How Good Investors See The Big Picture

Good value investors rely on financial not economic news and see the big picture.

Good value investors rely on financial not economic news and see the big picture. The big picture shows that we are not at the end of a 7 year bull market, but near the end of a 17 year sideways bear. The big picture supports a rising market after one more (perhaps severe) correction. Dow 1900-2014This is backed by a major financial study by Keppler Asset Management, one of the Good Value analysts we track. Since 1994 Keppler has been tracking financial news of nearly seven thousands shares in almost all developed and emerging stock markets. Based on this mathematical information he projects how much a equally weighted world market will rise or fall over the next four years. The chart shows how accurate his projections have been. The blue line shows his median projection, the grey are his high and low projections. The red line represents what has actually happened. Screen Shot 2016-01-13 at 2.33.11 PM Keppler’s last median projections in 2015 were that world markets will rise 10.7% compound annual for the next four years. His high projection is a 15.8% copind rate and his low a 4.7% compound rate. These projections are for all global shares. A good value portfolio should do much better. Keppler’s valuations show that the equally weighted World Index is selling for 1.52 times to book value. Keppler’s good value portfolio sells for only 1.26 times book value. Screen Shot 2016-01-11 at 6.16.36 AM In addition all the good value markets are non US dollar markets and the US dollar has risen to a distorted high. How Recessions Affect the Dollar The chart below clarifies how serious recessions affect the dollar for 5 or 6 years after. The chart shows the loss of value of the US dollar versus other major currencies. Anyone who invested outside the dollar for the 38 long term, gained incredible forex profits. Screen Shot 2016-01-11 at 5.53.31 AM Yet in 1981 to 1987 non dollar investments did not look so smart as there would be no forex profit. The 1982 recession was similar to the 2009 recession and the US dollar rose strongly due to fear but not for any fundamental reason. From 1981 to 1985 an investment against the US dollar looked really stupid as the dollar rose 50% against major currencies. Then finally the financial news set in and from 1985 to 1987 the the US dollar fell 50% in just two years. We have seen almost identical conditions since the 2009 recession. The Euro versus the US dollar has fallen over 30% from 1.61 dollars per Euro to $1.09 dollars per Euro. Screen Shot 2016-01-11 at 6.08.12 AM I am personally investing in nine good value developed markets mention in Keppler’s analysis. Six of these are European markets. The chart above shows how the portfolio we hold (and track in our Pi course) has a price to book value of 1.26 compared to the US market’s value of 2.61. This means that at a fundamental level we are getting our investments for half the price of US shares. Yet this portfolio is down in US dollar terms. This drop is in part due to market jitters and in part due to the overpricing of the US dollar. I believe that this creates great opportunity and though our portfolio is down right now, I am expanding my position.

Unpredictable Markets

Markets are ruled short term by emotions which are unpredictable, but long term markets move based on economic fundamentals which are predictable. The key to profit is to know how to find, invest (at a low cost) and believe in the value of these fundamentals and then wait for the real non emotional economics to bring the profit. The chart below from Keppler Asset Management shows that if one waits for 60 months the chances are that an equally weighted, diversified value based portfolio has an 85% chance of outperforming a world index of shares. Screen Shot 2016-01-11 at 6.24.18 AM This is not a get rich quick strategy. This is a strategy of buying good value and letting time work through the short term emotion based activity so the fundamental value emerges. Purposeful Investing We have created a course, The Purposeful investing Course (Pi) aimed at reducing risk, increasing profit and adding meaning into the investing process.

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The base analysis of the Pi course begins with Keppler Asset Management's analysis and comparison of almost every stock market in the world. Each share is compared by 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 each share is compared and compiled to create an understanding of each major stock market’s value in relation to its historic value.

From this research, Keppler develops a Good Value Stock Market Country Selection Strategies. This analysis is rational, mathematical and does not worry about short term ups and downs.

