MintKit Growth Index – Final Report

A Lean Benchmark of the Stock Marketfor Spry Growth at Modest Risk 
 — 

A pool of lively stocks based on equal weighting can beat the top benchmark of the bourse at modest risk over a representative window that covers a full cycle of boom and bust. Moreover, the setup requires a minim of time and effort; to wit, culling a dozen stocks or less in a single session lasting a couple of hours each year.

The lean strategy was tracked by the MintKit Growth Index (MGX). Since the streamlined method applies to portfolios both large and small, it befits a personal account as much as a large vessel such as a mutual fund or a pension fund. In particular, the lithe approach suits a busy investor who can devote only a dollop of time and effort to minding their portfolio.

The case study ran for half a decade starting in 2018. During this stretch, the representative window on the market spanned four years ending in 2021. Over that timespan, the sparky lodestar eclipsed the top benchmark of the bourse; namely, the S&P 500 Index (SPX). More precisely, the MGX gained 18.4% per year on average as opposed to 15.5% for the SPX over the same period.

In short, the study affirmed the merits of a combo of equal weighting, deft selection, and light handling of a lean portfolio. Simply put, a demure but mindful approach to tending spry stocks using equal weights can outpace the SPX. Moreover, the superior performance may be attained at modest risk by devoting only a couple of hours in a single session each year.

 

Note

The full review is titled “MintKit Growth Index – Final Report”. The document may be downloaded in PDF mode at MintKit Gist or Internet Archive.

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Tesla as an Aggressive Growth Fund

   

A Diversified Pool 

of 

High-tech Ventures

 ——— 

Tesla makes waves by building novel products for a sustainable economy starting with electric cars. As a mark of success, the dynamo has single-handedly created a mass market for clean vehicles.

Since its debut in 2003, the pioneer has gradually branched out into adjunct markets and turned into a conglomerate of high-tech ventures. The product lines on hand run the gamut from self-driving cars, solar cells, and potent batteries to insurance plans, neural supercomputers, and humanoid robots.

To be sure, Tesla is a single company from a formal stance. Even so, the wunderkind in practice bears a constellation of startups in motley sectors of the economy. For this reason, a stake in Tesla reflects a diversified portfolio of technologies and applications.

NOTE:  The report is a video titled, “Tesla as an Aggressive Growth Fund”. The briefing is available at Youtube or Vimeo.

Meanwhile, a preview of the report appears as a video clip titled, “Tesla as a High Growth Fund”. The nugget may be viewed at Youtube, Pinterest, or TikTok.

  

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$TSLA  #Investing

MintKit Growth Index – Update 2022

 

A Benchmark for Spry Growth at Modest Risk

The coronavirus plague that ravaged the global economy in 2020 continued to linger in diminished form during the past year. On the upside, though, the real economy as well as the stock market trudged ahead without any major problems. 

After thrashing around during the spring and autumn, the bourse reached all-time highs by the end of 2021. As a result, the flagship benchmark – namely, the S&P 500 Index (SPX) – rose by 26.9% from the previous year. 

When the stock market forges ahead, high-growth stocks tend to outrun their plodding peers. On the glum side, though, high-flying firms in China broke down en masse this year. Among them was Alibaba – a component of the MintKit Growth Index (MGX) – which plunged by 49%. Other washouts in the Index included a couple of mining firms, each of which lost around one-quarter of its value. As a result, the benchmark advanced by just 13.2% during the year.

From a broader stance, however, the MGX still managed to outpace the SPX. To wit, the Growth Index gained 18.4% per year on average since its debut, as opposed to 15.5% for the S&P yardstick over the same stretch.

From a different angle, the MGX upon its launch was set to unity (1); that is, 100 percentage points. Given this baseline, the Index reached 196.6695 points at the end of last year.

Looking downstream, the outlook for 2022 is roughly comparable to the previous year’s. The real economy will continue to recover from the drubbing dealt by the pandemic. In that case, the stock market should tramp higher as well.

As usual, the revised roster for MGX takes a moderately aggressive approach. To wit, the goal for the new year centers on ample growth at modest risk rather than huge potential at great peril.

On a fulfilling note, this will be the fifth and last year of the current experiment that began in 2018. That is, the project to maintain and appraise the MGX will conclude at the end of 2022.

On the other hand, the basic methodology behind the Growth Index will prevail for the foreseeable future. An example involves an expansion of the screening procedure to include option contracts as well as common stocks, or a variation among the weights assigned to the members of the Index. In these and other ways, the studies downrange will break free of a number of artificial fetters imposed on MGX during the current experiment.

NOTE:  The report is a slide presentation under the title of “MintKit Growth Index – Update 2022”. The briefing is available in PDF mode at the Internet Archive.

 

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Why the Price-Earnings Ratio is a Hoax

   

Tesla Spotlights 

the 

Curse and Cure

According to a rampant hoax, the ratio of price to earnings (PE) is the mainstay for gauging a stock for investment. The yardstick is meant to divine the likely direction and extent of the price level downstream.

