Western commentators and analysts find China troublesome to fathom. This is due to the ‘free market’ prism through which they look through. It is a fundamentally flawed starting position when trying to understand China! This further complicates dealing with China in a Trade War.
Cultural Divide
There is a Cultural Chasm which is impossible for Westerners to understand – literally like fitting a round peg in a square hole. Eastern philosophy is long term by nature where as Western philosophy is NOT. Short term thinking is indoctrinated in our Western markets.
The Chinese apply less political pressure to companies and Chinese industry works more with government – forming a pluralistic society. Under a pluralistic society, power no longer just rests with the government. They no longer dictate views of all groups but take into account the needs of society.
Where companies make decisions which work within these governmental/societal needs they are supported as they are for the good of the state. Where they aren’t, mother China can be ruthless. Control becomes indirect but just as strong – and maybe even stronger. For China its the NEXT growth phase. Therefore the US is controlled by the captains of industry but China in comparison controls captains of industry.
Western logic in an Eastern dominated World
If we are right and a company will do as a nation bids then nothing is as it seems …. economic rationality simply doesn’t work. What hope has an analyst got to understand a company’s prospects where any interaction exists with China ? What is the future of fundamental analysis ? On what basis will world markets operate? These are serious issues facing the traditional investment management industry the world over.
Moreover, how can trade wars be fought when the assumption is that economic rationality will bring the Chinese to the table. When the differing motives and capacity to withstand pain for a greater good are understood it casts a whole different light on the China-USA trade war. Trump is simply not playing on the same board. His assumptions and assertions are flawed. It is a challenging environment, specifically for those who invest the old way ie using traditional fundamentals. Since the GFC this method has been outdated – the concern is that most haven’t worked that out yet.
Pythagoras Investing
Our mathematical algorithms help us to cut through the behavioral biases and leave us with a clear, unemotional decision so we can profit from others confusion.
Our demonstration portfolio comprises ORI, ANZ, WOR, RIO and IPL. To assist understanding of Pythagoras we track these recommendations each week. I have attached the link so it is easy to track the history of returns. At the time of writing, since 1 April 2019:
- The 5 stocks achieved a 16.4% return on capital used whilst the market grew at 8.5%.
- In dollars, by investing $10k per buy recommendation, clients gained a return of $27,000+.
- 83% of recommendations produced a profit – an average of 3.2% each.
- Recommendations that didn’t profit – lost an average of 2.1%.
The past 2 years returns (1/7/2017 to 30/6/2019) for these same stocks:
| Stock Code | Stock Return | Pythagoras Return | Excess Return | |
| ORICA | ORI | -2.0 | 24.3 | 26.3 |
| WORLEY PARSONS | WOR | 31.1 | 73.5 | 42.4 |
| RIO TINTO | RIO | 64.0 | 71.1 | 7.1 |
| INCITEC PIVOT | IPL | 0.0 | 30.2 | 30.2 |
| ANZ Bank | ANZ | -1.8 | 21.6 | 23.4 |
| Average | 18.3 | 44.1 |
Pythagoras returned 44% on average for the 5 stocks, beating the stock market by more than 28%. This was during the 2 year period when market returns were 15.7%.
How are we doing it?
We mathematically predict share price behaviour so you can buy or sell before a share price change. We use entirely new ground-breaking knowledge and logic. Our system utilises 130,000+ lines of mathematical programming to do all the research and complex analysis that no team of humans can. It took 10 years of research to perfect our market-leading mathematical algorithms.
We are using the stock market cycles as our opportunity to create returns where most don’t think they exist. Our track record with these trial stocks shows a profit 4 in 5 times. The more you can invest the better off you are!
Michael Dee, 0419 726 223
Disclaimer: The information in this document (“Information”) is not intended to constitute advice. It is for general information only and does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and seek professional financial advice before relying on or making investment decisions based on the Information. Investment products are subject to risk including the loss of income or capital invested. Past performance is not an indicator of future performance. Neither Pythagoras Investment Timing Index Pty Ltd ACN 147371113 (AFSL 431 238), its directors, employees and representatives (collectively, “Pythagoras”) warrant the accuracy or completeness of the Information. To the extent permitted by law, Pythagoras disclaims all responsibility and liability for any loss or damage of any nature whatsoever which may be suffered by any person directly or indirectly.