I was reading the latest issue of the Economist yesterday evening, and found it very interesting. The main story was on the proposed US bail-out of the banks and financial institutions. I was surprised at first to see that the magazine believed that the plan was a good idea, and could help the economy.
I was in two minds when I originally heard about the US bailout plan. I hadn't read all of the details yet, and I couldn't see how it could help the financial system. From what I could tell, the plan was that the US Treasury would spend $700 billion to buy "toxic" debt, i.e. securities guaranteed by sub-prime mortgages which were unlikely to be repaid in full. The current market price for some of these securities is about $35 per $100 of nominal amount, so for every $100 of the original loan, the market now expects that only about $35 will actually be repaid in future. Banks and financial institutions that own these assets are in trouble, as their value has dropped from the original price of $100 to a current value of only $35. What I couldn't understand was, if the government was going to buy the securities for $35 each, how would this benefit the institutions holding them? The institutions would still be subject to a huge loss, and in fact the money they would receive would be the same as the current value of their securities, so their financial position would not really improve significantly. Or was the government going to overpay, giving the banks maybe $80 for each of these securities, knowing that they are only worth (and are only likely to repay in future) $35? Was the plan to take the taxpayers' money and give it to the banks to keep them from becoming insolvent? That certainly didn't sound like a very good idea.
Besides, wouldn't this plan destroy investors' faith in the US dollar and the creditworthiness of the United States? Was the US government just going to print off money to save the banks, creating inflation, and reducing the value of US debt (held to a large extent by overseas governments and institutions)? Should I be moving more and more of my money into gold and precious metals?
The only positive thing I could see about the whole plan was that at least the US authorities were trying to do something about the huge problems that their economy and financial system were facing. They were prepared to act quickly and decisively. If Japan had acted quickly and decisively when their own problems started in the early 90's, maybe the recovery process wouldn't have taken as long, or been as painful for the country as it has been. But was the quick and decisive action of the Fed going to cause a lot of pain for non-US investors and institutions holding US bonds, by reducing the true value of these assets? Was another fiat currency about to become worthless?
The articles in the Economist certainly provided some useful insight and information, and I have to say that I'm now a lot more relaxed about the proposed bailout plan, and, dare I say, even optimistic about it! (Well, in a pessimistic kind of way...)
So how is the plan supposed to work? Well, the idea goes something like this...
If we were to use realistic, best-estimate assumptions to value the "toxic" securities I mentioned earlier, we might decide that they are worth something like $65 per $100 nominal. However, because the market is particularly worried about risk at the moment, and is using worst-case scenarios to value these securities (instead of trying to assess the most likely future outcome), it's placing a value of only $35 instead of $65. So if the government can step in and start buying these securities at $65, this will increase the value of these assets, strengthen the balance sheet of banks and financial institutions holding them, allowing banks to start lending money again, and restoring proper market conditions in the global financial markets. And if the securities turn out to be worth $65 in the end, the taxpayer hasn't even lost any money in the process.
It all sounds good, and there is some logic to the plan. Unfortunately, we have to rely on some pretty brave assumptions. Most importantly, we have to assume that the market is taking an extremely pessimistic view of the future, placing a value on these securities that is significantly below their true worth. If it turns out that the market was right, and the securities are only worth $35, then the taxpayer will have overpaid for them, and will end up losing significant amounts of money. In fact, what if things turn out even worse than the market is currently expecting? What if the taxpayer only gets back $20 or $10 for each security? Remember that, not very long ago, the market was placing a value of $100 on these same securities!
But wasting a few hundred billion dollars of taxpayers' money may be a price worth paying, if it's going to save the global financial system from collapse. Because a possible collapse of the financial system could have catastrophic consequences for every aspect of the world economy. If companies and people cannot borrow money, economic activity would slow to a standstill. Companies would be forced to scale down their operations or close down completely, unemployment would rise to extremely high levels, and we'd all struggle to make a living. It could be the 1930's Depression all over again. I only know about the Great Depression from books and movies, but I know it's not something we'd want to go through at any point in our lives.
