The Secret Code to Investing

What does M1P5VEUV mean?  This is not just a meaningless puzzle.  We are in a battle for survival.  The enemy is brilliant and has a history of leading its foes to bloody, miserable failures - time after time after time.  There are only a few very elite corps of warriors that can survive, diagnose and combat the brilliant strategy of the cunning enemy.  It takes a secret code to stick with the right battle plan - a code that usually means that you have to go right when everyone else is telling you to go left.  The secret code does not mean that you will have instant success.  Sometimes the attack helicopters that you planned to use are grounded, and you have to be very patient and calm, but you stick to your battle plan that is guided by the secret code.

As you decipher the secret code, you find that M1 (recently changed from M2) is the most bullish level of monetary liquidity for our Asset Allocation Model.  This recent change in the code increases our odds for success.  As you continue, you find the P5 parameter in the code.  This part of the code, focused on investor psychology, tells us to attack when the enemy is vulnerable.  So, we are looking for the special weak points to enter the enemy's quarters.  The last part of the code, VEUV, tells us that stock market valuation is extremely undervalued.  This parameter also provides us with an amazing level of potential success.

So what do we do?  We never know exactly what is behind that door.  Does the enemy have its guns pointed at the door?  You don't get accepted as a member of these elite troops unless you are willing to take the necessary risks. 

Okay fellow Warriors, the enemy is Mr. Market.  The herd always tells us that the risks are too high.  They say this enemy is invincible, and instead of being behind the door, they're telling us that the enemy may be elsewhere, in hiding.  But elite troops follow the battle plan. 

We're opening the door...The enemy is toast!

To review yesterday's battle plan, click here.

To view today's complete Market Comment, click here.

Don Hays

Please see important disclosures at the bottom of this page.