Hypatia Education: December 2009

Thursday, December 3, 2009

Market Update:

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Our model is now 20% equities – 80% cash. The market environment is still positive but it is becoming difficult to find real value in this market. At this point we are very comfortable with this asset allocation because the risk/return ratio for equities is not anymore attractive.

About Hypatia Education

I have been teaching Accounting, Statistics and Computer Studies in France for more than 17 years. This valuable experience has enabled me to delve behind the common interpretation of financial statements in order to display the true state of affairs.

A strong interest in the financial market has led me to closely follow the equities markets around the world, especially the Australian, US and French markets. Hypatia Finance blog was created in 2007.

My background as a tertiary teacher in finance and accounting has influenced my investment philosophy. I have also found inspiration in the lessons given by both B. Graham and W. Buffet. Finding significantly undervalued stocks was at first the cornerstone of my method of investing: “I look for low risk and high return opportunities. Above average returns can only be achieved with a concentrated and focused portfolio”. This is still true today but the arrival of equities indexes ETF has made investing much easier.

The Hypatia invesment philosophy that I have designed is the result of a long evolution in the approach of investing. It is based on equities indexes ETF, not on individual issues.

This blog does not follow the Hypatia investment methodology. Its purpose is only to have fun trying to discover undervalued issues.

Important Disclaimer

The good news is that you don't need to be Warren Buffet to do well in the stock market.

I think the best and quicker way is to use my Hypatia investment strategy but if you prefer to invest in individual issues, there are approaches which will allow you to have investment performance close to the market while beating most of the "professional" investors.

The issues that I have selected in this blog have fundamental and technical characteristics that historically have offered good prospects in term of future performance.

The information provided in this blog represents my views and opinions and is not intended to be a forecast of future events, a guarantee of future results nor investment advice. All data is for information only.

Although the statements are believed to be reasonable, there are uncertain and unpredictable. To the extent that actual events differ materially from my statements, actual results will differ from those forecasted.

Also, keep in mind, that I do not take into account your objectives, financial situation or needs and risk tolerance.

Reference to any fund, asset or asset classes, fund, asset or asset classes performance, sectors or portfolio construction are presented to illustrate my views and opinions only and should not be considered a recommendation of any particular security, fund, assets, asset classes or portfolio.

Neither past actual performance nor hypothetical performance is a guarantee of future results.

Words of Wisdom

Investing is not as complicated as some would like you to believe. There is a very simple way to achieve reasonable return without much stress.

However, for those who like the challenge, all you have to do (but that is not easy - ask the professionals!) is:

* Find good companies offering low risk high return opportunities. Analysing the downside risk before the return is very important.

* Apply a disciplined portfolio management approach.

For the retail investor, seven companies is certainly enough to offer diversification unless you want to make your stockbroker richer...

"Wide diversification is only required when investors do not understand what they are doing" Warren Buffett.

At all time, capital preservation should always be the key investment tenet.