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Minding your own percents
 

Minding your own percents

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    Minding your own percents Minding your own percents Document Transcript

    • “Page 1 of 6 May 2013 © Copyright StockTakers Limited, All Rights Reserved. Copying Prohibited.The author does not provide investment advice. In order to use reproduce or convey the material herein,in any way, written agreement must be obtained from the author or its agent Architypes Inc.StockTakers Limited is an Alberta corporation providing information on “likeables” equities.StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.Alice, meet Dr. Dodgson! Minding Your Own Percents.Alice, the old adage remains, “You have to make your own bacon.”As asmall investor if you expect financial industry profits for their using yoursavings, your wealth will not be flying but wormed. In reality ‘financialproducts’ they sell do not work for you. Fees plus inflation they neverovercome. Your wealth will be eroded. They take those fees but down theirrabbit hole your cash goes. They have delusions not maps or compass.You must obtain a real return higher than inflation which in our present 42year productive adult lifetimes has averaged 4.42%, plus their average feeof 2% plus MERs (Management Expense Ratios) of 2% charged on top ofthat 4.42% inflation rate. They need to obtain 8.62% every year to maintainthe value of your money entrusted them. That they have never done.Minding your own percents? Yeah, that we have proven works. From 2000 through 2012 average26.53% obtained on the DOWs by our logically correct and mathematically proven theory andmethods have scientifically proven consequences of knowing equities Risk Price in any market.Our ABCs, Tax Charities, and BookBuilderTMportfolios all help the small investor up. These withthe Newbies of Q4 and Q1 seven portfolios are testable consequents of Risk Price partitioned"Likeables exposed in realtime. Each of these portfolios is an arbitrary filtered portion of theNYSE and TSX, a random sampling. The ABCs are in particular relevant as it extends rightthrough a sagging and rebounding TSX and NYSE, on these 18 months, for 37.02%.ABC-NYSE 31dec2011-22may2013 – 47.25% IRR avgABC-TSX 31dec2011-22may2013 – 26.78% IRR avgWhat small investors expect of bankers and financial industry investment products is a way tosecure savings value by growing their wealth. You have made it theirs, now just you try getting itback. The circularity of ‘investment talk’ from fund managers and advisors who have sold youtheir “goods” and taken your money to ‘safely invest’ is like what Alice gets in Wonderland.“Somebody said,” Alice whispered, “that it’s done by everybody minding their own business!”“Ah well! It means much the same thing,” said the Duchess, “and the moral of that is ‘Take care ofthe percents and the pounds will take care of themselves.’” “Thinking again? The Duchess asked.“I’ve a right to think,” said Alice. “Just as much right,” said the Duchess, “as pigs have to fly.”Pretty much, they have taken it all before your need arises. “Alice, meet the Duchess.”
    • “Page 2 of 6 May 2013 © Copyright StockTakers Limited, All Rights Reserved. Copying Prohibited.The author does not provide investment advice. In order to use reproduce or convey the material herein,in any way, written agreement must be obtained from the author or its agent Architypes Inc.StockTakers Limited is an Alberta corporation providing information on “likeables” equities.StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.Alice, meet Dr. Dodgson! Minding Your Own Percents.NYSE Solo-50K – 59.33% IRRNYSE Value 17K – 45.37% IRRTSX Value22.5K – 22.29% IRRFrom fresh balance sheet data there are always newly emerging firms, also projections of thosefirms tending to declining market preference we might best be prepared to shun. Our “Newbies” wedraw from to replace laggards and build portfolio performance, always going forward.NYSE Q1-2013 Newbies – 33.94% IRRTSX Q1-2013 Newbies – 36.87% IRR
    • “Page 3 of 6 May 2013 © Copyright StockTakers Limited, All Rights Reserved. Copying Prohibited.The author does not provide investment advice. In order to use reproduce or convey the material herein,in any way, written agreement must be obtained from the author or its agent Architypes Inc.StockTakers Limited is an Alberta corporation providing information on “likeables” equities.StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.Alice, meet Dr. Dodgson! Minding Your Own Percents.Mind, all those percents tend to an average 38.83% IRR obtained while markets have been gaining.Those are very useful results you have seen unfold in “likeables” public run portfolios. Risk AverseAlphaSmart gains, Capital Safety, and ready Liquidity works, that is minding percents.Cash value erodes