User Manual
Behind the Scenes | Monthly Newsletter | Regular Review | Special Projects
Behind the Scenes
Monthly Updates: Don’t worry if you only check out the site
once a month, because everything is based on month-end data.
While market prices are available immediately it may take
several days for some of the economic and most of our sentiment
raw data to be collated and released by the relevant governments
and stock exchanges. In some cases the delays are as much as a
month, in which case we use information from the previous month,
where the values do not change much from month to month.
Data Processing: Many thousands of calculations are then
processed to generate the 100+ tables that show our
recommendations for all assets in every market on the basis of
every strategy that contributes to our multi-disciplinary
system. Our library of some 10,000 charts is simultaneously
updated and both are uploaded to the website, where they are
available only to subscribers.
Release Schedule: Once that is done, you will be emailed an executive
summary, the Monthly Newsletter. Once you receive it,
you can assume that the updating routine is complete. Typically,
this is in the second week of each month.
Monthly Newsletter
Special Feature: Every month this analyses a different
investment theme, which is of major importance to long-term
global investors. Assets provides an overview of each asset
class in all the main regions to highlight global trends. The
remaining pages appear in declining order of their influence on
the performance of global portfolios. Thus Forex and Bonds come
last, not because they are unimportant to many investors, but
because they are less volatile than equities.
We call our summary on each RouteMap our "Best Guesses". While we hope that our predictions are the best
available, there is very large scope for error when predicting
markets, so we believe this is a more realistic description. As
this is an executive summary, comments on each RouteMap are
deliberately restricted to a single page, which follows the same
format:
- Stop Press – The latest short-term changes to our various strategies are discussed here.
- Current Opinions – This section summarises our main long-term investment themes, which may change only glacially
- Current Recommendations - This is where we keep score of how many markets we like and how many we dislike
- Product Upgrade - Significant modifications are described here whenever it is necessary to fine-tune the system.
If you have time for nothing else, please at least read our Newsletters to keep abreast of the main investment opportunities and threats as we see them.
Regular Review
Top-Down: The most logical way to start your monthly
investment review is from the top, drilling down to more detailed
analysis of those markets where changes to your portfolio may be
advisable. To log in from the home page, click on Log In, enter your user name and password on the page served up
and select the radio button for a RouteMap.
If you have subscribed to the Assets RouteMap start there,
because that is designed to assist in making and monitoring the
biggest decisions of all, stocks, bonds, cash or real estate,
and which of the main regional to prefer or avoid, Europe, US,
Japan, UK or US. However the following comments apply also to
the other RouteMaps, because they are all designed to be
compatible.
Tables: These provide the quickest overview because they show
the same data item for all assets as at the end of the last
month. This has been set as the default option, with only the
drop down menu at the bottom in operation, while the others are
greyed out as irrelevant.
Gains by Asset Class: Similarly the table summarising past
performance is shown as the default option because it helps to
know where markets have been before assessing where they may go
next. The top asset / regional matrix shows performance on a
comparable basis for the year to date, while the second matrix
shows the same for the last month, to check if trends
persisting. The bottom two are only important for those who need
to review particular markets in their local currency.
Please note that the performance of bond markets will appear
more volatile than shown in leading benchmark indices, because
those use a range of maturity dates, whereas our index is a
hypothetical one based on ten
year government bond yields.
Investment Diary: Next, it pays to remind oneself of significant
developments in the recent past. While media may generate a
blizzard of news, we find surprisingly few important stories.
That is because most of what matters is captured in the time
series we use and the vast majority of the rest is only relevant
for picking individual stocks or merely statistical noise.
Indeed I specifically recommend not wasting your most precious
resource, time, on live news services because they are designed
to generate excitement and action, which is generally
counter-productive to long-term investment performance.
Summary (Local Investors): The third essential table to review
is a summary of our opinions, either in local currency, or the
comparable US$ basis, depending on the RouteMap and your needs.
The action we recommend you take in each market is shown bold.
That recommendation is itself based on a wide range of
investment strategies, because no strategy can work everywhere
all the time, without being copied by most other investors and
thereby becoming ineffective.
Unlike some quantitative investment systems,
Investors RouteMap is not a black box, but is designed so
subscribers can drill down into the component strategies,
because it is better to understand than to trust. As investment
is an odds-based activity, there will be times and places when
even the most effective system fails. Then those who understand
are well placed to decide whether to sweat it out or fold their
hand.
Action: Our overall recommendations are based on combining three
types of investment strategy, namely Value, Trends and
Sentiment. These component recommendations are shown in separate
columns as is any change in trend of our overall Action
recommendation.
Summary (Global Investors): This table is for those investors
who want to concentrate their portfolios not just in what should
rise in value, but in what should rise fastest. Recommendations
are based on assessing expected performance compared to an
equally weighted average of the six asset classes in the system,
or a global benchmark for each class.