Unfortunately, the PE ratio can and often does vary hugely from one stock to another whatever their future prospects might be. Moreover, the quotient has a way of swinging wildly over time even for a given equity. As a result, the PE metric is hereby exposed as a treacherous guide to predicting the market. 

According to the party line, a high value of PE implies that the stock is overpriced and will thus crumple before long. In reality, though, the quotient can remain lofty for ages or even climb higher. 

From a different angle, the PE quotient tends to rise with the likely rate of growth in future earnings. For this reason, the PE ratio relative to the growth rate is a much better yardstick for vetting a stock. 

That is, the PE ratio may be divided by the growth rate, G. The latter term denotes the estimate of growth in earnings on an annual basis, expressed as a percentage of the profits actually garnered over the previous 12 months. The resulting quotient is known as the PEG yardstick.

The PEG is far more consistent than the PE throughout the stock market. As a consequence, an extreme level of PEG goes a long way in gauging whether a stock is overpriced, underpriced, or moderate.

Despite this fact of life, the mass of participants – ranging from part-time amateurs to full-time professionals – believe the PE ratio to be the mainstay for valuation. As we noted earlier, though, the PE varies a great deal regardless of future prospects and is therefore pretty much useless for sizing up a stock. Instead, the PEG yardstick provides a better metric by far in gauging the zest for the widget among market participants.

On a positive note, investors in the aggregate seem to grasp the bunkum behind the PE ratio on a subconscious plane even as they affirm its primacy at a conscious level. Here is an example where people say one thing, but do something else.

To round up, investors are impulsive creatures that like to band together. For instance, the plungers pile into the ring in the heat of a bubble and flee en masse in the freeze of a panic. One upshot is a wild ride in the ratio of the current price to past earnings. For this and other reasons, the PE is a lousy guide to valuation. On the bright side, though, the punters are far more consistent when the PE is adjusted by the future growth of earnings. 

Here is a rare instance where the actors as a group do the sensible thing despite their faulty grasp of the marketplace. Whether or not a gamer believes in the fable of the PE, they must act according to the PEG in order to prevail. Otherwise they suffer the consequences and often pay dearly as a result. 

In short, the shrewd investor in order to survive and prosper has to pursue a cogent strategy in practice even if they embrace the myth of the PE from a conceptual slant. In reality, the PEG is a far better gauge for divining the current appeal and future promise of all manner of stocks.

NOTE:  The full report is titled, “Why the Price-Earnings Ratio is a Hoax”. The document in PDF form may be downloaded from the Internet Archive.

#Finance #Tesla #Investing #Stocks #Growth #Hoax #Myths

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MintKit Growth Index – Update 2021

 

A Benchmark for Spry Growth at Modest Risk

 

It has been a rough year for everyone as the coronavirus pandemic roiled the real and financial markets. One nasty blow was the crash of the stock market in the spring. Luckily, though, the bourse rebounded promptly and set a new record by the end of the summer. 

After thrashing around in the autumn, the market again scaled an all-time peak by the end of the year. As a result, the flagship benchmark – namely, the S&P 500 Index – rose by some 16% over the previous year. 

When the stock market forges ahead, high-growth stocks tend to outrun their plodding peers. In keeping with the norm, the MintKit Growth Index (MGX) climbed by nearly 48% over the same timespan.

From a larger stance, the MGX upon its launch was set to unity (1); that is, 100 percentage points. From this baseline, the Index reached 173.6965 points at the end of last year.

Looking downstream, the outlook for 2021 is much brighter compared to the gloom of the past year. For one thing, the real economy will recover in stages from the drubbing caused by the pandemic. In that case, the stock market will continue to climb higher.

From a different slant, the politicians whipped up trillions of dollars out of thin air in a frantic effort to stimulate the economy in the throes of the pandemic. One fallout downrange is a swelling fear of inflation which will drive a growing throng of investors into the arms of precious metals such as gold. In that case, the mining industry will fare better than most of its peers in the near future and for many years to come. 

Against this backdrop, the revised roster for MGX takes a moderately aggressive approach to the stock market. Even so, the goal for the coming year centers on zesty growth with ample stability rather than lusty vigor with stellar potential.

NOTE:  The publication is a slide presentation under the title of “MintKit Growth Index – Update 2021”. The report is available in PDF mode at the Internet Archive. 

 

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MintKit Growth Index – Update 2020

A Benchmark for Spry Growth at Modest Risk

After enduring a crash in late 2018, the stock market scrambled higher over the past year. Despite a few fallbacks along the way, the bourse racked up hefty gains in the end. In particular, the flagship benchmark—namely, the S&P 500 Index (SPX)—rose by 28.9% during 2019.

When the stock market forges ahead, high-growth stocks tend to surpass their plodding peers. In keeping with the norm, the MintKit Growth Index (MGX) climbed by 33.5%.

From a larger stance, the MGX upon its launch was set to unity (1); that is, 100 percentage points. Starting from this baseline, the Index reached 117.6893 points at the end of last year.

Looking downstream, the outlook for 2020 is humdrum compared to the slant over the past year. The main damper lies in the prospect of a recession in the U.S. by 2021. Given the frailty of the economy, the stock market is slated to flail around a lot more than press ahead. In that case, the bourse will at best chalk up a modest return over the year to come.

