Investment principles

Ryan_Futuristics

TheTracker wrote: »

I could be wrong. But I imagine if a Value Premium is proven and transparent (identifiable by a screen) then that would lead to a fairly valued premium, much as risk may be now. It would remove competitive edge, but it would increase the efficiency of the market, potentially raising returns. I don't think it would lead to a reduction of edge alone. I could be wrong. Then Ryan & co would move on to other poorly appreciated premiums.

Well I think the US might be an example of what happens when a market becomes so scrutinised and over-analysed that there's no *sensible* value to be found anywhere

The software, ETFs and metrics they've got for US markets are fantastic - makes us look positively prehistoric

I'd go as far as to say the US may be a truly efficient market, and the only way to beat the market would by timing it well

TCA

Ryan_Futuristics wrote: »

So I think the risk/reward profile makes being overweight Russia worthwhile ... I invest mainly through JP Morgan New Europe, which is 44% Russia, and has other similarly cheap regions in to spread the worst-case risk a bit

Ryan, I think you also mentioned holding Baring Emerging Europe IT (BEE) a while back, which I've been keeping my eye on, having decided I'm not brave enough for JP Morgan Russian Securities IT (JRS). I'm also watching BlackRock Emerging Europe IT (BEEP).

I'd be interested to hear your reasoning as to why you've (mainly?) opted for a fund as opposed to an investment trust in these areas? Are you topping up existing holdings given the drops we're seeing?

Ryan_Futuristics

TCA wrote: »

Ryan, I think you also mentioned holding Baring Emerging Europe IT (BEE) a while back, which I've been keeping my eye on, having decided I'm not brave enough for JP Morgan Russian Securities IT (JRS). I'm also watching BlackRock Emerging Europe IT (BEEP).

I'd be interested to hear your reasoning as to why you've (mainly?) opted for a fund as opposed to an investment trust in these areas? Are you topping up existing holdings given the drops we're seeing?

I don't *think* I mentioned BEE (unless I'm being forgetful or typed something silly - but I don't actually hold that one)

Well I suppose my reasoning is that in my value portfolio, the *decisions* I make with asset allocation, how cheap I buy, when I choose to reduce exposure, etc. really dictate returns .. I suppose I prefer IT's when I'm planning to buy and hold something that doesn't need much attention

So what I'm really looking for is regional allocation ... and in the case of JPM New Europe and BEE, they're both about what I want, but the OEIC's got a slightly lower charge for me and very similar performance

Looking at BEE on MorningStar though, I notice a P/E of 6 and forecast earnings growth of 21% ... A secondary valuation I use is the PEG ratio, which in that case would be 6 divided 21 ... which would be 0.29

Anything less than 1 I'd consider very good, even more so with a good dividend (sometimes I divide P/E by Growth forecast + dividend, which makes BEE look very good value)

That might simply be down to a slightly higher Russia allocation - Russian-only funds have a very good PEG ratio now (I don't know that many people use PEG ratios for funds - I'm just trying it out)

So both look very good value to me ... It's just slightly cheaper for me to hold and rebalance open funds

Actually I've only bought JPM New Europe on dips, so I'm only *just* in negative territory with it today (funnily enough), and only by about half a percent

I was thinking when would I top up ... Maybe not until it's 5% down ... That might be a point where I look again at prospects and see whether it's still something I'm happy with ... Or I might just trickle money in while it's in negative territory

Like I say I'm not 100% about Russia - I'm topping up Italy and Brazil too, and will maybe start buying a bit more China too

guymo

Ryan_Futuristics wrote: »

I'd go as far as to say the US may be a truly efficient market, and the only way to beat the market would by timing it well

Except that it is precisely the US market in which the value premium has been identified and shown to persist despite this identification and the attendant publicity. (Depending on whose data and analysis you believe, of course.)

TCA

Ryan_Futuristics wrote: »

I don't *think* I mentioned BEE (unless I'm being forgetful or typed something silly - but I don't actually hold that one)

Sorry, must just have been one that I was looking at myself.

Ryan_Futuristics wrote: »

Looking at BEE on MorningStar though, I notice a P/E of 6 and forecast earnings growth of 21% ...

These are the metrics from 31st August, so I don't know how much they've changed since. I like Morningstar but it's an annoying trait that you can look at the Portfolio(Latest) tab, which in this case is dated 31st October, but Portfolio(Full Holdings) can be annoyingly out of sync.

Ryan_Futuristics

guymo wrote: »

Except that it is precisely the US market in which the value premium has been identified and shown to persist despite this identification and the attendant publicity. (Depending on whose data and analysis you believe, of course.)

Well you may well be right - but I just tend to find stock screeners often have a really hard time finding more than 1 or 2 US stocks that really fit (conventional) deep value profiles ... I hear it's a problem ... But there are probably more flexible approaches

TCA wrote: »

Sorry, must just have been one that I was looking at myself.

These are the metrics from 31st August, so I don't know how much they've changed since. I like Morningstar but it's an annoying trait that you can look at the Portfolio(Latest) tab, which in this case is dated 31st October, but Portfolio(Full Holdings) can be annoyingly out of sync.

I'll have to keep an eye on this (some of them are quite a few months out date)

But I notice the metrics seem to update quite often and in line with the markets, so what I *think* they must do is take a snapshot of the fund holdings maybe quarterly (which in most cases wouldn't change much) then I'm guessing they pull fresh figures from the individual equities from a live database perhaps daily or weekly for the metrics

gadgetmind

Ryan_Futuristics wrote: »

I hear it's a problem

It's a problem for those who need to show long-term outperformance to justify their massive fees. The rest of us need not worry.