when idle. Cash is not capital until it is engaged in the business of firms creatingand adding value creating cash flow through ideas and productivity. The markets are always amovable feast the investor must move with. Our “likeables” give direction, like map and compass.Minding your own percents? Yes, we have proven that works. What proof does convention show?The financial industry does not even come close tothe average of benchmark indices. Has yourstatement value grown 27.06% in the last threeyears? What about returns of the brashest selfpromoting hedge funds performance for deep pocket sophisticated investors? HFRI reports anaverage 3.01% for 3 years or a total of 9.59% gain for their clients, flush with recent low inflation.Well, how about the best, brightest and most learned institution endowments run by and overseenby economists with PhDs and Nobel Prizes sitting on their boards. Perhaps those1have managedbetter in securing generous return with those philanthropic gifts in exchange for charitable taxwrite-downs. Sad fact is those numbers include all new philanthropic donations made to thosefunds in that fiscal year, like our pension fund contributions skew results. Resulting in fewer andlarger classes, less research, smaller and fewer scholarships, and greater student debt the grindingreality of fiscal and investment management is agent, as scienters’ wrongful acts?Despite better intentions and hefty tax write-downs on wealth drawn from our living nationaleconomy investing to build institutions express our society’s aspirations for future innovation andproductivity arising from better institutions obtaining universal education. Fund managers’practices belie these promises. They do not deliver more than fine words of self praise. Well, maybethey are just doing their best with bad tools. They should know. Poor results are theirs.The investment models of the industry do not work to obtain the minimum 8.42% return required.Many sitting at board endowments invented the methods being used that even for their own
    • “Page 4 of 6 May 2013 © Copyright StockTakers Limited, All Rights Reserved. Copying Prohibited.The author does not provide investment advice. In order to use reproduce or convey the material herein,in any way, written agreement must be obtained from the author or its agent Architypes Inc.StockTakers Limited is an Alberta corporation providing information on “likeables” equities.StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.Alice, meet Dr. Dodgson! Minding Your Own Percents.investment businesses proved failure in practice. The Yale investment board in particular is hailedas the model many social service endowments use. That board endorses fund managers take nearer6% in fees, costs and salaries even in bad times, and then, even congratulates them, for loses.Yale posted a return of 4.7 percent on its investments during the latest fiscal year,...“Thanks to the outstandingwork of the Investments Office, ..."Yet when fees are fully accounted theirs was -0.1% result. Outstanding work, or nice if you can getit from donors? The Yale model espouses fine sounding "Alternative Investments" entailing highercost for them to oversee and with the very risk of illiquidity and losses if they do not succeed asthey hope for. Rudely not shy about Schadenfreude they draw derisive attention to others losses.Yale’s endowment performance ... exceeds the returns registered at ... Harvard University announcedyesterday that its investments had experienced a 0.05 percent loss during fiscal year 2012.Is Yale just paying 33% more in management fees than Harvard, as this infers? More is told in thebase reference of fiscal year ends; June 2011 to June 2012 the markets gain averaged 9.62% asthese multi-billion dollar university endowments returns were negative. In real value terms not halfof the 2009 losses have been recovered four years later as inflation is relentless and very real.None of the Yale model proposed private equity, hedge fund, fund of funds and fixed assetelements under “Alternative Investments” umbrella are cited for scrutiny given ongoing failure ofconsistent results the model supposes its advantage. Their core strategy is ‘more baskets’ inopposition to traditional bonds and stock market equities. These elements are all failing in theirhands, by compounding fee charges claimed for their managing, but more and poor overviewability on all these asset classes. They wear cap and robes, but have no real clothes.All the proof is in the pudding. These kingly men handling those social nest eggs are not making‘just desserts’ for social good as likely as they are their own benefit among industry confreres with‘pay as you play’ schemes made notorious in financial industry investigations. Hiring hedge fundsand alternative asset advisors is claiming panoply of fees for guidance services