InvestorsFriend Inc. Newsletter
October 9, 2011
First the Bad News...
A World of Fear About Stock
Prices
Fear has been gripping stock
investors all over the world. Investors are told that Greece is almost
certain to default on its debts before too many more months. And a Greek
default could be followed by defaults by several other European countries.
And all of this could cause insolvency in many European banks who may be
owed more money by these weak countries than the banks have in investor
capital. And it is thought that this, in turn, could lead to losses for at
least some of the larger United States Investment banks. And in a worse case
all of this leads to another credit crisis whereby banks refuse to lend to
virtually anyone or any company. Interest rates would soar. (Except if
certain governments like the United States are considered risk free, then
Treasury bond interest rates could plummet even further). A credit crisis
could cause a world-wide recession. Stocks would fall due to lower earnings.
And some fear that the United
states will ultimately print too much money and/or that there will be a loss
of confidence in the United States dollar and we will have hyper-inflation
and interest rates even on United States Treasuries will soar.
Some investors believe that
the world economy has benefited from a huge credit boom for the last 80
years but that this is now OVER and we face credit contraction and declining
economies for decades to come.
Others observe that stocks
have been on a downtrend and believe that this will continue and believe
that there is no point to investing new money or even holding existing
stocks until the downtrend is over.
Still others are convinced
that it was abundant energy that fueled our rising standards of living but
that oil reserves are now declining which will push standards of living
down.
And if those things don't
"get us" then others fear it will be global environmental catastrophe,
world war, pandemic disease or something else that will surely "get
us".
It's hard to get excited
about investing in stocks in the face of such fear.
Now for the Good News:
A World of Stocks On Sale!
Stocks all over the world are
selling at cheaper valuations than they have in many years. Based on Price /
Earnings ratios they are generally cheaper even than they were at the bottom
of the market after the 2008 stock market crash.
While there are always risks,
it is a fact that stocks at least appear to be cheap, on a
price/earnings basis.
No one really knows the
extent to which any of the fears listed above will come to pass or how severe
they will be or how along the ill effects would last.
But if those fears are
largely unfounded then it is going to turn out that right now was a very
good time to own stocks or buy more stocks.
Investing Globally
It's one thing to be told
that you should be investing more globally. But it's quite a different thing
to actually know exactly how to do that.
If you have a brokerage
account that allows you buy individual stocks, then a good way to invest in
other countries is to purchase certain exchange traded funds.
I have provided for you a
list of Global Exchange Traded Funds that
allow you to easily invest in a basket of stocks of companies from (for
example) Japan, China, Brazil or Italy. This article also succinctly
provides the P/E ratios and dividend yields and more, for each ETF. And I
have indicated which country ETFs seem attractive (But I make no guarantees
that these will in fact be good investments in either the short or long
term. No honest person can make such a guarantee).
North American Markets
I have updated several
analysis articles that examine whether or not now is a good time to invest
in stocks in North America.
S&P
500 Index Valuation
Dow
Jones Industrial Average Valuation
Toronto
Stock Market Valuation
Opinion Versus Informed
Unbiased Opinion
Everyone has an opinion on
just about everything. Be it the economy, global warming, the quality of
education, tax levels, the performance of politicians, the price of
gasoline, traffic congestion or what have you. Opinion is everywhere. It
bombards us daily. What is less common is informed opinion. And especially informed
unbiased opinion.
My approach to investing has
always been to try to arrive at informed unbiased opinions. That does not guarantee
a correct opinion that will to lead to investing success. But I am
pretty sure it helps a lot. (My own investing has been quite successful, I
like to think that is because I invested based on my informed opinion - but
it's possible I have simply been quite lucky.)
I try to stay unbiased by
never getting into the game of being paid to promote any investment. I have
never been paid a dime to feature any company on this Site nor have I ever
made a single dime in commission as a result of my subscribers investing in
certain companies. I even try to avoid much if any contact with the
companies rated here. If I were too friendly with any company it would
impact my ability to be critical of the company when needed. Certainly some
biases will remain but I do what I can to be unbiased.
