Now as you all know, I do not profess to be an authority on financial investment. I am just a person who together with Richard and David has come up with a system of producing a regular supply of unbiased fund performance numbers which indicate the direction of travel of the I.A.sectors and investment funds. Anybody with access to these numbers, and a good fund supermarket to place their trades, should be able to enjoy success.
The idea is pretty simple. Use the numbers, and endeavour to rule out sentiment and the outside noise that comes from financial commentators dressed as life-guards throwing you anvils.
That is the tricky bit and definitely what I find difficult. I enjoy reading and sifting through financial comment and numbers. Unfortunately, this has on occasions resulted in my anticipating a trend which has subsequently turned out to be a mirage. I am fighting with such a situation at the moment in the form of Mr Trump and the USA Market.
In the last year, the world`s intelligentsia and media have enjoyed poking fun at the intemperate tweets of the President. However the financial situation for the USA, for the working class and blue collar workers, could well be on an upward self-sustaining virtuous spiral.
- The imminent lower corporate tax structure changes could persuade the large American conglomerates to repatriate their financial offices back into the USA. This would result in more taxes being paid and business expansion occurring at home, which means more employment.
- These same large conglomerates have also been offered a one-off low tax payment on the trillions of dollars they already hold offshore so they can clean up their act and be good Americans. If this occurs, then the USA debt can be reduced and large amounts of money can be spent on improving infrastructure. Again more employment.
- The dollar has also fallen to a low value against the standard international basket of currencies. This must result in higher exports and lower imports, both of which create employment at home.
- At the same time as the above is happening, employment has already fallen to a very low level and wages have started to rise as demand outweighs supply. This trend must surely accelerate. More people at work with more money to spend will continue the demand for more goods. The tax collection also rises and the country has a virtuous circle of expansion.
Therein lies my problem, for if I put any credence in the above argument I would expect it to be showing in our Saltydog numbers and it does not. I have graphed a great many of the American funds that we cover and by and large they have very similar results. One year results of 5%-10%, three years 45%- 55% and five years 130%-140%. Their performance is falling and this at a time when the USA stock markets are approaching all-time highs.
I would have expected fund prices to follow the market trends, but apparently not.
Maybe the market is inflating on the back of the major technology funds and is not yet reflected in the market sectors as a whole. Perhaps as Sterling investors, part of the poor performance can be laid at the door of currency movement because Sterling has appreciated against the dollar by around 10% in the last twelve months.
These however do not account for the large discrepancy between the market and fund price movements. Still, what do I know?
The Ocean Liner made a small investment in an American fund at the end of last year, but my personal portfolios will remain un-invested in this sector until I understand more, and the numbers start to reflect the arguments.