In this tepid environment, it seems prudent to seek stable growth rather than zippy gains going forward. For this reason, the revised roster for MGX takes a somewhat conservative approach much like the tack taken in 2019. To sum up, the goal for the coming year centers on sturdy growth with ample stability rather than lusty vigor with stellar potential.


NOTE:  The report is a slide presentation under the title of “MintKit Growth Index – Update 2020”. The file is available in PDF form at SlideShare.

 

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MintKit Growth Index – 2019 Update

A Benchmark for Spry Growth at Modest Risk

The stock market thrashed around a great deal in 2018. The initial flap involved an upsurge that began around the end of the previous year. The upthrow soon gave way a smackdown within a few weeks.

Following an upward trudge during the spring and summer, the market lurched lower in the autumn. As a finale, the bourse sustained a jarring crash in December: a rare event for this time of year.

When the stock market flounders, high-growth stocks tend to thrash around more than their plodding peers. Not surprisingly, the MintKit Growth Index (MGX) fared worse than the stock market as a whole.

We may reckon the initial value of the Index upon its launch as unity (1); that is, 100 percentage points. In that case, the newfound level of MGX at the onset of 2019 comes out to 88.1746 points.

Since the Index fell by some 11.8% last year, it fared worse than the SPX which lost 6.2% over the same stretch. That much was to be expected given the heightened sensitivity of high-growth stocks to the movements of the stock market at large.

Looking downstream, the prospects for 2019 are not much better than last year's. In particular, the market is slated to soar and dive a couple of times during the year.

In that case, it seems prudent to favor stable growth rather than zippy gains over the year to come. For this reason, the revised roster for MGX takes a slightly conservative approach by seeking sturdy growth with ample stability rather than sparkling pep with lofty potential.


NOTE:  The report is a slide presentation under the title of “MintKit Growth Index – Update”. The file is available in PDF form at SlideShare.

 

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MintKit Growth Index

A Benchmark of the Stock Market

for

Sprightly Growth at Modest Risk

The ideal of investment lies in a robust strategy for high growth at low risk. Granted, a perfect solution could never emerge in an imperfect world such as ours. Even so, certain approaches toward the objective make more sense than others.

By received wisdom, the leading benchmarks of the stock market are cogent and meaningful portraits of the action on the bourse. Sadly, though, the reality differs greatly from the mirage.

For starters, the renowned indexes track the stocks in the prime of their lives rather than the entirety of their lifespans. In the process, the yardsticks gloss over the fact that death is the way of life for all companies along with their equities. The outcome is a grossly distorted picture of the payoff for the entire throng of shareholders over the long range.

Even in the near term, the traditional benchmarks have little or no bearing on the mass of participants. For instance, many an index monitors a group of stocks according to their market caps.

While this approach may befit a profile of the bourse as a whole over the short run, the unbalanced scheme has scant relevance to the thoughtful investor who is most unlikely to load up their portfolios according to the market caps of the stocks at hand.

For these and other reasons, the traditional benchmarks are unsuitable as beacons for the investing public. Instead, a worthwhile index should address the true concerns of serious investors in areas ranging from pertinent metrics to workable strategies.

An example of a fruitful scheme involves the equal weighting of stocks within a benchmark. The benefits lie in conceptual elegance as well as practical relevance for the participants. Another drawcard is the tendency of uniform weighting to deliver higher returns compared to the labored scheme based on market caps.

In seeking a trusty path, a basic step is to canvass the timeworn benchmarks in multiplex areas ranging from conceptual soundness and logical rigor to common sense and pragmatic import. The wholesome assay then leads to guidelines for designing trenchant beacons suited to investors in tending their private portfolios. The enhanced framework is showcased by the MintKit Growth Index: a model benchmark geared toward promising stocks poised for zesty growth at modest risk.


NOTE: The briefing is titled, “MintKit Growth Index”. The slide presentation may be viewed as a document in PDF form or a video in MP4 mode.


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Trillion Dollar Agenda for Global Growth through Social Capital

For the economy to grow, the actors in the marketplace need to expand the overall output rather than jostle each other for bigger shares of the available output. To this end, the productivity level may be boosted through a comprehensive program of social capital.

Based on the experience of the 20th century, the rich countries of the world could afford to commit US$1 trillion per year for a couple of decades. According to a compelling scenario, the total investment of $20 trillion in nominal terms will comprise $13.6 trillion in current dollars since the funds will be disbursed over time rather than spent at once.

Using conservative estimates, the present value of the benefits will exceed $3.39 quadrillion which represents a payback of 249 times the original investment. In this way, the windfall from a global program of social capital should far surpass the outlay required for its implementation.


NOTE. The full report is available under the following title: “On the Economic Returns from a Global Program of Social Capital”. The document, available in PDF form, may be downloaded from the Library at MintKit.


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Myths Behind Misguided Policies on Social and Economic Fronts

 

In a complex and chaotic world, people often gloss over the facts and jump to conclusions. Unfortunately, the hasty approach usually yields deficient and even harmful results. The domains affected range from migration and poverty to alienation and crime.

