How to Use Market Witch
Market Witch is big-picture investing at its best.
We get most of our information about the US economy and domestic American companies in a very direct way. We simply go there or we phone them. We talk to people. We conduct interviews. We go to the stores and restaurants and see for ourselves if there's anyone in them. We look at the products. We watch people buy them. Or not. When we found out, in 1990, that a segment of the American population would go without food to be able to buy a Harley-Davidson (USA: HOG) we immediately put our life savings into the company's stock and never looked back. (Until 1995, when the Intel (USA: INTC) Pentium was introduced and until 1996 (when Cisco (USA: CSCO) began to create what's now called the Internet Protocol (IP) industry) and 1997 (when we began to invest in Corning (USA: GLW) and its fiber optics goldmine. We also like find to out everything we can about a company's execs. Cracker Barrel (USA: CRBL) for example has a new CEO, a woman, Sandra Cochran, who has an degree from Vanderbilt in chemical engineering and also an MBA but was also ROTC in college and is a qualified paratrooper. We think this bodes well for Cracker Barrel, which is adding restaurants to its staple upscale Interstate highway stopover fleet of 624 restaurants in 42 states. And we evaluate what's going on with American companies within the USA's cultural context. We think for example that Apple (USA:APPL) has peaked as an influential cultural force. We've been talking about the USA having become a new Third World Country (95% poor 5% rich, unskilled primary work force, no Middle Class) for almost ten years. And one of the companies that addresses the New American Poor quite successfully is Dollar General (USA: DG) which has 11,000 DG stores in 40 states and will open 700 more this year. Because of the Internet, we rarely pay much attention to American financial news sources like Barron's or IBD (or, God forbid, CNBC) but are able to find great financial sources in far-flung parts of the world, we do much the same with foreign companies as well. Wanna find out about copper? Skip Bloomberg: go to mining.com
Market Witch is a world-view. We are politically neutral. But we recognized years ago that the United States is not in a 'cyclic downturn' but has in fact become a Third World Country (see Market Witch "Third World America" May 2005 available on the MW website) And that the country possibly won't recover from this new and diminished status. And if it does, it'll take a decade or more to regain what the United States formerly was, because we've destroyed our K-12 public education system, badly damaged our manufacturing base (in 1990 50% of clothing sold in the US was manufactured here, now it's 2%) and debased our once-strong currency.
And most importantly, we are no longer a unified American people with a single national value system and a single set of goals, philosophies and beliefs, but we are a people at war with each other, living in two separate Americas that are, so far, in a culture war with each other but that culture war may become a hot war, as we started to see in mid-2013 with the Zimmerman case and as we saw in late 2013 with Phil Robertson and the disenfranchisement of the word 'homophobic.' That culture war began to heat up in 2010 and 2011, following the housing crisis 2008 and the spectacle of Americans left with mortgages that were 'under water.' In 2013 this culture war became much hotter and this is most likely to continue, as we pass through 2014, unless the country turns a political and cultural corner on the way toward a rebirth of traditional American values.
But if that happens, one half of our people will welcome this, while the other half will be furious.
What happened during 2012: The United States broke in two. The US became two separate countries. One country, whose capitol is Washington DC, became the states in what for convenient shorthand we're calling the People's Republic of America. The other country, the Former United States of America, whose capitol most likely seems to be Dallas Texas, consists of the states in the New American Wealth Belt, the Old West, Alaska, and the Agribiz/ grain belt states, and has no allegiance to the government of the PRA. One country creates wealth. The other one, the People's Republic of America, does not, but instead lives off the wealth created.
The issue: two separate & distinct American cultures have become two separate countries, each occupying one part of what once was the United States.