But are things really that desperate? Are we facing a possible collapse of the global financial system? Well, it's certainly not looking very good at the moment. We've had problems with Freddie Mac and Fannie Mae, the collapse of Lehman Brothers, the near-collapse of AIG, institutions which were previously thought to be too big and / or too safe to fail. And yet they did. (Or almost did.) Over the last few months, and to an even greater extent over the last few weeks, banks had almost completely stopped lending money to each other, and even money market funds were starting to get into trouble. Money market funds are supposed to be extremely safe investments, equivalent to cash. They lend to banks and other institutions on very short durations, and play an important role in the financial system. Some of these funds were holding Lehman Brothers debt when the company collapsed, so they started losing money. This was not supposed to happen. Money market funds were supposed to be as safe as cash in the bank. (Hmm...) And once investors realised that these funds were not 100% safe, they started taking their money out. If this process had continued, another very important source of liquidity for the global financial system would have dried up. So things were getting pretty bad. The Fed had to do something.
And they did. They came up with the bail-out plan. It's not going to be easy to get out of this mess, but we have to try. Could the bailout plan end up costing billions of dollars to the US taxpayer? Yes. Could it lead to a de-valuation of the US dollar? Yes. Is it going to magically sort out all the problems in the global economy? No. But by acting quickly, we may avoid seeing the worse of this crisis.
During recessions, governments need to spend money to re-start the economy. They need to spend money to provide jobs for the unemployed, to buy products from companies that may otherwise find no buyers. That's the only way the government can stop the economy from coming to a standstill. So now is not the time for governments to suddenly remember that they need to be prudent and careful about spending taxpayers' money. Now is not the time to try to address the budget deficit. Now is the time to spend. Now is the time to build roads, repair electricity networks, spend huge amounts of money on infrastructure projects, wind or solar energy systems, and generally do whatever is necessary to keep the economy moving.
The bail-out plan is a start. By helping the financial system to continue to operate, we may be able to prevent some of the most pessimistic scenarios from becoming reality. But let's not kid ourselves, the bailout plan on its own is not going to fix all of the problems in the economy. House prices are likely to continue to fall, a lot of people employed in the financial services industry may still lose their jobs, unemployment may still rise, and company profits may still fall. We'll probably still experience a recession. But we may avoid the worst-case scenarios. 30% unemployment, a collapse in companies' profits. More bailout plans and more spending may be necessary in the future. More taxpayers' money may have to be spent. The budget deficit may have to increase even further.
None of these things are good. I'm very fond of capitalism, and would prefer the state to have a much much smaller role in the economy. I would prefer taxes to be reduced, I would prefer the public sector to contract significantly. I would prefer the Treasury to have a budget surplus instead of a budget deficit. But now is not the time to address all of these issues. Now is the time for the government to play its role in stabilising the financial system and re-starting the economy. Because the alternative could be disastrous...
PS1. Things are moving pretty fast, and it's difficult to keep up with all the news these days. By the time I'd finished editing this article, the US Congress had already rejected the bail-out plan, and it wasn't clear what the next steps would be. I suspect we haven't seen the last of the bail-out plan yet.
PS2. As always, none of the above (or below) is to be taken as advice on investments or any other matters. I've used terms like "government", "the Treasury", "the Fed", etc. interchangeably. You know what I mean. Although I'm referring to US practices, events, and institutions, Britain faces similar challenges, and probably needs to address them in a similar way. You may find that I've over-simplified things here and there, but I think the general ideas still stand. Governments need to spend money to cure recessions. Ideally the money should be spent on productive and worthwhile projects which will benefit our society for years to come (infrastructure, research and investment on developing alternative sources of energy, etc.).
PS3. Because the accumulation of debt has contributed to a lot of the problems we are now facing, some people now seem to think that debt is a bad thing that should be avoided at all costs. My view is that there is bad debt and good debt. Bad debt sounds something like this: "My salary is low, I can barely make ends meet every month, but I want to take my family on a round-the-world holiday this summer, so I'll borrow £20,000 from the bank to finance my holidays." Bad debt is usually a very bad idea. Good debt sounds something like this: "I'm 18 years old, and want to become an actuary/lawyer/engineer. I've researched the industry, and it seems that there is a lot of demand for actuarial/legal/engineering skills. I believe I have the skills and abilities needed to become an actuary/lawyer/engineer. I need to borrow £25,000 to finance 3 years of university studies to acquire the skills necessary to achieve my goals." Good debt can be a risk as well, but it's usually a risk worth taking. The return on the original investment can be very substantial. Unfortunately, distinguishing between good debt and bad debt is not always as straightforward as in the examples above.