According to the Myth of Boon, for instance, immigrants always benefit the host society. In this light, many people envisage the great migrations of the 19th century from Europe to America. However, the United States at that stage was itself a developing country; moreover the Civil War showed that clashing cultures cannot co-exist.

Meanwhile the Myth of Multiculturalism asserts that a mashup of mores is always desirable; but the reality is otherwise. When immigrants in their millions pour into sparsely populated districts, they end up replicating the cultures that caused them to flee their homelands in the first place. The upshot is disruptive and distressing for all parties be they newcomers or incumbents.

In addition, the Myth of Virtue declares that migrants of all backgrounds are equally upright. Yet comprehensive studies in Sweden have shown that violent crimes can be traced to immigrants at rates which are at least four times those for natives. From another angle, a drove of migrants is a godsend for criminals. For instance, a terrorist ring struck in France in 2015 and again in Belgium the following year. The perpetrators – who grew up in Belgium, France and Sweden – displayed immigrant backgrounds and included part of the cohort that traveled to the Mideast to receive training from militants then returned to Europe by posing as refugees.

Since socioeconomic problems are intertwined rather than independent, a piecemeal approach will not fill the bill. Instead, a coherent grasp of the issues and their tie-ups is a prerequisite for devising a wholesome solution.


NOTE: The full report is a document in PDF form under the title of “Complex Factors Behind Misguided Policies in Socioeconomics”. The updated version may be viewed or downloaded here.

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Relative Sizes of Economies After Global Growth: 2010-2060

Despite a slowdown in economic growth, China will soon displace the U.S. as the world leader. By 2030 the Middle Kingdom will generate a tad over ¼ of global production.

In 2060 China will retain its lead with India close behind. The rich nations will fall back in relative terms while the other poor countries will hold their ground. On the upside, though, every region of the planet will burgeon in terms of absolute levels of wealth and income.

Note: A crisp (high definition) version of this poster is available in PNG format at the Internet Archive.

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Toolkits and Tollgates for High Growth Markets

 

Sidekicks Trump Primos

During a Gold Rush

in Concrete or Virtual Fields

In the throes of a gold rush, the best strategy for growth – whether in terms of business or investment – is to cater to the swashbucklers on the front lines by way of toolkits and tollgates rather than lead the charge into the unknown. By plying the wildcats in the field with the essentials they need, the sidekicks at the rear can extract a huge share of the bounty reaped in the budding terrain.

On one hand, the heap of opportunities in a flowering market has a way of luring myriads of eager beavers. On the other hand, the mass of firebrands rushing into the wilderness are for the most part destined to flail and flub then flop and fail. The dire fate of the hotheads is a natural consequence of the brutal competition in a scramble open to all comers regardless of germane experience, special savvy, or inborn talent.

By contrast, the context differs entirely for the canny supplier of armaments to the jousters in the field. The armorer can earn a juicy profit by providing the kit required by the combatants bent on bashing each other in their frantic quest for lucre. The advantage of the aide applies to the panoply of domains ranging from mining to farming in the primary sector; from carving to brewing in the secondary branch; from shipping to banking in the tertiary patch.

To spotlight the key concepts, we examine a case study in depth along with a medley of vignettes in brief. The first cameo involves a literal example of a gold rush. A bounteous lode in California gave rise to a stampede of migrants on a global scale for the first time in the annals of history.

More recently, a gold rush of a different kind arose with the upgrowth of digital technology. As usual in a free-for-all, however, the hustlers on the front lines had a rough time trying to hit the jackpot or even make ends meet.

By comparison, the vendors of tools and services had a field day. Thanks to the toll positions they staked out, the sidekicks as a group flourished as the markets bloomed. As a result, the adjuncts in the wings managed to outshine the primos at center stage in the realms of hardware as well as software.

Granted, the go-getters plunging headlong into a lush tract have a way of attracting the bulk of the attention and hoopla along with the financing and glory. On the downside, though, the crunch of competition in a riotous field has a way of quashing most if not all of the dashers on the front lines. As a result the mass of entrants end up losing their shirts, and likewise for the patrons who back the upstarts.

In contrast, a sprouting field has plenty to offer the crafty players working behind the scenes. For this reason, the entrepreneur as well as the investor ought to pay close attention to toolkits and tollgates as a way to ensure sound growth in a booming market.


NOTE: The full report is a document in PDF form under the title of “Toolkits and Tollgates for High Growth Markets”. The briefing may be viewed or downloaded here.

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Skyscrapers Predict Real and Financial Markets

 

A Spurt of Gross High-Rises

Marks an Asset Bubble 

and Portends a Market Crash

A breakout of soaring skyscrapers can presage a crash of the stock market and a recession in the real economy. That is, a bubble in real estate by way of oversize buildings heralds the end of a boom and the onset of a bust. In this way, a rash of record-busting construction serves as a portent of doom during the long-lived cycles in the property market as well as the financial forum.

