the first year of The Personal investing Course (Pi) for any amount you feel you can afford. The annual fee is normally $299, but Boomers can pay whatever they choose for the first year.
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 any amount you choose. This is the last week of this special offer.
Your subscription will be charged the annual renewal fee of $99 a year from now, but you can cancel at any time.