PS4. I have no doubt in my mind that the best investment I've made in my life was my university / actuarial education. I don't expect my investments in shares or precious metals to ever provide a better return. And I'm grateful to my parents for helping to finance my university education, so that I didn't have to take out any loans to pay for it...
Sunday 28 September 2008
Saturday 13 September 2008
My investment strategy
Because I'm generally pessimistic about economic prospects, I prefer to invest in big, established and profitable companies that have a good chance of surviving any downturn. I also hold a large part of my portfolio in cash. I have some investments in precious metals, in case things go very badly wrong and it takes us a very long time to recover from the recession. And I have some investments in shares related to agriculture, which might do well in the scenario where inflation picks up significantly. (These investments are in the form of unit trusts. I don't know much about this sector to select individual company shares. That's why you won't find any of these in the sample portfolio below.)
I try to have a portfolio that is diversified over a wide range of industries and countries, so that I'm not too heavily exposed to a particular industry or country. I try to include some sectors that I don't have much confidence in. This is because I believe that any of my assumptions and predictions could turn out to be wrong, and I don't want my portfolio to perform spectacularly badly in that event. I want a portfolio that will do well if my predictions are correct, and less well but still producing an acceptable return if my predictions turn out to be wrong.
I prefer companies that pay a reasonable level of dividends (about 3% or more p.a.). This is not a strict rule, and my portfolio does contain some shares that pay a much lower level of dividends, but I generally have more confidence in companies with good dividend yields. It shows me that their profits are not just an accounting fabrication, made up of weird accounting rules and regulations, but real money that can be paid out to me as a shareholder.
And finally, I have a very long-term investment horizon. (I do make short-term investment decisions from time to time, but am ignoring these for the purposes of this post.) I want to build a portfolio that I can hold over the next 10, 20, 30 years without the need for constant re-balancing. Not many people can predict how different industries will perform over these timescales, and I don't pretend to be one of them. Diversification is therefore important. I don't worry too much about short-term market volatility if I think that in the long term things have the potential to improve.
This document was actually written at the beginning of July 2008 and emailed to some friends and family members. What follows is an investment portfolio, made up entirely of shares that I used to own at the time. The only reason this portfolio is included here is to demonstrate the type of shares that I had selected based on my views discussed above. It is NOT meant as a list of recommended shares or as a recommended investment portfolio.
Ok, so here comes the list.
|
|
| Share Price | Dividend yield |
| BP | £ 3,000 | £ 5.5150 | 4.1% |
| Shell | £ 3,000 | £ 19.4000 | 3.7% |
| Glaxo | £ 3,000 | £ 11.7350 | 4.5% |
| Astrazeneca | £ 3,000 | £ 23.5600 | 4.0% |
| Prudential | £ 1,500 | £ 5.0800 | 3.5% |
| Aviva | £ 1,500 | £ 4.8450 | 6.8% |
| RBS | £ 1,500 | £ 2.0600 | 8.1% |
| BBVA | £ 1,500 | £ 9.6020 | 4.3% |
| General Electric | £ 3,000 | £ 13.4370 | 3.6% |
| Vodafone | £ 3,000 | £ 1.5190 | 4.9% |
| Rolls Royce | £ 2,000 | £ 3.2550 | 4.0% |
| Toyota | £ 2,000 | £ 45.9370 | 2.2% |
| Unilever | £ 2,000 | £ 14.0900 | 3.7% |
| P&G | £ 2,000 | £ 31.7920 | 1.9% |
| Hewlett Packard | £ 3,000 | £ 21.6900 | 0.6% |
| Veolia | £ 3,000 | £ 26.4890 | 2.2% |
| Physical Silver | £ 4,000 | £ 8.9620 | 0.0% |
| Cash | £ 38,000 | £ 1.0000 | 4.0% |
|
|
|
|
|
| Sum | £ 80,000 |
| 3.7% |
Notes: This is NOT my actual current portfolio, or current value of my portfolio. I've been buying and selling shares for a number of years now, so my portfolio is not as neat and tidy as the one above. However, the list above is made up entirely of shares that I currently hold (I thought I would be cheating if I included shares that I don't actually own.) Amounts are made up (to come up with something that looks like a balanced portfolio) and do not represent my actual percentage exposure to each share. I've included cash to illustrate the point that I'm not fully invested in shares, and assumed that cash will earn interest of 4%. I've also included silver to illustrate one of the other areas that I invest in to increase diversification. I got the information on share prices and dividends from the internet on 5 July 2008. Dividend yields were calculated using information on dividends paid during 2007. For non-UK shares, I've reduced the yield to allow for 15% withholding tax, and for RBS I've divided last year's dividend by half to make some allowance for expected dividend reductions following the recent rights issue. I do have other investments that are not listed above (mainly in unit trusts), and I do not intend to keep updating this list for shares that I may buy or sell in the future. Again, I need to point out that the above table should NOT be taken as advice to structure (or not to structure) your portfolio in a similar way. Oh, and if I was starting again, I probably wouldn't have bought RBS shares…
(Note written in September 2008: I should probably state here that I have sold my Astrazeneca shares since originally writing this document. They had increased in price by about 30% since I'd bought them, so decided to take some profits. As this doesn't really change any of the things I've written below, I decided not to edit the list above or any of the comments below.)
