Alpha Investment Newsletter

Stay Ahead in 2017 and Beyond...

The S&P500 Gained 70% in 2009 on Rebound from 2008 Collapse. Gained Further 20% in 2010, Closed Flat in 2011, Gained 12% in 2012, and Gained 40% in 2013-2014. The Central Banks have supported the Global Economy like never before, and that has caused this large rally since 2009.

Despite Fewer Jobless Claims, the US Economic Recovery is still not strong. Many Jobs are Part-time and Wages are stagnant.

Euro zone is showing some growth after many years of weakness.

Emerging Markets (India, China, Brazil, Russia) are struggling with unemployment and inflation with moderate growth.

Japan has negative interest rates and is trying hard to get some inflation.

Meanwhile, the Global Equity Markets are at their highest levels.

NASDAQ hit 5000 in March 2015 – first time after year 2000!

S&P500 hit 2400 in March 2017 – after hitting 666 in March 2009.

Low interest rates are holding up the Global Economy. How long can it work? Can it help us muddle through? US Fed rate hikes will cause major turbulence in many sectors that have got used to free capital over last 8 years.

Banks, States and Countries Can Still Fail in2017 just like in 2008, Taking Everyone Down in the following sell off. But the same uncertainty offers opportunity.

Where Are We Headed From Here? When Should You Stay In the Market and When Should You Exit?

As An Investor, You Know The Importance Of Timely And Actionable Market Analysis.

Stay Ahead with Alpha Investment Newsletter... in 2017 and beyond.

Charts of the S&P500 Index illustrate a roller-coaster ride of peaks and valleys, but in the end, "buy and hold" investors are pretty much left stuck in the mud when wild market swings take away profits earned over several months.

However, if you sell at higher levels and buy-back back at lower levels, then you can do much better than the Index. And when the markets are moving up with a clear uptrend, then we just hold as long as the trend is in place, which can be several months in each case. We have been gaining from this approach for a long time.

Our subscribers are based in North America, Europe, and Asia-Pacific.

Our newsletter tells you what we will do in the coming week/month: Market levels for Buy, Hold, or Sell.

We trade only with Index ETFs covering these 4 markets: USA, Europe, Hong Kong/China, and India. The global capital markets take cues from the USA, and the S&P500 is the main index to watch from worldwide.


Some Recent Benefits:

Trading Index ETFs is profitable when you buy during market falls, exit the market at a high point, and buy back your ETFs at lower prices again. Our newsletter will have the information on when to buy and sell — you just have to use it!

Please Note: Our newsletter can also be used for Index Futures trading for good results, but Index Options trading is a very different ball game due to time value, and we don't advise any option trading with our newsletter.

The goal of Alpha Investment Newsletter is to give you a regular update on the Global stock markets (using key indices) and to keep you aware of the key developments affecting the markets, and to guide you with specific inputs (in terms of buy and sell levels) that we are using for our model portfolio.

We are in the Tech Century, and we strongly believe that technology industry (Internet, Software, Biotech, etc) will be the major wealth creator in this century, and we have seen this first hand through stock options, and rise of Apple, Google, Amazon, Linkedin, and Infosys stock prices over the last 15 years. This is a long term trend, though the leaders of tomorrow maybe different from today.

Nasdaq ETF (QQQ) has been our top pick since 2010.

Who Can Benefit and Who Can Not?

Our newsletter is aimed for investors who want to make profits from investing in stocks/ETFs by trading just about 10 times in the entire year; it’s not meant for day-traders or very short-term traders who are working with tight stop losses. However, index futures trading can be done very profitably using our newsletter. So we will not be giving intraday trading calls or daily trading calls - that is not the goal of this newsletter. It is very difficult to successfully predict such short duration changes in the market.

The goal of our newsletter is to identify the broad trends in the market and to use them in such a way that we are reducing the risk of our investment, and staying in the investment only when the market conditions are favorable for a positive movement and growth of our investment. 