In the modern era, real estate and financial assets form the bulk of wealth for the population at large. For this and other reasons, the tangible and virtual markets are closely intertwined. In the larger scheme of things, the fortunes of both types of assets depend on the health of the economy at large. In that case, it makes sense for the real and financial markets to display a heap of correlation and even a glob of causality with each other.

In their own way, skyscrapers can serve as beacons for investment planning by spotlighting bouts of excess in the property sector as well as other domains such as the stock market. All too often, an upcast of buildings that set fresh records for height is a glaring sign of froth in the real economy and the financial system. For this reason, the sober investor should pay heed to high-rise projects that make little or no sense from a pragmatic stance. To wit, a spate of record-breaking buildings is a cue for the canny player to rejigger their portfolio and prepare for a blowout in the real and financial markets.


NOTE: The full report is a document in PDF form under the title of “Skyscrapers Predict Real and Financial Markets”. The briefing may be viewed or downloaded here.

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Top Index Funds Based on IPO Stocks – FPX and CSD

Initial Public Offering

 as the Lifeblood of 

 Zesty Funds

The vitality of an initial public offering (IPO) is a compelling approach to growth for an exchange traded fund (ETF). As a rule, a newborn listing in the stock market has a way of outpacing the market averages, especially during the first year of its debut on the bourse. In the combined approach, the robustness and longevity of an ETF can be fortified by the vigor and potential of an IPO.

In the popular image, an IPO refers to the sale of equity to the general public upon the initial launch of a bantam venture on a stock exchange. In the financial community, however, the terminology is also used to denote any type of fresh listing on the bourse.

An example of the latter is a stricken firm whose equity was delisted in the throes of bankruptcy proceedings. If an overhaul of the struggling firm turns out to be successful, then the return of the outfit to the equity market is regarded as the IPO of a reborn stock.

From a different angle, an exchange traded fund is a handy way to participate in diverse markets ranging from equities and bonds to commodities and currencies. In terms of scope, an ETF may cover a broad swath such as a whole industry or even the entire economy. An example of the latter is an index fund based on the flagship benchmark of the stock market; namely, the Standard & Poor’s index of 500 giants on the bourse.

From the converse stance, a communal pool could focus on a compact niche. Examples in this vein range from computer hardware and real estate to precious metals and foreign currencies.

Whatever the choice of market, though, an initial public offering can perk up the return on a portfolio. Since the autumn of the 20th century, a raft of studies have shown that an IPO is apt to outpace the bourse as a whole during the couple of years of its debut.

On the downside, though, the basic equities of operating companies are in general inapt as the primary vehicles for investment by the mass of participants in the stock market. The reason lies in the endless hail of sideswipes and smashups in every industry ranging from mining and shipping to software and banking. The bugbear stems from a fact of life which is ignored by the simplistic models of orthodox finance. In the real world, companies of all stripes break down and go bust all of a sudden, or fade out and die off in slow motion.

By contrast, an index fund is much more likely to lead a long and productive life. The longevity of the vehicle springs from the continual process of renewal as the aging champs within the underlying index are replaced by rising stars in the marketplace. Given this background, the best course of action for the mass of investors is to funnel most or all of their savings into communal pools based on market benchmarks.

On the downside, though, a market index is wont to track the established firms within its field of interest. For this reason, the corresponding pool will contain little or nothing in the way of fledgling ventures.

As we noted earlier, newborn stocks tend to outpace their older peers; and likewise outrun the bourse as a whole. In that case, the canny investor can ratchet up the return on investment by fleshing out a primary position in an ETF in any domain with a secondary stake in one or more budding stocks within the same niche.

An alternative ploy is invest in an index fund that consists entirely of new-sprung stocks. A pioneer on this front lies in a tracking vehicle called the First Trust US IPO Index Fund; the ETF trades under the ticker symbol of FPX. Another spearhead is found in the Guggenheim Spin-Off Fund, which goes by the call sign of CSD.

To place the performance of the vanguards in context, the index funds can be matched against a couple of renowned benchmarks of the stock market. In the larger scheme of things, the Standard & Poor’s index of 500 heavyweights stands out as the leading proxy for the bourse as a whole. Meanwhile the S&P 400 Midcap Index is arguably the standard bearer within the vale of midsize stocks.

Each of the foregoing yardsticks has spawned an index fund of its own. The offsprings carry the ticker symbols of SPY and MDY respectively.

During a window of evaluation stretching from 2006 to 2013, the index funds based on infant stocks – namely, FPX and CSD – beat the prime benchmarks of the stock market by a hefty margin. For instance, CSD trumped MDY by a solid lead despite a modicum of turbulence along the way. Moreover, the overall gain for the live wire was more than twice the payoff of 37% for SPY.

The story was similar for FPX only better. On a negative note, the dynamo was a tad more volatile than SPY as well as MDY. On the upside, though, the cumulative gain for FPX over the entire stretch was about 29% higher than the copious bounty bagged by CSD.


NOTE:  The full briefing is a document in PDF form. The report, listed under the title of “IPO as a Growth Mode for an Exchange Traded Fund”, may be downloaded here.