Some very brief comments on the companies listed above follow. I've tried to discuss briefly some of the risks relating to these shares, although this is only a very very brief summary…
BP, Shell: Big oil producers, reasonable PE ratios, good dividend yields. Oil prices are currently very high, and could fall, potentially reducing share prices for these companies. As oil reserves are depleted, it's becoming more and more difficult and expensive to find new oil reserves and extract oil from the ground. Oil companies will often operate in countries where the political regime is not stable, or is not friendly towards big multinational companies exploiting their country's natural resources. Governments may decide to increase the tax burden for oil companies. Corruption may be prevalent in some of the countries where these companies operate. Having said all that, I think that the world will continue to rely on oil as a source of energy for some time to come, so BP and Shell should continue to make good profits for the foreseeable future.
GlaxoSmithKline, Astrazeneca: Big pharmaceuticals, reasonable PE ratios, good dividend yields. Budgets for research and development can be extremely high, and there is no guarantee that expensive clinical trials of new drugs and treatments will produce positive results. As patents for old drugs expire, sales will decrease because cheaper generic treatments can be produced by other companies. Pharmaceuticals therefore need to continue to develop and bring to market new drugs to make up for reduced sales from drugs whose patents have expired. The cost of buying drugs is an important part of the overall expenditure for many countries' national health services, and there will always be pressure on pharmaceuticals to reduce prices. However, people will always want to receive the drugs that will treat their various illnesses. And as people are living longer, they are likely to require more care and treatment during their lifetime. So big pharmaceuticals should be able to make reasonable profits for some time to come.
Unilever, Procter and Gamble: Relatively high PE ratios and low dividend yields (especially for P&G), probably justified by the fact that these companies have hundreds of leading brands in household products, used by millions of people around the world, so the companies should be around for some time to come. Inflation in raw materials costs may eat into these companies' profit margins. As the companies try to increase their prices in order to maintain profitability, (and as consumers would have less money to spend during a recession), some people may decide to switch to cheaper non-branded alternatives. Still, Unilever and P&G are huge companies, and should survive a recession, making decent profits for their shareholders along the way. (Very similar comments probably apply to Nestle as well. However, I tend to avoid Swiss shares if at all possible because of the high withholding tax rates applied to dividends by Swiss tax authorities. As I don't consider Nestle to be vastly superior to P&G, I prefer to hold P&G rather than Nestle.)
General Electric: One of the biggest companies in the world, offering a good dividend yield and a reasonable PE ratio. General Electric is a global conglomerate, involved in infrastructure, finance, media, etc. (and facing different risks in each of these areas.) Hopefully, a company of this size can survive a recession.
Toyota: Big auto-manufacturer, reasonable PE ratio, low yield. Car sales are likely to suffer during a global recession, but I've included Toyota in my portfolio for reasons of diversification, (and because I always try to include in my portfolio some sectors in which I don't have much confidence in). I don't know much about cars, but analyst reports suggest that Toyota is one of the best-run auto-manufacturers around. If General Motors or Ford do not survive the downturn, this would reduce competition and help Toyota in the future. I also like Toyota because it gives me some exposure (although probably quite small) to Japan and the Yen. I'm not sure why I like Japan, the last 20 years have certainly not been a very good time to own Japanese shares, but I think that the return of inflation may be bad for the global economy, but good for Japan, who has been struggling with deflation for the last few years.
