Newsletter October 9, 2011
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.
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.
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 firstname.lastname@example.org
Shawn Allen, CFA, CMA, MBA, P.Eng.
To see older editions of this newsletter, or to get off of this email list , click here.