We publish our newsletter by email (about 2-4 times per month on weekends) along with summary of the market, and any essential notes or action items that may be needed in case of unexpected or extreme market behavior. Therefore, you will need regular access to your email.

Money Saved Is Money Earned...

The market forces are powerful and they affect stocks across industries. Even the best companies took a big beating when the market crashed in 2008 and early 2009. That's a clear example of how irrespective of the quality of the company and the quality of earnings, when the market sentiments are bad, the stock prices will go down along with the market.

One stock may fall 30%, while other may fall 50%, but both are large falls and what we want to do is to give you inputs to help you exit the market at times when we believe the situation is not favorable and a correction in prices is overdue. That is a big money-saver in our experience.

Our investing experience has shown that it’s possible to have run a profitable investment with just about 6-15 trades per year, spending much less time on managing the portfolio. Our profitable portfolio has just 5 components, including cash, and it is very easy to replicate at your end.

A common myth in the market is that you have to trade a lot to have high returns – that’s not true. When you trade a lot you also have very high brokerage costs and you are also likely to miss some of the larger trends in chasing some of the smaller trends. Our experience has been that it is most profitable to work with larger market trends -- seek 10-20% gains rather than 2-3% gains in short term trades -- to stay invested when the trends are positive, as opposed to day-to-day trading, which is what most traders do. 

It is profitable to move out of ETFs/stocks into Cash or Gold when the equity markets are not looking favorable. In fact the market's technical indicators often give warning signals before the markets start falling, which is when most people start to take notice, and that is one of the big benefits of our newsletter where we are able to protect the portfolio from any significant losses like in 2008.

Therefore, one of the biggest benefit of following our portfolio updates is that your losses can be limited in the event of major market falls -- we are likely to have a couple of them in 2010 and 2011 -- because the moment we see weakness/bearishness in the market through technical indicators we will move away from ETFs/stocks into cash and you can consider doing the same.

After we have exited the ETF, sometimes the market may continue to move further before finally coming down. We prefer to lose some extra gain than to lose investment capital, especially when global investors can pull money out with great speed. Thus, exiting the market while it is still bullish or after a large rally has played out, reduces the risk of facing rapid corrections which can take the market down by 5 to 10 percent within 2 or 3 trading sessions, and this has happened several times in the past, and it will surely happen in the future too.

The markets rarely rise a lot within a few days but they can fall rapidly within a few days. Market falls are 3-4 times faster than market rise. So it’s very important to protect the investment portfolio from extreme falls, and that is something that we want to ensure using all our indicators, to exit the market once the weakness becomes visible, and come back after the weakness is gone. Sometimes the weakness remains for a few days; sometimes the weakness remains for a few months. It’s okay as we must maintain cash when we are not in a positive market because cash is the best way to preserve the value of the portfolio.

We share planned portfolio updates in our monthly newsletter, with updates every weekend. If there is an important/urgent market development, then we may mail you mid-week. Otherwise, in the course of normal market behavior, we don’t need to do anything except to stay on the course. We will let you know by email when the market course is changing so that you can take the action that we have already taken so we can stay in sync and take the same actions.

So our newsletter will tell you how we are managing our portfolio, and you can decide suitable action at your end. If you were to copy our actions, you would get the same gains and you would have the same protection to your portfolio. And in addition to that you can use our market analysis to plan your own portfolio in a bigger or a narrower way as your case may be. 

We are long term investors, and do not want to take any intra-day trading. Our portfolio can be managed by looking at the ETFs/portfolio once a week or maybe 2-3 times per week if you want to be active, and in that sense whenever there’s an important message you will get it by email and you can take an action on that, and we will let you know in advance that this is a good time to buy or this is a good time to sell and exit to market.

Please Note: We will not be able to advice on individual stocks or individual questions because this is a newsletter service. We do our analysis; we publish the newsletter. You can read the newsletter and use it in whichever ways you think it’s most beneficial for you. For any individual queries on any investments you can speak with a certified financial advisor or certified financial planner.