Order: While matrix tables are appropriate for the Assets and
Styles RouteMaps, in the other three RouteMaps countries and
regions are ranked in one of two ways, depending on the analysis
in question.
Attractiveness: This is shown in descending order with the
strongest performers or the cheapest appearing at the top
Alphabetical: Countries appear alphabetically within regions,
followed by the regional average, with global benchmarks
last
Other Tables: These let subscribers drill down into the
individual strategies that are in turn combined into Value,
Trend and Sentiment categories. If you need contextual help,
there are notes at the bottom of these tables to explain briefly
each strategy, as there are for other tables.
Each of these kinds of strategy works in a different way.
Value strategies: These
compare the current level of a valuation ratio with a historical
average, going back quarter of a century, where possible.
Trend strategies: They are
algorithms, back-tested over three decades and live since first
launched in 2000 or subsequently revised which generate Buy
or Sell signals.
Sentiment strategies: Each
is a composite indicator, which generates our Best Guess for the
market level a year ahead. Each composite indicator may be
comprised of up to sixteen individual ratios, back-tested over
seven years.
These level of detail is less important if you have limited time. If you have a
favourite strategy, you may just want to check out the current
recommendations on that basis. Valuation ratios change little
from month to month, but Trend signals can change from Buy to
Sell frequently and typically do so every six months. As to
Sentiment strategies, there is a danger of crediting them with
spurious precision, when simply predicting the market’s
direction correctly is already a major achievement.
Charts: After reviewing Tables for the current position for a
variety of markets, select the radio button for Charts to view
historical records and our Best Guess. These go back as far as 1972 so subscribers
can assess the effect of peaks and troughs in inflation, the
major global bear markets of 1973-74 and 2000-02, booms and
busts in exchange rates, various bubbles and several stock
market cycles.
Each of the 10,000 individual charts is composed from just
a handful of selection criteria, each one determined by its own
drop-down menu, which now appear in black. These represent
choices for country or region, chart type, time scale and
investment perspective in the case of Bonds, Forex or Shares
RouteMaps. For the other two RouteMaps there is an additional
fifth menu offering a choice of Asset Class or Investment Style
and Sector.
The default option is set to show the most popular type
of chart for the most important or volatile country as seen by
its dominant investor class, i.e. the Local Investor's View. Hit GO to see
the default option, which is the Momentum & Value Summary
because it combines key elements of several strategies.
Now choose another option from the Chart Type drop-down menu and
hit GO to study the same market over the same time scale from
the same investment view but using a different investment
strategy. By rotating through all the Investment Strategy options, it is easy to see
how attractive any market is on the basis of many
different investment strategies.
It may take time to become used to these chart
types, because many are either proprietary or unusual to you,
and unlikely to be widely found elsewhere because they are too
sophisticated to be generated online. Therefore we also provide
plenty of online help. Initially there is contextual help within
the subscriber section alongside the Profile and below the
Tables and Charts. Then there is more background information
within the Investor Education part of the public section.
Examples of all charts are explained in the Chart Library, which is located in
the public part of our website. To avoid the complications of
logging in and out, you may find it better to open another
window to the website and locate the type of chart you want for
the relevant RouteMap via the Site Map.
Once you have mastered a particular type of chart
that you find particularly helpful, you may want to rotate
quickly through the complete selection. This can be done by
selecting Country in the Slide Show menu, then hit GO. Similarly
you can use the Slide Show to vary any of the other criteria.
Forward and back buttons will now appear beneath the initial
chart that is served up. With each click forward the next chart
will appear. They will be served up in the same order that
countries are ranked in our Tables. That is to say
alphabetically within regions, followed by the regional average,
with global benchmarks appearing last.
Special Projects
In addition to regular monthly reviews, there may be
particular issues that arise from time to time. These may
include trawling the system for new or replacement ideas,
deciding if it is a good time to raise cash or make additional
investments, assessing particular investment themes or deciding
how to react on sudden market movements.
Profiles: Your trawling may dig up interesting ideas about
markets or sectors of which you know little. If so, select the
radio button marked Profiles. This contains investment reports
on all the markets covered in that RouteMap including lists of
quoted investment companies that specialise in each of them.
These reports include fundamental market forecasts based on our
own econometric modelling, a table explaining our Action
recommendation in terms of the component investment strategies,
background briefings and key historical developments.
Chronology of Events: By selecting the radio button marked Chart you can
also view special historical charts. These show how the market
reacted when key developments occurred. Scroll up and down or
left and right to view whatever period especially interests you
in these very large charts.
Having identified which market is worth analysing
closely, you can save time selecting the relevant charts, also
by using the Slide Show option described above. Choose Chart
type from the drop-down menu. By pressing the forward or back
buttons that appear below the chart, you can then review how
attractive it may be based on all of the investment strategies
available, leaving the time series for the market’s performance
constant.
Good Luck