being subcontractedto fellows of the class. Such serial subcontracting just inflates the cost for poor performance.Many more baskets can seem prudent practice for carrying the nest eggs. One needs to check forholes and safe handles. Evaluating equity quality seemed lost art given recent bubbles they hadbought and lost. The Yale model was a new direction from pedigree source as manna to fundmanagers. But buying heavily into private equity positions, funds and real estate creates illiquidityand buys inherent risks. Better you choose sturdy baskets with sound handles on the business youare minding, or holding. Good fortune with darts matters more than rote they suppose are financialalgorithms that actually arose from poor interpretations and pretenses in science.These social endowment fund managers draw whatever they can in salaries, fees, sales (moredonations are always needed) and overhead costs by use of what are known inadequate investmentmethods. These methods are those same used by banks and insurers creating mutual funds as
    • “Page 5 of 6 May 2013 © Copyright StockTakers LimitedThe author does not provide investment advice. In order to use reproduce or convey thein any way, written agreement must bStockTakers Limited is an Alberta corporation providiStockTakers Limited encourages your seeking tax law advisor for capital gains taxAlice, meet Dr. Dodgsonfinancial products to exploit small investor savings for their taking fees.They are not changing their tools or sharpening those they have.took the “regular courses” to be certified inis of their own c“I only took the regular courses,” sighed the Mock Turtle.“What was that?” inquired Alice.“Reeling and Writhing, of course, to begin with, and then the differentbranches of ArithmeticDerision.”Noise and gossip drive price and earningssocial beast politics serves as wellConventional investment "fundamentals" are based in price and projected earnfleeting and unreliable measures,the corporation (virtual, though not irrelevant)wish-filled projections in Punch and Judy puppetnewsy reports of flimsy, oftenentire investment industry is gossipWhat convention offers as fundamentals for investment guidancebut not flawless. Graham and Dodd madethe business enterprise. Price, earnings and intrinsic valuessurficial attributes unlinked to the firms’obtained through its social role limiting liabilitycreation of the ‘fictitious person’Investors need to know more, have some realpatterns of convenient thought experimentsAlice whispered, “Somebobusiness!”“Ah well! It means much the same thingand the pounds will take care of themselves,To successfully invest you needdefends your capital, keeps it safeOur "likeables" are based in our new fundamentalsknown. That is from our new theory of the firmcorporations as social creationsnew fundamentals.Our "likeables" are determined by the internalits debt is at the core of our new theory of the firmStockTakers Limited, All Rights Reserved. Copying Prohibited.The author does not provide investment advice. In order to use reproduce or convey the material herein,written agreement must be obtained from the author or its agent Architypes Inc.StockTakers Limited is an Alberta corporation providing information on “likeables” equities.StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.Alice, meet Dr. Dodgson! Minding Your Own Percents.financial products to exploit small investor savings for their taking fees.They are not changing their tools or sharpening those they have.took the “regular courses” to be certified in a self regulated industryof their own creation, more impressive fiction than it is“I only took the regular courses,” sighed the Mock Turtle.“What was that?” inquired Alice.“Reeling and Writhing, of course, to begin with, and then the differentbranches of Arithmetic – Ambition, Distraction, Uglification, andDerision.”Noise and gossip drive price and earnings in any direction that may be contrived.as well."fundamentals" are based in price and projected earnmeasures, just chatter and noise. Both are external(virtual, though not irrelevant). Price has no mass, and earnings are misleadingPunch and Judy puppet-shows that can be and often are manipulated inartfully biased when not intentionally tales wagginggossip-based in such flotsam riding the waves of loose conjecturesoffers as fundamentals for investment guidance is largely unchanged since 1934Graham and Dodd made a nice step, but half-measure as based in externalities ofPrice, earnings and intrinsic values (as if there are selfsurficial attributes unlinked to the firms’ very founding in its debt obligations. Thoselimiting liability grounded in a conflicted legal history accepting the’ without responsibility “to his buttons”3as earlier business norms.need to know more, have some real intelligence from critical thinking that conventionexperiments do not offer.Alice