We will be doing the actions on our own portfolio and you can consider doing the same – that’s the fundamental message that we have and we will continue to see newer opportunities in the market so if you find something which is an attractive investment opportunity we will add that into our portfolio and in that sense, through our portfolio, not only you will understand when to enter the market; when to exit the market, you will also learn about newer investment opportunities, some of which you could consider for your own investments as well.


Our Portfolio

We have the following model portfolio:

  1. S&P500 ETF and Nasdaq ETF (covers US and Global market) - 60%

  2. S&P Europe 350 Index ETF - 10%

  3. India Index ETF (covers high growth market of India) - 10%

  4. Hang Seng Index ETF (covers China & Far East) - 10%

  5. Cash (as gold ETF) - 10% 

Thus our newsletter covers 4 major markets across the world – USA, Europe, India and China/Hong Kong markets.

The ETF details are shared with subscribers. All ETFs are available for investors in the USA and Europe. We have seen strong interest in emerging markets from investors in USA and our portfolio has received good response.

Following chart shows the performance of the Index ETFs in our model portfolio.
Majority of our portfolio is S&P500 ETF (SPY) and Nasdaq ETF (QQQ), so we have been with the top performers.

Following chart shows long term Index performance comparison from June 2007 to May 2017.

The top performer (in local currency terms) is Nifty index of India, because the Indian economy has been growing at 6-7% despite weak global growth, and the index performance reflects that growth. However, the Nifty Index ETF (INDY) in USD has not done that well, because the Indian currency INR has depreciated against the USD over last 8 years. Europe has seen very weak growth and the Europe 350 index has been the weakest performer in last 10 years. S&P500 index has done well, and we have maximum weight for it.

Global capital has been largely concentrated in the US markets since 2009, and at some point, the capital may move out into other markets, especially Asian markets. The movement to European markets is already happening in 2017 because the Eurozone is showing 2% GDP growth. Overall, the S&P500 and Nasdaq index can still offer very good returns over next 20 years. They have moved up a lot in last 2 years, so we may see 10-20% correction in the near term, but investors should aim to buy the index ETFs after such a correction or adjustment.

Following is a sample set of trades from our model portfolio. From March 2007 to April 2010, our Simple ETF-based portfolio delivered 127% gain compared to 13% loss in S&P 500 ETF over the same time period. Alpha Investment Newsletter-2207-2010-portfolio-chart

When we buy an Index ETF (S&P500 ETF SPY), we are buying the entire market, which eliminates company specific risks.

In my 17 years of market experience, the single biggest risk to investment capital comes from company specific risks, like lawsuits, some corporate governance issue, some plant accident, and the stock loses 20% within 2 days. Fund managers may say they are good at stock-picking but it’s really difficult to pick winners on a consistent basis. The difficulty with stock picking is that even after you have identified a winner, you can't load all your capital on one stock. So you need at least 4-5 winners to load your capital, and that's difficult even for good fund managers. Capital moves with great speed between stocks and sectors. No fund manager can match the speed of capital movements. In addition, even top quality stocks can run into trouble. For example, a blue chip like Goldman Sachs fell almost 25% over 2 weeks in April 2010 due to legal issues. Index ETFs make things simple while delivering good gains and lowest possible equity risk.

We have benefited significantly from our strong positive view of the Technology industry.

The Tech sector has been growing well in last 15 years, and holds the best growth potential even for next 20 years. The significant out-performance of Nasdaq compared to S&P500 is a clear proof that investors are willing to give higher valuation to Tech companies, because major problems can only be solved by technology innovation, whether it is cancer treatment or new energy storage devices, or business data management, or better learning systems and communication systems to increase productivity of people. On the other hand, investors are not willing to give high valuation to mature industries like steel, cement, logistics, retail, etc. The Nasdaq index provides the best investment opportunity in a basket of leading tech companies, and hence it is easily the best index for investment. There will be some 10-20% corrections along the way, but the best returns will come from Nasdaq index for sure.