Can these two countries coexist? We're not sure, but we don't think so. The People's Republic of America seems eerily reminiscent of and the logical conclusion of the Kruschev USSR era, when the Russians were saying: We will force the United States to spend itself to death. Our federal government is doing just that, without any outside help. Will the People's Republic collapse, as did the USSR? Possibly. In order for the United States USA to reestablish its former 20th century economic dominance in the 21st century, the People's Republic of America, and uts culture of fiat currency and skyrocketing public debt, will have to be replaced. Can the USA re-establish its once-great e pluribus unum from many, one) culture? Maybe, but probably not in 2014. We've just turned a major cultural corner in one way, with the re-validation and re-assertion of certain fundamental religious values (Catholics standing up to Obamacare, for example) but we're just turned a major cultural corner in another realm as well, as marijuana begins to become legal.
For these reasons, we continue to advocate investing in High Net Asset Value companies both foreign and domestic, those companies which have highly-tangible highly-valuable assets, low debt, are extremely well-managed, and which pay quarterly dividends, often fat ones. These companies are mostly Multinationals with assets, sales growth, or both, outside the US, (Deere, Cummins, Siemens and Southern Copper are a few obvious ones) and we list these companies every month in our Market Witch Strong Buy lists, which include High Net Asset Value companies from all over the globe.
Market Witch is context. Nothing economic happens in a vacuum. Global commerce (and quarterly profits, and bull or bear markets, and broad speculative upswings/momentum plays) are subject not only to what the financial community defines as 'market forces' but also to hurricanes volcanoes droughts floods wars national & international politics new inventions commodities and basic materials price shifts crop failures disease currency value fluctuations the rise and the rise and fall of both regions and religions plus the vagaries and trajectories in the historic and economic lives of nations. Brazil, for example, is a nation on the rise. The US is a nation broken in two. Russia has recently re-discovered its Orthodox Church, has become conservative, and once more has worldly ambitions. China has become successful, but at a huge price to its air and water. What we try to do is stay a few years ahead of all this, and invest into what we see happening three four five years into the future.
To do this, we not only travel, but we read everything. Most of what we read may seem to come from outside the world of finance markets and indices- sociology, anthropology, history, archaeology etc. And the lion's share of it comes from outside the United States, as well. We don't read the WSJ for financial news. Though we like the WSJ's journalism, we don't take these Lower-Manhattan-centric financial judgements seriously: the perspective is too narrow and provincial. Incidentally, the WSJ, America's premiere financial newspaper, is no longer American, but is owned by Rupert Murdock, an Australian, and it's another one of those things that a formerly great country has sold or given away.
We read parts of many many foreign newspapers and dozens of global trade publications. This view of things shows us where to invest next, and for the long-term. It's a perspective you will not find in any other US financial markets publication and it usually puts us two or three years ahead of even the most advanced contemporary American thinking.
In each issue of MW, we provide a link for you to follow much of what we read, for yourself. To that extent, Market Witch is a learning system. We are a Rosetta Stone (USA: RST) (interesting company with useful language-skill products but not a company we'd invest in) product for investors.
Not only that, Market Witch is inexpensive ($129 annually) because we earn most of our income not from readers' subscriptions but from our investments in stocks.
A hallmark of what we do is this: we believe that if you read MW for any length of time, you too can learn to do what we do on your own. If you are a new investor, think of us as training wheels. If you are a seasoned investor, but new to Market Witch, know that if your thinking about something is in agreement with our thinking about something, the chances are very close to 100% that we both are right. Because approximately 92% of the stocks we recommend to you, and buy ourselves, appreciate.
We pay a great deal of attention to global commodities, which in this early part of the 21st century, the era of the Commodities Supercycle and the Global Infrastructure Buildout, are the underpinnings of the financial indices. That is, if you wish to invest in infotechnology, invest in copper, niobium, etc. If you wish to invest in the Global Infrastructure Buildout, invest in industrial gases and copper and wind farms and iron ore. Sometimes you can do very well just buying companies or ETFs that deal in metals. Commodities and basic resource prices are not falling in 2014 and won't in 2015 either.