My opinions are almost always
informed by hours of analysis. My approach is generally to obtain key
information (words and numbers - primarily from annual and quarterly
reports), analyze the information and then indicate what I think the data
means. I could be wrong, but at least I am not merely guessing. I try to
avoid sharing any opinion whatsoever on investments that I have not analyzed.
InvestorsFriend.com - a
work in progress
This Web Site,
InvestorsFriend.com went "live" on the internet in June 1999. (It
was called investment-picks.com for the first few years.) I incorporated
InvestorsFriend Inc. in 2002.
It is largely a one-man
effort. I write all of the articles myself and currently do all of the stock
research (I have had some assistance at times in the past)
Today the Web Site has over
500 paying customers of our stock research. There over 10,000 email
addresses on the list for this free investment newsletter. Mostly through
Google searches, the Site receives over 25,000 visits per month and over
half a million page views per year. (Thank you, Google).
There are over 100 articles
on the Site plus about a 100 archived newsletter. I believe the articles in
particular represent a valuable body of investment education.
I plan to continue with this
Site indefinitely. I am gratified by the support from repeat visitors, those
who have made room in their inboxes for this free newsletter and from the
paying customers.
Get Our Stock Picks?
InvestorsFriend inc. offers
internet access to individual stocks picks on a monthly or annual
subscription basis. The type of analysis involved is illustrated by the
following old sample reports.
But
it's not for everyone.
If you don't have a brokerage
account that allows you to buy individual stocks then there would be no
point to paying for these stock picks. (And you would obviously need some
existing money in investment accounts, the minimum is probably around
$25,000 including RRPS and RESP money that you have or wish invested in
stocks). To be clear, I don't take in investment money. Our customers trade
their own stocks.
If you wish to see reports on
tiny Gold mining companies (or really any mining companies or commodity
companies) then this research is not for you. We will never feature
any junior mining companies (junior meaning they are still digging the mine
and have no revenues yet, let alone profit). We will rarely, if ever,
feature any mining companies because that is a specialized field of
investment that we simply don't follow and they are not suitable for the
type of analysis we do. In general commodity companies are not our forte,
although we will sometimes have an oil or natural gas company. (We also have
some ETF information to cover those sectors, but we have been providing that
free of charge, so you don't need our stock picks for that).
If you are convinced that the
way to make money in stocks is based on charts and momentum and has little
or nothing to do with things like the price to earnings ratio, then this
research is simply not for you.
If you don't have the financial
ability to accept some risk of loss or if you cannot tolerate the emotions
of sometimes losing money, then you should not even be investing in stocks.
If you are convinced that a
stock analyst should always be able to prevent you from losing money (even
on a temporary basis) then this research is not for you. (Our customers must
be mature and take responsibility for their own investment results). In
other words, if you require a guarantee as to results, then our stock picks
are not for you.
However if you are a
self-directed investor who is interesting is getting internet access to our
buy / sell ratings on a selected group of stocks then please consider subscribing
to our stock picks. (This link has a small discount on the annual
subscription price).
Our Stock Picks tend to be
mostly larger profitable companies. Most pay dividends. About half trade in
the United States. The other half trade in Toronto. Sectors include
financial, restaurant, real estate development, retail, cable, transportation,
stock exchanges, manufacturing and more. This service is well suited for
people who believe in a fundamental approach to investing. People who think
in terms of of investing in companies as opposed to squiggles on a screen.
People who have long term goals to grow their wealth and who recognize that
the path to building wealth while generally an upward path does have its down hills
at times. People who are comfortable making their own decisions about what
to buy or sell but who are looking for some guidance from a trusted and
rational (but never guaranteed) source. If that describes you, then consider
subscribing today.
For questions, email shawn@investorsfriend.com
END
Shawn Allen, CFA, CMA, MBA,
P.Eng.
President
InvestorsFriend Inc.
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