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Smallcap ETF Review – Top 3 Index Funds for Healthcare, Energy and Growth Stocks

 

 Index Fund Performance 

 for 

 PSCH, PSCE and IJT 

Given the drawcards of an exchange traded fund, a smallcap ETF review for the stock market lays the groundwork for investing with finesse in bantam firms. To this end, the first order of business is to select a suitable timespan for sizing up the candidates.

On one hand, a lengthy window of observation provides a heap of data for a thorough analysis of performance. On the other hand, the broad-based approach has its drawbacks as well. One stumper springs from the dynamism within the financial forum. Due to the explosive growth of index funds in the millennium, a prolonged timespan has the side effect of casting aside numerous entrants that have stepped into the arena only in the recent past.

For this reason, the wily investor has to strike a balance between the conflicting factors in order to pick an apt window of evaluation. In striking a compromise, a time frame of three years seems like a fitting choice in most cases.

From a different stance, the financial crisis of 2008 was a watershed in the global economy. In recognition of the landmark, a duration of five years ending in spring 2013 has the advantage of spanning the epic fiasco and its aftermath. For this reason, the longer window of half a decade can provide a host of pointers on the true nature of motley markets.

In addition to grokking the price action in the arena, the deft investor takes into account a number of additional factors relating to the short run as well as the long range. A case in point is a minimal level of liquidity needed for the artful player to enter and exit a given market in a timely fashion.

A second hallmark of the savvy investor is an aversion for levered vehicles. The reason lies in the constant threat of sudden death and/or gradual demise that besets any type of rickety scheme based on high gearing. Due to the specter of certain doom, only a heedless speculator lusts after shaky contraptions pumped up by the gimmicks of leverage. In other words, the sober investor relies only on sturdy rigs that move with the target market in a direct and forthright way.

In sifting through a database of index funds focused on smallish firms, a straightforward approach is to begin with a muster of the front-runners in the field. Then the other factors such as liquidity and risk can be brought to bear on the appraisal.

In line with this thrust, our search begins with a tally of raw performance over the course of three years ending in spring 2013. The resulting list of candidates is then whittled down by the duo of secondary screens. As we noted above, the first filter deals with the liquidity of the asset in the marketplace. Meanwhile the second criterion concerns the directness of the setup; that is, the absence of leverage.

Based on this routine, the top 3 index funds turned out to be PSCH, PSCE and IJT. These pools focus respectively on the healthcare sector, energy market, and growth stocks.

Within the ranks of acceptable funds based on bantam stocks, PSCH turned out to be the clear winner. The return on investment for the spearhead displayed a series of higher peaks as well as rising troughs over the span of three years following its debut in the stock market in spring 2010.

Of the pair of runners-up, the average payoff for PSCE was comparable to the turnout for IJT. On the other hand, the latter vehicle was a lot less volatile compared to the former. For this reason, IJT was the better choice for the genuine investor.

To place the performance of the high flyers in context, the eagles were compared against a couple of renowned benchmarks of the bourse. Looking at the big picture, the Standard & Poor’s index of 500 giants stands out as a popular proxy for the stock market as a whole. Meanwhile the Russell 2000 Index is arguably the leading beacon within the vale of bantam stocks.

Each of the foregoing yardsticks has spawned an index fund of its own. The offshoot vehicles carry the ticker symbols of SPY and IWM respectively. On the bright side, the trio of winning funds for smallcap stocks – namely, PSCH, PSCE and IJT – trounced the standard benchmarks of the bourse by a comfortable margin.


 NOTE: The full briefing is a document in PDF form. The publication, titled “Smallcap ETF Review for Investing in Top Markets”, may be viewed or downloaded here.

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Gold ETF Forecast for the Springtime of the 21st Century

 

Cycles of Boom and Bust

for the Commodity and

Top Exchange Traded Funds

A forecast of the top exchange traded fund (ETF) for the gold market sets the stage for an orderly approach to investing in precious metals. In drumming up an agenda, the main vehicles for investment fall into two broad classes: the commodity itself versus the producers within the mining industry. Naturally, each mode of transport comes with its own combo of strengths and drawbacks.

In order to sketch out the prospects downstream, the deft investor looks first in the opposite direction. On one hand, the conditions of the past will never be fully duplicated in the future. Even so, the crucial features of the market are sure to crop up again and again as time goes by.

As in other parts of the economy at large, a watershed in the gold market popped up with the financial crisis of 2008 along with the Great Recession. The severe conditions of the debacle, followed by the fitful recovery of the markets in its aftermath, laid bare the raw fibers of the financial forum and the real economy.

Looking to the future, the demand for gold is slated to burgeon until at least the second half of the 21st century. The lusty trend is the prime mover behind the yellow metal over the long haul. On the other hand, the market is sure to be battered along the way by an endless hail of upthrows and downcasts.

From a larger stance, the buildup of the global economy fuels a groundswell of demand for gold. The uplift is of course a godsend for the producers of the commodity. If prices are rising, then profits should increase for the industry as a whole over the short term as well as the medium range. Over the long run, however, the inrush of newcomers in a budding field – along with the rigors of competition – can lead to the squelch of earnings for the entire cast both old and new. The cruddy outcome is an example of the distinction between the fortunes of the commodity and its producers.