The market is very intelligent, and it’s very difficult to beat the market in long term. Despite the best efforts most actively managed funds are unable to beat the market for durations over a year or two, because the market is a very intelligent creature – it’s the collective brain of all professional investors and fund managers who are trying to out-perform others, and they are all operating within the market!

Legendary investor Warren Buffet has acknowledged this fact in many of his interviews, and his wealth after his death will go into an S&P500 index ETF for the same reason. So our best bet is to ride the market via index ETFs or index funds.

With Index ETFs, you don't need any stock-specific research and you have no stock-specific risk.

Please note that recent portfolio updates will not be posted on the website; they are available only to our subscribers. We hope you will have a profitable investment journey with us and we look forward to having you as a subscriber.


Sample Newsletters

Here are two recent newsletters to give you a good idea of the content and how you can benefit from it.
Each newsletter has (a) Market commentary/analysis and (b) Market buy/sell levels for each key index.

Alpha Investment Newsletter - 11 June 2017

Alpha Investment Newsletter - 29 May 2017


Feedback & Testimonials

"Thank you so much for bringing focus into my investing. Over the last 3 years, I have been buying the Nasdaq ETF (QQQ) regularly as per your advice, and it has been my best investment experience." - Investor in USA

"Your perspective on the global equity markets is valuable. I am investing in the Nasdaq ETF after every correction, and I am exiting individual stocks and mutual funds to buy the Nasdaq ETF. It has been very profitable. Thanks." - Investor in UK

"When I read about Warren Buffett's decision to invest all his capital into an S&P500 index fund, I thought of you because you have been advising the same approach for last many years." - Investor in USA

"Please write a book on investing because it can make life simple and profitable for a large number of investors. In fact, if you compile all your newsletters since 2010, it can be a very useful book" - Investor in Hong Kong

"When the markets were in deep red in Feb 2016, your newsletter said buy, and those were the lowest levels of last 2 years." - Investor in India

"I have learned the hard way that once your buy signal comes, I can not remain bearish anymore." - Trader in USA


FAQ

Following are the Frequently Asked Questions by our subscribers. You will find most of your answers here, and if you still have a question, please contact us and we will reply promptly.

  1. How do you decide when to buy and when to sell?
    That's an important question because timely buying and selling decisions are the key drivers behind a portfolio's profitability. We use a variety of market indicators for arriving at our decision to stay in the market or leave the market and convert our stocks/ETFs into cash. So our portfolio uses ETFs and stock for "long" and cash for "short". A variety of indicators are used to show us about the moving averages of the market, the overbought/oversold positions, the momentum and the volume of trades, the inflows from domestic/foreign institutions and the outflows from domestic and foreign institutions, and also we are able to see the closing prices and how they are behaving on let’s say a week-to-week basis.

  2. Do you also use Technical Analysis along with Fundamental Analysis?
    Yes. Technical Analysis along with Fundamental Analysis is very important because factors like liquidity and foreign capital flows are not easy to capture with fundamental reasoning alone. We use a variety of technical indicators like Trading Volumes, VIX, Put/Call Ratios, RSI, EMA, etc. And we have learned that no one indicator is perfect, and we must check with multiple indicators to understand the market status and direction. Therefore we use multiple technical indicators and analyse the market over 1 month to 5 year period to see trends. We often go back in time and market history to look for precedents. The capital market evolves with time but it’s possible to learn a lot from history to see what the current market condition is saying, and then decide what our own investment strategy will be. Sometimes you will expect market to correct from an overvalued position, but if the US government or some other major country makes capital supply cheap, then the market will continue to rise from overvalued to "more-overvalued". And this rise can go on for weeks or months before reality sets in. Marcus Goldman, the founder of Goldman Sachs has a simple advice for us: “Go with the flow”. We have learned from experience that it is better to stay with the trend rather than predict a contradictory move and take a contra position. Sometimes it may look like the market is extending itself too much in one direction without caring for fundamentals. Valuations can go from very cheap to absurdly expensive within a few years. Roger Babson rightly said in the 1920s for such cases: "The irrationality of the market can bankrupt the most rational of investors". Once a new trend is taking shape, we will rapidly align with it.

