Guild’s Premium Global Market Commentary: Helping You To Be a Better Investor
The purpose of this Guild’s Premium Global Market Commentary is to help you become a better investor.
The web and the airwaves are full of people who may have a similar goal for their listeners, readers, and customers. But if you’ve read other newsletters or spent time listening to the talk on financial TV, you may have noticed that the information we bring you each week is often different.
This week we’d like to tell you a little about our philosophy, and the years of market experience and analysis that have shaped it. That way, we hope you’ll better understand our goal of bringing information to your attention to help you identify trends of investment importance now and in the future. We believe this is critical in helping you make better investment decisions.
The Forest and the Trees
A recent survey conducted by Farleigh Dickinson University suggested that those Americans who listen to and read the most news are actually among the most poorly informed when it comes to foreign affairs. It’s our conviction that this overload of information and misinformation can also become an adverse factor in investment decision-making. Our goal in researching the topics that we present each week is to direct your attention to the trends that we believe are of great significance.Out of the clamor and noise of political and financial news that surrounds you, we want to offer you the ideas that we consider most important to help you identify a trend before it goes mainstream and becomes the talk of the town
It’s All About the Trends
Many significant trends have been successfully outlined by our newsletter in advance. Our subscribers have had the opportunity to take advantage of this knowledge.In the present investing environment, the market’s daily movements often reflect the actions of government, high-speed trading firms, and powerful financial institutions. For investors outside Wall Street and other corridors of power, it’s next to impossible to beat these market movers at their own game. Where it is possible to secure an advantage, we believe, is in the ability to spot important emerging trends in significant economic, industrial, and business sectors before mainstream analysts and media talking heads seize on them.
In short, although we do provide specific investment recommendations to our subscribers, our primary purpose is not to give mechanical instructions to buy this security or sell that one, nor is it to offer the technicalities of particular trading strategies. Those opinions are available in abundance.
What We’re Watching– Top-Down and Bottom-Up Research
Our views about the investments we recommend are formed both by broad observation in analyzing the significance of emerging trends and by attention to detail in finding the companies that may benefit most from these trends.
From a broad top-down perspective, we monitor global social, political, and economic trends. We begin by monitoring economic and political events in a number of countries. From there we move to watching national-level trends — for example, supply and demand in various industries, and the political and economic events shaping the growth of GDP. We identify trends that are shaping industries as they grow, shrink, and morph into new industries.
Next, from a bottom-up perspective, we watch companies in industries that may benefit from the trends we identified, visiting with management, customers, and competitors. Gradually, we get an analytic and intuitive grasp of how an industry — and the companies within that industry — function. We do this to gain an appreciation of the tone and outlook of their business — how well various companies can grow and meet the challenges of their industry. We analyze a company’s past performance, and try to predict what type of revenues and earnings a company might achieve. After estimating earnings and growth, we analyze the potential reward from the investment and the risk that we are willing to undertake in buying the stock. We always try to balance risk and reward so that, in our analysis, the reward is substantially greater than the risk. In addition, we want to understand the company’s position in the industry and the industry’s position in the economy as a whole.
Our performance is a record of how we’ve done in the past, but as you’ve heard many times, we would caution that past performance is not a guarantee of future results.
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Markets ignore Congress
Unlike previous partisan conflicts in Washington DC in 2011 and 2012, the recent political ‘crisis’ didn’t have a significant downside effect on the performance of the stock market. We believe that market participants have turned the corner in their recovery from the shock of the financial crisis of 2007 to 2009. With corporate America ready to restart serious capital investment, the market sees corporate profits ahead — which are the most fundamental driver of equity values. We think investors now see that they were too cautious during the 2011 and 2012 political crises, and we believe they didn’t want to make the same mistake again.
U.S. energy renaissance: the next stage in fracking
Since the widespread use of hydraulic fracturing, the proved reserves and the production of oil in the U.S. have reached growth levels not seen for 75 years or more. Now, thanks to the deployment of a new suite of improved fracking techniques and technologies, U.S. shale oil producers will see even larger reserve additions and initial production increases this year. What’s more, they’ve been able to achieve this without a significant increase in capital expense. We think this bodes well for the valuation of oil companies, and more broadly, for the revolutionary impact that we believe shale hydrocarbons will continue to have on the U.S. economy at large — especially in utilities and downstream product manufacture.
Guild Basic Needs IndexTM
Track our analysis in these letters and at www.gbni.info.
In Last Week’s Global Market Commentary We Discussed:
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