These and other factors play a vital role in sizing up the prospects for the gold market. As a first step in sorting out the muddle, a primal task is to examine the behavior of the marketplace during the tumultuous period that straddled the financial crisis and its aftermath. A second thrust lies in the difference between the movements of the raw commodity versus the antics of the mining stocks. A third function is to map out the key features of the gold market over the years and decades to come.

Since the turn of the millennium, the golden metal has enjoyed a prolonged upswell in spite of the occasional setback. A case in point was the ascent that started in early 2010 and lasted until it faltered in the latter part of the following year. 

For the bulk of investors, the main vehicle for tracking the commodity lies in an exchange traded fund sporting the ticker symbol of GLD. Looking downrange, the next milestone for the index fund stands at its previous peak of some $185 per ounce. As things stand, the latter landmark will be reached in 2013. This objective lies $35 above the current support at the $150 level. In fractional terms, the increase amounts to a gain of some 23% in short order.

After regaining its previous summit, GLD will take a breather before pushing ahead once more. On current trends, the vehicle should reach a sizable barrier at the $185 mark by the following winter. 

Shortly afterward, the commodity itself will touch a price of $2,000 per ounce in the commercial market. The big round number will then kindle a gale of excitement from the mass media and the investing public.

To add to the bluster, a ragtag conga of talking heads will sashay out of the woodwork. The self-proclaimed swamis will declare that the prospects for the metal are not only bounteous but simply boundless.

The outburst of hype will drive the metal higher in the futures market that serves as the touchstone for commercial transactions in gold bullion. In that case, the tracking fund in the stock market will of course follow suit. In the dash to the upside, the next hurdle for the ETF is a price level of $195 per share.

After hitting that target, the stock will fall back toward the $185 zone. Shortly afterward, the ETF should regain its vigor and zoom past $195 within a matter of months.

The next milepost is a hefty barrier at the $220 level. The latter objective lies another $35 past the first milestone at $185. In relative terms, the advance comes out to a hike of a tad under 19%.

After reaching that outpost, GLD will stagger back toward the previous hurdle at $195. Before long, though, the rig will muster enough energy to push ahead once more. All that will take us through 2014 and into the middle of this decade.

By contrast to the raw commodity, the turnout for the mining firms depends more on the hoopla amongst the punters on the bourse than the outlook for either the yellow metal or the stock market at large. When GLD pushes past its prior peak, however, the investing public will once again chase after mining stocks.

In due course, the value of the metal in the commercial market will break through the psychic barrier at $2,000 per ounce. The resulting spate of breathless reports from the mass media will then rouse the general public into a frenzy.

Soon thereafter, the index funds for the mining firms will pare back their losses to date and shoot past their previous peaks. The surge of the mining stocks will draw in a deluge of cash from all quarters, including myriads of plungers who had never before heard about GLD, let alone the index funds for the mining firms.

And so a bubble will duly form as the madding crowd rushes into the arena for a piece of the action. At this stage, however, the savvy players in the ring will begin a gradual process of withdrawal from the futures market for gold bullion as well the index funds for the mining firms.

As the bonfire in the bazaar begins to sputter, a growing cohort of antsy players will wonder whether the uptrend in gold has run its course. And soon enough, the specter of a smashup will turn into a reality.

The ensuing crash of the market will of course deal a body blow to the mass of latecomers to the game. The first big punchout is likely to occur around 2015 or so.

Even so, the fiasco will not mark the end of the boom in gold by a long shot. After wallowing in a funk for a couple of years, the commodity will be ready to stage a bigger comeback.

As the market tramps upward and pushes past one milepost after another, millions of newcomers will jump on the bandwagon. In a fit of delirium, the gamesters in the ring will drive the metal to batty levels rivaled only by the lunacy of the Internet fever during the 1990s.

Swept aloft by the uproar, the sizzling metal will not only reach fat round numbers like $5,000 per ounce but zip right past them. There’s a good chance that figures of this magnitude will spring up by the second half of the 2010s.

Moreover the beefy prices will comprise mere waystations on a multistage journey to the $10,000 level. The latter target is likely to be reached around the 2020s.

By contrast to the raw commodity, the index funds for the mining firms depend largely on the mood of the investing public rather than the action in the commercial market. In the throes of a feeding frenzy, the equities of the major producers could vault by tenfold or more within a matter of years. Meanwhile the index fund for junior miners is apt to explode in excess of a hundredfold beyond its initial peak. 

Such is the wild ride that awaits investors of all stripes in the arena. In these ways, the antics of the gold market in the decades ahead will eclipse the tidal waves of boom and bust in all previous eras.


Read more on Gold ETF Forecast for the Springtime of the 21st Century.

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How to Invest in Gold ETFs

 

Top Exchange Traded Funds

for the

Commodity and Its Producers

 

 

A handy way to invest in gold is to take up communal vehicles known as exchange traded funds (ETFs). The mission of the funds is to track the market for gold via direct or indirect means. In the upfront approach, a communal pool holds a stockpile of gold bullion. For the oblique mode, the custom is to hold the stocks of companies engaged in the mining industry by way of exploration, extraction or other functions.