In my opinion, Keppler is one of the best market statisticians in the world. Numerous very large fund managers use his analysis to manage funds such as State Street Global Advisers.

Pi studies numerous ways to use this value strategy to create a portfolio using equally weighted, diversified value based portfolios of country ETFs. The course focuses on the two investing tactics I personally use to invest in these ETFs.

Tactic #1 is investing through Motif. Motif is a unique online broker that appears to offer the lowest cost way of investing in the Pifolio. Motif Investing is an online broker that has pioneered thematic investing via “motifs” for low fees. Motif Investing is a registered broker dealer and a member of SIPC. Motif was recently ranked number one on Fast Company’s list of Most Innovative Companies in Personal Finance and has been recognized for two consecutive years on the CNBC Disrupter 50 list.

The company’s investors include Goldman Sachs, JPMorgan Chase, and Renren Inc. Board members include former Securities Exchange Commission Chairman, Arthur Levitt, and former Boston Consulting Group Chairman, Carl Stern. Motif lets you create your own portfolio of up to 30 shares and invest in all the shares in the portfolio for one low fee of $9.95.

Tactic #2 is United Southern Bank. The other approach I use is this community bank in Smalltown USA. United Southern Bank (USB) began in 1937 and today has eleven offices in the Lake County area.

The bank believes in strong customer relationships. The bank’s officers live here, some of them all their lives, and they know their customers and their businesses. I prefer doing business with a bank that is locally owned and managed and realizes that they are invested in their customer’s success as much as their own.

There is another reason why I like UBS. They know what I am doing and help me learn. I wanted to see how Motif purchase prices might compare with the pricing I received at USB. Working with the head of the trust department, Ken Carpenter, I created two accounts, one at Motif and the other at USB. I placed $40,000 in each. I set up the order for the 17 country ETFs online, while Ken set up orders for the identical amounts of the same shares in his system. Then we got on the phone, coordinated our timing and on a count of three each pushed the button “BUY”. The results showed that we were buying at pretty much the same low costs in each tactic.

Model Portfolio

Lessons from Pi are based on the creation and management of this Primary Pi Model Portfolio. Here is the portfolio. This is an image of Merri’s and my personal portfolio at Motif.

Screen Shot 2016-01-11 at 6.50.07 AM

The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets that I have slightly modified using my (almost) 50 years of global experience and my study of the analysis of Michael Keppler.

We then study modifications of the Pifolio based on the logical mathematical analysis of other math oriented value economic analysts plus how to use tactics involving trailing stops and moving averages to better understand the market. Our goal is to help each Pi subscriber understand how to find and easily invest in good value equities at a low cost.

I cannot guarantee that our research and thinking will bring quick profits. I cannot even guarantee any profits at all. Our entire strategy is based on the absolute principle that there is always something that we do not know. But I can guarantee that what you learn from Pi is based on logic and our 50 years experience, plus some great mathematical intelligence I have come across in these years. Plus I can guarantee that what we share is what I really believe in because the way I research is to have my own money invested in this Pifolio.

Right now we have a special offer so when you subscribe to Pi you also receive access to our online Value Investing Seminar. We have put the seminar online so you can attend our seminar any time convenient to you, in 10 to 20 minute video sessions.

The end of the 17 year sideways bear market creates the greatest opportunity we have seen in 30 years. I hope you will join me in taking advantage of big picture value investing by subscribing to the Purposeful investing Course. 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 $102 off the subscription.  Plus you receive my $29.95 report “Three Currency Patterns For 50% Profits or More” and my recent $27 report “The Silver Dip” free for a total savings of $158.95.

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#1: 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 purposeful investing. If you are not totally happy, simply let me know.

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#3: I guarantee you can keep the golden rules of investing and “Three Currency Patterns For 50% Profits or More” and “The Silver Dip 2015” report as my thanks for trying. You have nothing to lose except the fear.  You have the ultimate form of financial security to gain. Save $158.95.

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