Global Mining Investing $69.95, 2 Volume e-Book Set. Buy here.
Author, Andrew Sheldon

Global Mining Investing is a reference eBook to teach investors how to think and act as investors with a underlying theme of managing risk. The book touches on a huge amount of content which heavily relies on knowledge that can only be obtained through experience...The text was engaging, as I knew the valuable outcome was to be a better thinker and investor.

While some books (such as Coulson’s An Insider’s Guide to the Mining Sector) focus on one particular commodity this book (Global Mining Investing) attempts (and does well) to cover all types of mining and commodities.

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Sunday, March 09, 2008

The world's top 2000 companies

Forbes has published its Top 2000 companies around the world. Its a useful survey since you can search the list by their ranking, country, industry, sales, profits, assets and market value. I suspect a lot of people would look at such a list and think they should buy the most profitable company, particularly if it has a history of performance. My logic is the opposite. I want to go to the bottom of the 'profit ranking' to see the stock offering the greatest upside. You can be sure that if there is a company making 30-40% growth in sales or profits, its going to be trading at a huge premium in the market. My belief is that things eventually tend to go wrong with these companies, whether success breeds mistakes, or builds strength in the competition. They are destined to make a mistake. Everyone is impressed by Google - as they should be - but I'm waiting for them to fail because they are 'too successful', such that bloggers can't upload photos because their service is so popular. Maybe the age of outsourcing will avoid this issue. I'd be more inclined to invest in Yahoo - though I choose to use Google's services.
Typically stocks that are have been making losses are trading at huge discounts. Shareholders have abandoned the stock, and will be looking for signs of improvement. Typical signs are:
1. Changes in senior management & the board
2. Asset sales
3. Restructuring of debt

Unfortunately the information provided by Forbes is not really in a useful state. We really need to import this data into a spreadsheet. I am assuming that Forbes has applied a consistent format for calculating this data, but since its a new service and not a market advisor, it would be worthwhile to check the figures. By doing that we can perform some simple analysis of financial ratios:
1. Profits as a fraction of sales: This will provide an indication of which companies have low profit margins. Certain industries have better profit margins than others, so its worth comparing the companies with industry peers. Bear in mind that two insurance companies need not be the same. One might be insuring buildings, the other is offering house insurance. We are looking for patterns at first, then we need to explain the discrepancies.
2. Earnings as a fraction of market capitalisation: This will tell you which companies are valued at a discount or premium in the market. Its like a price-earnings ratio (PER). You need to consider why the stock is trading at a premium. These are major stocks, so they tend to be high profile. So you need to know the reason for the under- or over-rating. eg. Oil companies 5 years ago were trading at a discount because because whilst oil prices were historically high, the market thought they would collapse back to $9/barrel. That perception has since changed and oil companies are amongst the largest in the world, with oil at $105/barrel up from $44/barrel at the time.
3. Profits as a fraction of assets: This will provide an indication of which companies have under-performing assets. Assets can be under-performing for a variety of reasons. The profits might be low because those assets have huge liabilities against them. Given the outlook for higher inflation, we would need to consider the risk of higher interest charges. This might be considered a negative, but steps to reduce debt would be a positive if done sooner rather than when its forced.

After identifying anomalies, comparing them with peers, and attempting to explain the anomaly in the market rating, the next step is to look at the stock chart, and to take a closer look at the company. Then I would be trying to find a CFD provider who trades that stock.
Andrew Sheldon
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Japan Foreclosed Property 2015-2016 - Buy this 5th edition report!

Over the years, this ebook has been enhanced with additional research to offer a comprehensive appraisal of the Japanese foreclosed property market, as well as offering economic and industry analysis. The author travels to Japan regularly to keep abreast of the local market conditions, and has purchased several foreclosed properties, as well as bidding on others. Japan is one of the few markets offering high-yielding property investment opportunities. Contrary to the 'rural depopulation' scepticism, the urban centres are growing, and they have always been a magnet for expatriates in Asia. Japan is a place where expats, investors (big or small) can make highly profitable real estate investments. Japan is a large market, with a plethora of cheap properties up for tender by the courts. Few other Western nations offer such cheap property so close to major infrastructure. Japan is unique in this respect, and it offers such a different life experience, which also makes it special. There is a plethora of property is depopulating rural areas, however there are fortnightly tenders offering plenty of property in Japan's cities as well. I bought a dormitory 1hr from Tokyo for just $US30,000.
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The Philippines property market remains one of the strongest in Asia thanks to rising incomes, rising population and rapid rates of urbanisation. The administrative reforms of the Arroyo government have given way to improved administration under Aquino. ASEAN countries can be expected to achieve even greater price gains than Western markets, demonstrating that this super cycle is far from over.

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Investment Strategy

If you are investing for the long term, you still need an investment strategy. Dont be fooled by the rhetoric of fund managers. The reason they advise you to 'buy & hold' is because they dont want to compete with you in sell-offs. Markets and industrial sectors are cyclical, so they demand trading to get the best returns. Fund managers actually cant hope to match the performance of small investors (if you are half good) because they have to manage huge amounts of funds and charge you a fee besides.
MY ADVICE is (i) look at a range of market indices and decide upon what level of correction would give you the justification you need to get in & out of the market. It might be a 5-10% retracement or a break of trend. (ii) Diversify if you dont have an intimate knowledge of the company or management. More than 30% in one company is aggressive.

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The NZ property market is shaping up as one of the most attractive property investment markets for the next few years. High yielding property and the collapse of the NZD make NZ the perfect counter-cyclical investment if you buy right! In addition, there is no capital gains tax, transfer taxes, VAT/GST or wealth taxes in NZ, so rest assured that NZ property is tax-effective! Learn more now!

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