This article examines the top 3 exchange traded funds for the gold market. The first pool takes the direct approach by amassing a trove of the raw commodity. Meanwhile the other two vehicles rely on the indirect tack by holding stakes in the equities of the leading firms in the field.

 

Read more on How to Invest in Gold ETFs.

 

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Charade of the Debt Crisis

From Buffoonery to Tragedy

in the

Debt Folly and Euro Farce

A rampant blunder in real and financial markets involves a mix-up between the destination and the journey. A showcase cropped up with the financial crisis of 2008 and its aftermath. During the debacle, frantic politicians wasted mounds of public funds even as they chose to cripple the financial forum and the real economy. From a larger stance, a solid grasp of means and ends is the first step toward thrashing out a cogent agenda in any domain.



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In complex fields such as finance and economics, a common bungle involves a mix-up between the destination and the journey. The confusion is showcased by the hoopla during the financial crisis of 2008 in tandem with the debt crisis in Europe.

Among the raft of muck-ups, one sample was the batty policy of the politicos for propping up the market for sovereign bonds in Southern Europe. According to the rhetoric of the ringleaders, an official default by Greece or any other country in the vicinity would shatter the common currency in Europe, then clobber the regional economy as well as the entire planet.

No doubt some of the actors in the public sector were taken in by the sham arguments. If so, the goof-up stemmed from a patchy grasp of financial and economic issues. An example of this sort lay in the proper role of the banking industry in the economy at large. Another instance involved the true purpose and import of a currency union across neighboring countries.

Amid the din and smog, the politicos plundered the public treasury in order to prop up the bludgeoned securities. Sadly, the inept move was a whopping waste of the taxpayer’s money. Worse yet, the boondoggles hampered the real and financial markets, thus ensuring that the entire population would lose trillions of dollars worth of income foregone due to a crippled economy.

In any field of human enterprise, a solid grasp of means and ends is the first step toward fixing up a worthwhile solution while cutting down waste and beefing up productivity. The next step is to thrash out a trenchant plan that exploits the opportunities and avoids the pitfalls in the arena. The third task is to put the resulting plan into action with gumption and dispatch.


Note: This report is available from major distributors and retailers of electronic books. A notable example lies in Amazon or Smashwords.

The title is offered in a variety of formats ranging from PDF and HTML to EPUB and MOBI. Further information on the publication can be obtained by clicking on the image above.


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How to Grow and Prosper

 

Basic Laws of Personal Productivity,

Competitive Strategy and Public Policy

A universal set of guidelines can serve as the groundwork for progress and prosperity in any domain. For this purpose, the basic laws of growth deal with the selection of hearty goals along with their pursuit with rigor and dispatch.

The principles apply to the panoply of human enterprise, ranging from personal affairs and corporate strategies to government policies and international programs.


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Growth and prosperity are hallmarks of the modern culture. The folks bent on forging ahead run the gamut from the workman and entrepreneur to the executive and politician.

For all the yearnings of progress, however, it’s hard to find anyone who goes about the business of advancement in a coherent way. Instead, the usual shtick suffers from a welter of lapses and missteps that trip up the decision maker. As a result, the mass of effort brought to bear on the task is haphazard and disjointed, or even worthless and downright counterproductive.

On the bright side, though, a universal set of maxims can serve as the foundation for a lucid course of action in any domain. In this light, the Code of Growth is applicable to the panoply of human endeavor, ranging from personal affairs and corporate campaigns to economic policies and multinational programs. From a different angle, the functions in hand run the gamut from creative work and vaulting innovation to financial regulation and international trade.

In a nutshell, the purpose of this primer is to explain how the basic laws of growth can be applied to the totality of innovation and enterprise in a world of constrained resources. The general guidelines are relevant to progressive projects in any domain, ranging from personal advancement and corporate strategy to public policy and global growth.


Note: This report is available from major distributors and retailers of electronic books. A notable example lies in Smashwords or Amazon.

The ebook is offered in a variety of formats ranging from PDF and HTML to EPUB and MOBI. For instance, clicking the image above will bring up detailed information on the version for Amazon Kindle.


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Top 10 ETF List for Growth – Performance, Risk and Cost

In order to pick out a promising exchange traded fund (ETF) in an orderly way, the first task of the investor is to compile a list of the top performers. For this purpose, the crucial factors include the pace of capital gains, the level of price volatility, and the burden of maintenance charges.

In certain cases, additional features may come to the fore. A case in point is the yield due to the dividends thrown off by the ETF.

For the most part, the traits noted above are interlinked rather than independent. As an example, an exchange traded fund on a growth streak is apt to be more volatile than a sluggish one which plods along at a modest pace. Another sample is the cost structure; whatever the performance in the past, an index fund with a heavy load is more likely than not in the future to lag behind its rivals with leaner structures.

In tackling these issues, a sensible step is to begin with a muster of the top 10 funds by way of growth. Then the other factors such as risk and cost can be brought to bear on the evaluation.

Read more on Top 10 ETF List for Growth – Performance, Risk and Cost.

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