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For the past three years, I’ve been managing a global investment portfolio that’s produced an annualized return of 22.89% per year — from the date of inception (August 6, 2004) through the end of June, 2007.#
For the entire period, that comes to 81.75%, net of all fees — a rate that, if sustained, is on course to double the value of the portfolio in less than four years.
As the chart below indicates, from August 6, 2004 through June 30, 2007, a global investment strategy, such as the Weiss All-World Strategic Growth Program, would have significantly outperformed an all-U.S. portfolio, as represented by the S&P 500 Index (although with more volatility).
Of course, just because I’ve achieved these results in the past, it doesn’t mean I will continue to do so going forward. But with this week marking the third anniversary of my program, and with a market correction currently underway, I think this is a good time for you to seriously consider global investing so that you have an opportunity to strive for similar returns.
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| Past performance does not guarantee future results. It is not possible to invest in an index. Data source: S&P 500 Index, Bloomberg; Weiss All-World Strategic Growth Program, Advent Axys. |
Here’s how:
First, invest globally.
Sounds obvious, right? But even those who believe in global investing may still be underestimating its vital importance — especially today.
We have a serious mortgage crisis in the United States that’s spreading to other credit sectors and threatening to drag down our economy. Plus, at the same time, we have powerful global growth overseas that’s been persistently pushing up major foreign markets.
To me, this means that investing strictly in the U.S. is no longer the more conservative, lower-risk approach. Rather, it means that global investing is now becoming a vital element — almost a must — for any truly diversified approach to investing.
Second, diversify across many regions and countries.
With the benefit of 20-20 hindsight, it’s easy to see that the stock markets of China and Brazil have been the star performers for the past couple of years.
But I believe that anyone focusing strictly on these superstars is making a grave error. No one really knows which markets will take the biggest hits in the next major correction. No one really knows where the next-best performers will emerge. Since my program’s inception three years ago, there have been two major corrections in global markets, all included in the program’s performance and each one creating an attractive entry point for new investors.
What we do know is this: The global-growth phenomenon has reached into more regions, more countries and more sectors than at any time in modern history. Not just Asia, but also India and Latin America. Not just young, emerging economies, but also mature, highly industrialized nations. Not strictly export sectors, but also sectors that cater to domestic consumers. We believe that all this is highly likely to continue.
That’s why, in addition to China and Brazil, I like Europe, despite the fact that it’s not growing as fast. I also invest in countries such as Taiwan, South Korea, and even Canada, to add diversification and exposure to other more-mature industrial economies.
If I had excluded them from my portfolio, I might have achieved higher results in the short term. But, in the long term, I think the broader diversification gives us a better opportunity for a steadier — and more solid — return.
Third, global investing should not exclude the United States!
Right now, the U.S. is undergoing a correction and the dollar is falling. So if you’re reducing your exposure to the U.S., you’re doing the right thing, in my view.
What about slashing your U.S. investments down to zero? I am opposed to that approach for several reasons:
- To eliminate the United States would exclude the largest economy in the world, and would not be prudent.
- To totally exclude the United States makes the assumption that foreign markets will always outperform and the dollar will always go down. Everyone should know that’s obviously next to impossible.
- When you do invest in the U.S., just be selective. Focus on specific sectors, especially those that stand to benefit the most from global growth, rather than buying the broad market.
Like energy, for instance. Like those technology sectors that have done the best job globalizing their sales.
Fourth, stay the course and don’t overtrade.
Some people seem to like action for action’s sake. I’m not among them. It’s just not my nature. I follow my long-term convictions, when investing and making changes to the portfolio.
As long as the long-term trends are in place, stay the course — don’t bail out during corrections — they are a fact of investing life.
In fact, our clients at Weiss Capital Management establish a relationship with us because they recognize that investing takes a lot of time, research and talent to do it effectively, not to mention unemotional conviction. And by leaving the driving to us, they can dedicate their time to the business they know — or to the leisure they love.
Then, it’s our job to stay the course we have plotted with each client — and to do our best to steer clear of the inevitable potholes along the way.
So my approach is simple: View market corrections as opportunities. Take some profits along the way. And buy, when warranted, on declines. Don’t let emotions get in the way. And don’t give up a good position unless long-term circumstances dictate otherwise. That’s what has worked well, so far, for our clients in the program.
Fifth, don’t invest in just one manager or one program.
If I were an investment salesperson, I’d remind you of the fundamental wisdom of diversification.
To give you broader opportunities and spread your risk, you need a diversity of strategies and asset classes, and a diversity of managers with different specialties.
The global strategy I’ve been telling you about today is our All-World Strategic Growth managed-account program.1 Invest $100,000 before Labor Day week, if suitable, and you can permanently lock in our 1.50% annual management fee. After September 7, it will be higher.**
And be prepared, when you visit with our financial advisors, they may recommend diversifying your investment dollars into more than one of our strategies — not only to provide for greater diversity, but also to manage risk. For example, our Weiss Bear Strategy is designed to hedge against U.S. market declines and may be appropriate for a portion of your funds. Or, perhaps our Weiss Managed Treasury Program designed for income and preservation of capital. And, among other strategies we offer, our advisors may also recommend a portion of your assets be kept very liquid in our Weiss Treasury Only Money Market Fund.
What’s important is that your portfolio will be unique to your circumstances. But, at all times, we seek to achieve the greatest returns, with the least amount of risk.
Here’s how to contact us for more information or to speak with one of our financial advisors: Call 800-814-3045, or click here to send us an e-mail.
We hope you’re interested in learning more about our services, but if you prefer to handle your investments personally, we understand and hope that you can use the principles we’ve provided here as a guide.
Sincerely,
Steve Chapman
Vice President, Weiss Capital Management, Inc.
Portfolio Manager, Weiss All-World Strategic Growth Program
1 Name changed from Weiss All-Star Growth Program effective July 25, 2007
** New or additional investments only
* Weiss Capital Management, Inc., an SEC registered investment advisory firm, is an affiliate of Weiss Research, Inc., the publisher of Money and Markets, with separate management, officers and operations.
# For back-up information on performance, and important Disclaimers and Disclosures regarding the Weiss All-World Strategic Growth Program, click here. The minimum initial investment in the Weiss All-World Strategic Growth Program is $50,000. Minimum household relationship with Weiss Capital Management is $100,000.
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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Adam Shafer, Andrea Baumwald, Kristen Adams, Maryellen Murphy, Red Morgan, Jennifer Newman-Amos, and Julie Trudeau.
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