  3. How do you assess macroeconomic factors and use them for the investment analysis and portfolio decisions?
    There are various macroeconomic factors that play a role in market movement and if we know that something is going to come as a major event in coming weeks/months, we know from experience that however much the market may have factored the event, invariably when the event actually happens there will be a sentiment that will move the market sharply. Therefore we have to also plan for those things and if those events are major then those could mean either earning five or ten percent points as gain or losing five or ten percent from the gain that we had. So we try to stay on top of some of the core developments in the global markets. The global capital markets are very tightly connected today. There are people who say that the global markets of different countries are decoupling. On the contrary, we feel that they are actually more and more tightly coupled today than ever before. Capital flows very efficiently overnight from different markets. For example, capital deployed in the US can move into Asia overnight and work there and move to Europe after Asia and come back by the start of the next trading session in the US! Thus global capital markets are closely linked and news-flow has an impact because just like the global economy, most billion dollar trading houses run parallel trades in different markets, hence the capital flows are truly global and it’s very important to watch the global trends.

  4. How do subscribers benefit from your newsletter?
    We do all the market analysis mentioned above, and we maintain a model portfolio of just 5 constituents, including cash. We try to do all that as part of our newsletter and summarize everything into a message which is simple in the sense that should we stay in the market or should we go out of the market – that’s the ultimate call that we want to make at any given time. If we have to stay then we will stay with our ETFs and if we have to go out then we will convert them to cash. That's how we have built our gains in our model portfolio since 2007. Our newsletter will tell you what we are doing with our portfolio and you can make suitable decisions at your end.

  5. What is the composition of your portfolio?
    We use Exchange Traded Funds or ETFs and we use cash so our portfolio essentially is a mix of just three line items, if you can call them like that. There are 4 ETFs and there is cash, and they cover different markets, from USA, Europe to Asia (India and China/Hong Kong). You have the choice to go with all 4 ETFs or just use one ETF and stay with cash as the other item. If you are with any of the reputed stock brokers you can easily access all the ETF that we have, and in that sense you can have a really dynamic portfolio. So you do not have to do any extensive stock-specific research. We have found that just by buying the entire market, because when we buy these ETFs they are almost like buying the market, that itself gives good return because you have to understand that despite the best efforts most actively managed funds are unable to beat the market in any longer durations of let’s say one year, two year or three year or more. So the market is a very intelligent creature because it is the collective brain of all the fund managers who are trying to do something better than the others and they are all operating within the market and we believe that the market is extremely intelligent as a collective creature and that it is not an easy task to beat the market on a significantly long duration. 

  6. How does your portfolio's performance compare with the S&P500 Index? How do you maintain your portfolio performance?
    Our portfolio has done a better than DOW because we have maintained the discipline to sell at higher levels and buy on falls. It has helped us holding a large amount of stock purchased at higher prices. As you will observe from the charts shared in our portfolio, we carefully monitor the ETFs/stocks, and will sell once we feel the ETF/stock is overbought. Overall, it takes constant effort to stay ahead. One can easily beat the market for a day; one can also beat the market for a week or a month, but its not easy to beat the market for over long durations like multiple quarters or multiple years. Our portfolio has been able to do it, while sticking to simple rules of buying and selling, and always keeping some cash, i.e., we don't believe in investing all our cash, at any time. Very few people have been able to beat the Index over long term, and one person who has been able to do it well is Warren Buffett and he is one of the best investors out there, who knows how to assign value to present cash flows and future growth. He is one of the best in the world and if you see his approach for investments, he has chosen long-term investing where he has stuck with the investments for multiple years at a time. He has not traded with his stocks on daily basis. We operate with a difference. We believe it is fine to buy and sell when the opportunities come, which are about once in a month or sometimes once in a quarter.