whispered, “Somebody said, that it’s done by everybody minding their own“Ah well! It means much the same thing, and the moral of that is ‘Take care of the percentsds will take care of themselves,’” said the Duchess.you need to Know What You Have and only Have What You Know, keeps it safe. That lets your capital grow in value outpacing inflation.our new fundamentals, the Risk Price (SF) of the company isis from our new theory of the firm4arising in law, economicsas social creations we have proven logically and mathematicallyOur "likeables" are determined by the internal realities of corporations debt. How the firm managits debt is at the core of our new theory of the firm. Debt-financing and obligationMinding Your Own Percents.financial products to exploit small investor savings for their taking fees.They are not changing their tools or sharpening those they have. They alla self regulated industry thatmore impressive fiction than it is science.“I only took the regular courses,” sighed the Mock Turtle.“Reeling and Writhing, of course, to begin with, and then the differentDistraction, Uglification, andin any direction that may be contrived. Rhetoric is the"fundamentals" are based in price and projected earnings. Both arevalues to runningPrice has no mass, and earnings are misleadingthat can be and often are manipulated intales wagging dogs. Theof loose conjectures.unchanged since 19342based in externalities of(as if there are self-evident truths) areobligations. Those structures arehistory accepting theas earlier business norms.intelligence from critical thinking that conventionalthat it’s done by everybody minding their ownis ‘Take care of the percentsHave What You Know. Thatoutpacing inflation.of the company is our, economics and philosophy ofmathematically consequences, ourrporations debt. How the firm managesfinancing and obligation is the essential
    • “Page 6 of 6 May 2013 © Copyright StockTakers Limited, All Rights Reserved. Copying Prohibited.The author does not provide investment advice. In order to use reproduce or convey the material herein,in any way, written agreement must be obtained from the author or its agent Architypes Inc.StockTakers Limited is an Alberta corporation providing information on “likeables” equities.StockTakers Limited encourages your seeking tax law advisor for capital gains tax dispositions.Alice, meet Dr. Dodgson! Minding Your Own Percents.issue of corporations’ framework from inception of their legal structure as fictitious persons undermanagement in the 1800’s (under protests of manager agency potent moral hazard). How debtstructures feed a business idea and obligations are met is ageless to any firms’ success, solvency orruin. Risk Price is based on debt structures integral to the firm we discern from its balance sheet.Equities trading above our benchmark Risk Price are those investors tend to like. Two of threecontinue to price rise due investors’ preference. These equities are “likeables.” They are revealedby their rise above Risk Price, the measure that investors must know to defend their capital. It is thereal intelligence investors need5but never had. Risk Price is practical benchmark for capital safety.The "likeables" are the ‘Grail’ portfolio builders investors need. These provide capital safetyobtained through AlphaSmart gains while protecting the downside and always remain liquid ascash, only better than cash by growing value in the long term. That is very different metric. The restof the firms in the market have difficult or compromised debt structure under management. Thosewe reasonably call the ‘Goats’ rogues that will likely eat your grass, graze your wallet, and leave,wealth takers, under management. Those rogue ’Goats’ you do not want their risky business.Clear, concise and consistent. The equities we hold are “likeables” tending to gain 67% of the time.We do not make stock prices but can reasonably respond to stock price tendencies, by our knowingthe price of risk, the downside, and buying and holding accordingly. That is new fundamentals fromour new theory of the firm. Know What You Have. Have What You KnowOur view is risk averse. Of course we require 2&20 fees for doing that. Mail us for our help.Hans Goetze,Architypes Inc and StockTakers LimitedHead Office76 Midridge Close SECalgary, ABT2X 1G1351 Chemin BoulangerSutton, PQJ0E 2K0450 538-12701http://www.nacubo.org/Documents/research/2012NCSEPublicTablesEndowmentMarketValuesRevisedFebruary42013.pdf2B. Graham and D. Dodd, Security Analysis, 1934, and, The Intelligent Investor, 19493The famous “Names” of Lloyd’s Market once bore unlimited liability for their contracts as debts to redeeming even silver buttonson their shirts.4E. Goetze, The Modal Geometry of the Firm and the Balance Sheet Worth of the Trading Connections, 20095http://riskwerk.com/2013/05/18/the-real-intelligent-investor/