We stay completely away from bonds, t-bills, currency trades and the like, although there are a few currency ETFs we like (the Swiss Franc ETF FXF especially among them) and corporate bond offerings we occasionally like and when we do we list them. We always list the best High Dividend stocks, as well. Do we hold physical gold? Yes. Do we hold paper gold ETFs? Yes. Do we hold shares of key gold mining stocks? Yes. We also comment on more esoteric form of investment, like art and antiques.
Most of all, Market Witch is a view of the future. After the Nasdaq collapse we were investing in Corning (NYSE:GLW) (at about $2.17 a share) in 2002. We began to invest in big global mining companies in 2003. We began to invest in Brazil starting in the spring of 2004. Who knew Germany was becoming the economic powerhouse of Europe and the country holding the EU together? We did, five years ago. What are we interested in now? Africa. Latin America. Big multinational US companies. Some of the wilder parts of Asia. We like Australia's economy, though we are edgy about windfall taxation on mining profits. We like Aussie prime minister Tony Abbott and his plans to re-boot the Australian mining boom, but we aren't especially thrilled about Australia's economy this year. Brazil has a presidential election in autumn of this year and most likely Dilma Rousseff will be swept away in the creation a stronger Brazilian economy evan as Brazil assumes center stage among countries in 2014 2015. Indonesia has one of the world' largest and most vibrant economies…and as the Muslim world finally begins to assimilate into the global economy, Indonesia and its predominantly-muslim population stands ready to become a big factor in the 21st century global economy. We don't like it that Indonesia has 129 active volcanoes: poof, there goes the Caterpillar (NYSE:CAT) dealership in Jakarta. We could care less about the war between Islam and the USA, which has been for a decade a war between a sticks-and-stones primitive/medieval tribal culture, and companies like Raytheon (NYSE:RTN) and their 21st century laser weaponry. That may be about to change, because current American People's Republic policy will allow Iran to have The Bomb. Meanwhile, Islamic banking has entered the global financial system with such a strong foundation the Bloomberg covers it.
Market Witch is encyclopedic. We list commodity prices, (our concept of commodities is very broad, and includes Harley Davidson Motorcycles and Camel cigarettes and iPhones and antiques and diamonds and peanut butter as well as the price of copper) currency prices, (gold remonetized globally in 2007, even though the US government is in total denial of this) after having become 'money' in the Global Outlaw Economy about three years earlier, replacing first the US $100 bill and then the EU500 banknote as Global Outlaw Economy money) as well as global stocks we think are worth following and investing in.
In our Strong Buy lists, we list every month all the stocks we're paying attention to, by region, by subject, or by cultural context (war, poverty, luxury, Mexico, water, shipping, India, and so on) and our thoughts about them. To pick the best potential investments, simply go through our Strong Buy lists and look for these signals: A MARKET WITCH BEST BUY, STRONG BUY, STRONG LONG-TERM BUY, A MARKET WITCH PORTFOLIO FOUNDATION STOCK, SPECULATIVE STRONG BUY, or UNDERVALUED.
To cut to the chase: if you do not have the patience to read or scan so much information, simply go to these two sections:
The MW WHAT WE OWN is a list, every month, of stocks we own, in descending order of valuation. The section after that one, the STRONG BUY list, enumerates all the stocks would be buyers of: stocks we'd either start a position in next time we have profits of dividends, or stocks we'd buy more shares of in addition to our current position in them.
That's another thing. What makes us different from any other financial analysis publication you can buy (in addition to our big-picture view of things) is that we aren't saying we think you should buy this or that. We are saying: here's what we are buying, these are the stocks we own, come along with us, and prosper.
Market Witch High Net Asset Value stocks usually offer substantial quarterly or annual dividends. We are strong advocates of High Net Asset Value stocks. The very best position you can be in during 2014 is to be invested in High Net Asset Value stocks that are both (A) appreciating into an expanding market and (B) paying dividends which you can invest into shares of additional stocks.
Come along with us, and prosper.