Veolia: Water utility, also involved in water treatment, desalination, waste management and other environmental projects. Relatively high PE ratio and low yield, especially for a utility. Included because I think that the world is running out of clean, drinkable / usable water, environmental issues are becoming more and more important as time goes by, and Veolia is well placed to benefit from these trends. Because of that, the market has high expectations for Veolia, and if these expectations are not met the share price may suffer. (In fact, this may be why the share price has declined significantly over the last few months.) I am thinking of adding some more utilities in my portfolio (as Veolia is not really a typical utility). Any suggestions welcome.
RBS, BBVA: Big banks with low PE ratios and high dividend yields (but note that this is based on historic earnings and dividends, and there is no guarantee that either of these can be maintained. In fact, I think RBS has already said that dividend levels will have to be adjusted following the recent rights issue.) These are probably the two stocks in my portfolio that I am least confident about, and if I was starting my portfolio now I would probably buy HSBC or a big Japanese bank instead of RBS and BBVA. Banks make money by lending funds to people and businesses. During a recession, lending activity tends to slow down, reducing bank profits. Some borrowers may also be unable to repay their loans, further reducing bank profits. So there are certainly risks involved with holding bank shares. But banks will always provide a valuable service to the economy, and should be rewarded for that. In the long term, they should be able to make reasonable profits. RBS has operations in several parts of the world, and BBVA is mainly exposed to Spain, Mexico, and Latin America, but has ambitious plans to expand further.
Aviva, Prudential: Another two companies involved in the financial services sector (insurance), so any recession could hit them hard. As asset values fall, solvency concerns may appear, and the income that insurers receive from managing assets will decrease. Again, these companies are included in the portfolio for reasons of diversification and taking a long-term view. Prudential has a decent yield (but low compared to some other insurers). It has a very strong position in several South-East Asian markets, and that's the main reason I've included it in my portfolio. I also think they've made some very good calls on the markets over the last few years, so they must have some smart people at the top. Aviva is stronger in the UK, and has both life and general insurance operations, which increases diversification. It also has a very good yield.
Hewlett Packard: Dividend yield is less than 1%, but this is common for IT companies. As IT has become such an important part of out lives, I wanted to have some exposure to the sector. My feeling is that this is a very competitive sector, and things can change dramatically very fast. A company dominating the market today may lose that position quickly, and a new competitor may appear out of nowhere to take its market share. (Did Google exist 10 years ago?) HP makes printers, laptops, and they have just bought EDS, which is a company providing IT outsourcing services to other companies. Three sources of income gives HP some element of diversification, which I like in a market as competitive and fast-moving as IT. The fact that HP just bought EDS is seen as a risk by some analysts, because the integration of the two companies may not go smoothly. However, it also gives HP the chance to compete more effectively with IBM in the IT services sector.
Vodafone: Mobile phone operator with a presence in several parts of the world. Reasonable PE ratio, good dividend yield, and exposure to emerging markets such as Turkey and India. I'm particularly interested in the exposure to India, as the market there could be huge. A lot of Indians don't have access to landlines, (ask me about my recent trip to Mumbai if you want to know why), so they're using mobile phones instead. That's more than 1 billion people (potentially) relying on mobiles for their telecommunication needs. But is Vodafone's share price already allowing for this potential? And are people in Europe and the US going to continue to use mobile phones to the same extent as they do now during a recession?
Rolls Royce: Rolls Royce do not make cars, they make airplane engines. I don't own shares in any airlines, so this share gives me some exposure to the sector, and I don't have to worry about the effect of the increasing oil price as much. Although obviously if airlines don't do well, they will stop ordering new planes, so Rolls Royce revenue will be affected. At the moment, RR have a big order book, a reputation for quality, and the shares trade on a reasonable PE and dividend yield.
Physical silver: I've focused so far on company shares, so I wasn't sure if I should be including physical silver in the list. I decided to mention it because I think that any well-diversified portfolio should have some (small) exposure to precious metals. Especially if you think we're headed for a nasty recession. The share price of any company listed above could go up or down, and could, under very negative economic conditions, reach zero if the company goes bankrupt. I don't think the price of silver will ever reach zero. It could fall significantly, but silver will always have a value. Physical silver does not provide you with dividends (in fact, there is a small annual charge to cover fees for storage, insurance, etc.) and its price has increased a lot over the last few years, which some may see as another bubble forming. (I don't take a view on this. People have used precious metals as a store of value for thousands of years, and that's why I hold some in my portfolio.) Very similar comments to the above would equally apply to gold, or platinum.