  7. How often is the newsletter published?
    The newsletter is published 2-4 times per month, based on the market developments. If market conditions are stable, we may have only 2 newsletters in a month. If market is volatile, then we may have 2 newsletters in a month. About once every month, the newsletter will cover broader macroeconomics and capital flows into various assets, and will aim to constantly give investors an idea of risk-reward ratio from current market level. The aim is to share whatever analysis we have with you at the earliest possible. Weekend closing levels have significance and they enable longer-term trend analysis. Therefore our newsletter comes on the weekend, usually by Sunday afternoon so that it can be used from Monday morning.

  8. How is the newsletter shared with subscribers?
    The newsletter comes by email, which is the fastest and most efficient method of communicating our newsletter. We request our subscribers to use an email id that they check regularly.

  9. How many trades do make in your model portfolio per year?
    We have done about 5 to 8 trades per year per index. Sometimes we may have just 2-3 trades in an entire year, and they will be very profitable because they would have been in strongly up-trending markets. We use a range of market indicators to enter and exit the market. Overtrading can reduce profits as brokerage costs can eat into gains, and if we enter the market at higher levels, then it often forces an exit soon after the entry because the market may be overbought. It is important to buy and sell at the right levels. Our newsletter will share our portfolio updates, which can help you make decisions at your end.

  10. Can you advice on a specific stock or query?
    Stock specific advice is not in the scope of this newsletter because this is a newsletter service and we can't answer individual stock questions or advice on your equity investment portfolio. We will publish the newsletter with market trends and market levels for staying and exiting, and we will share what we are doing with our model portfolio, and you are free to do some of the actions that we are doing, all of the actions we are doing or none of the actions we are doing. That’s your call as a reader to the newsletter. We will share what we are doing, and we will be measuring the result of our actions. For individual stock queries please contact us with your requirement, and we will see if we can arrange a consultation for your specific case. 


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Please Note: After making the subscription, please send us an email telling us about your location and the markets of your interest, so that we can help you better: info @ alphainvestmentnewsletter.com

Payments are processed by PayPal and taken by MyOrbit Ltd. The subscription fee is very nominal compared to the gains you can make. You could recover your subscription fee within 2-3 newsletters, buying and selling the index ETFs at suitable times. And you will surely benefit from our market trend analysis.

Our ETF based portfolio completely removes stock specific risk. Remember, even a blue-chip like Goldman Sachs lost 25% value within 2 weeks in May 2010. For long term investors, its best to buy index ETFs like S&P 500 Index ETF (SPY), Vanguard Total Stock Market ETF (VTI), Nasdaq ETF (QQQ) and index ETFs of India and China/Hong Kong.

Once you subscribe, we will add your email id in our subscription list, and you will start receiving our investment newsletter whenever it is published. If something is really important, then we may send email mid-week, but it’s rare. We look forward to sharing our market insights and portfolio updates with you, to help you make better investment decisions. We reserve the right to revise the above subscription fee periodically.

BONUS: Here’s our most valuable message for you. This is the ETF you must buy and hold for next 10-20 years: Nasdaq Index ETF (QQQ). You can buy this ETF during all major market corrections to get more shares for your dollars. We have been asking our subscribers and investors to buy this ETF since year 2010 when it was $50. Cmp $140, Target $900. We are in the “Tech Century” and this Nasdaq ETF will go very far. 

Satisfaction and Money Back Guarantee: While we can't reduce market risk for you, we can surely remove the subscription risk with our Satisfaction Guarantee. If you are not fully satisfied with our newsletter for any reason, please contact us anytime within 90 days from your subscription date, and we will give you 100% refund. We prefer to have your trust than your money.
Please email us for any questions: info @ alphainvestmentnewsletter.com
Wishing you all the best with your investments.

Stay Ahead with Alpha Investment Newsletter... in 2017 and beyond.
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