My opinion on the state of the world economy
I'm generally quite pessimistic about the state of the world economy, and prospects over the next few years. To some extent, this is probably because I tend to be a bit pessimistic by nature. I'm an actuary, so I always focus on potential risks, maybe more than I focus on potential rewards.
I'm sure you've all heard about the credit crunch. And you've probably also noticed that interest rates on mortgages have been going up, increasing the amount of money that people have to spend on mortgage payments every month, gas and electricity bills are going up, food inflation has been picking up lately, so lots of essential items seem to be increasing in price. This leaves less money available to spend on non-essential items. At the same time, house prices are falling, making people feel gloomy, and less likely to spend lots of money on the high street. The problem with that is that the less money people spend, the less profits companies make, and when companies do not make profits they try to reduce costs, and they do that by reducing their workforce. And higher unemployment means even less spending, less profits, more unemployment, and it all goes round again.
So I think that the global economy is heading towards recession. I also think that prices for food and energy could continue to increase or stay at high levels for some time to come. The world's population is increasing, putting a strain on the planet's natural resources. We need to increase agricultural production to eat, and extract vast amounts of oil and base metals from the ground to maintain our standard of living.
Now even though I think that all of these things could happen, and in fact I do believe that the next few years are going to be difficult for the world economy, I have great faith in mankind's ability to invent new and ingenious ways to solve any problems that come our way, so I think that we'll somehow manage to get over these problems eventually.
Introduction - start here!!!
Well, as most of you know, I invest in the stockmarket, spend a lot of time reading financial news and information, and I generally enjoy the whole process of investing and following the movements in the financial markets. Some of you have asked me about my views on the market, whether it's a good idea to invest in the stockmarket or not, whether now is a good time to buy or sell shares, what kind of shares I own, etc. And most of the time, my answer to these questions tends to be brief and rather vague. I'm always a bit wary about answering such questions. That's not because I don't want to share my views with you, but because answering any of these questions fully would take a very long time, and I'm not sure I can answer any of them properly as part of a casual conversation over lunch or over the phone in the evening. Is it a good idea to invest in the stockmarket? Well, this probably depends on your personal circumstances, your financial objectives, attitude to risk, investment horizon, whether you might need to access your funds over the next few years, and hundreds of other things. Is now a good time to invest? Again, this depends on hundreds of different factors, most of which are extremely difficult to predict with any degree of certainty. For example, how is the global economy going to perform over the next few years? I've got some views on the issue, but I don't feel comfortable with you risking your money based on my personal views on the outlook for the world economy. What shares do I own? Well, I don't really want to give you a random list of shares I own without explaining to you a little bit about the background of how and why I have chosen these particular shares, the risks associated with them, etc.
But because I do enjoy following the markets, and discussing my views on stocks and shares, the oil price, the prospects of the world economy, etc. I decided to start this blog and start writing about some of my views on all of these issues. I should probably warn you that if you are not interested in stockmarket investments, you will probably not enjoy this blog. I may at some point start another blog to keep you up to date with my personal news, but at the moment all you'll find here is discussions on the markets, stocks and shares, etc.
Now before we go any further, I need to make something very clear. This blog is for general information only, and is NOT intended to provide investment advice. I'm discussing my own personal views, and am not advising you to make (or not to make) any investment decisions based on what I've written. The blog is potentially being viewed by several different people, who may have very different financial needs and objectives, so any views expressed here may not correspond to you. I cannot guarantee the accuracy of the information contained in this blog, and such information may no longer be up to date by the time you read it. Your capital is at risk when you invest in shares, and you may get back less than the amount you originally invested. You should do your own research and seek advice from a qualified financial advisor before making any investment decisions. I accept no liability for any loss that you may suffer as a result of any investment decisions that you make. In summary, you should not rely on this blog to make (or not to make) any investment or other decisions.
So bearing all of this in mind, in the next two articles I'll discuss
- My general opinion on the state of the world economy, future prospects, and prospects for company earnings
- My general investment strategy, together with an investment portfolio that is meant to demonstrate how I use this strategy in practice (this document was written in July 2008, and the portfolio was made up entirely of shares I owned at the time)
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