Cooking With Statistics
Latin American Wireless Takes Off
Today's date is September 9, 2009, or 9/9/09. That's a lot of nines. This must be at least as significant as 8/8/08, 7/7/07, and so on, right?
The reaction to this calendar phenomenon hasn't been anywhere near the ruckus surrounding the big odometer clickover of Y2K, but the major Web sites tell us that people are paying attention.
So, in the spirit of trying to help Cabot Wealth Advisory readers to make sense of the potential numerological significance of today's nine-rich date, I went looking for someone who could explain it all.
But I didn't want just any cosmic babbler; I wanted the real thing. The person I found was Hans Decoz, "the world's most experienced developer of accurate and in-depth numerology reports," who posts his expertise and wisdom at Tarot.com, which is listed as a "trusted partner" on AOL.com. Credentials like that were certainly good enough for me.
Anyway, here's what Mr. Decoz has to say about his methods. "Even to the numerology newcomer, this date is unique because it is 9/9/09. To a numerology expert, this date is extraordinary for its combination of the numbers 11, 9 and 2. The technical explanation for this (and please bear with me) is that 9/9/2009 translates to 9/9/11 (since the digits of 2009, when added together, equal 11). The next step is that the difference between 11 and 9 is 2, and if you were to continue adding digits, you would find two more 2s in this date, and one more 11."
Well, that's clear enough.
Mr. Decoz gets to the bottom line later in his post, forecasting that on this day "we will have our attention directed to issues of personal interconnections and brotherhood."
You won't get that kind of hard-hitting advice from just anyone. I wish I could have gotten this information to you a few days ago so you could have used it in your investing tactics for the day, but my column wasn't due until today. Besides, everything happens for a reason, right?
In closing this note, I'd like to point out that I also use numbers in making my recommendations for the Cabot China & Emerging Markets Report, although I don't get quite as much out of them as an experience numerologist would. I'm stuck in the decidedly non-cosmic world of trends, reversals and earnings surprises.
Still, it seems to be working, and if you'd like to try investing using an earth-bound advisory that concentrates on the fast-growing emerging markets, energetic companies and strong stocks, a trial subscription can be obtained by clicking on this link. No crystals, no horoscopes, just solid, high-potential stocks in exciting markets.
Statistics are like mushrooms; you'd better be pretty darned careful which ones you swallow.
Specifically, I have in mind the statistic that shows that September is the worst month of the year in which to invest.
Here are the specifics.
Since the inception of the Dow Jones Industrial Average in 1896, the 11 months of the year that are not September have averaged a gain of 0.7% per month.
September, on the other hand, has averaged a loss of 1.2%!
There's also a decade-by-decade comparison that shows September finishing 12th out of the months of the year in performance in four of the last six decades and only ninth and 10th in the other two.
The statistic has a long duration, which eliminates noise and it's not qualified or cherry-picked. It's also paralleled by the performance of the S&P 500 Index, which represents the broader large-cap market pretty well. The lesson for investors should be obvious. But it's not. And there are lots of reasons why not.
The biggest reason it's hard to use Sorry September as an investing opportunity is that no one knows why it happens. Everyone knows that the month marks the return of the Wall Street A-Team from summer vacation, but there's no consensus on why that should mean net selling.
Some analysts point to the fact that September marks the end of the third quarter, and thus the onset of the October earnings season. This explanation has a little resonance for me. I can see some big mutual fund managers looking at the Q3 earnings season as their last chance to adjust their holdings to include the market leaders and a few earnings winners. Thus, they sell off a little of their holdings in September to hold some cash for quick purchases (well, as quick as the whales can move).
Maybe it's the reason, maybe it's not. But it's the best I can do.
But the question is: can you use September's poor relative performance to any advantage in your investing? And my answer is, probably not.
There might be a case to be made for pulling some money out of an S&P 500 or Dow index fund during September and then plugging it back in when October rolls around. But the idea of using decades-long statistics to make daily investment decisions doesn't make any sense to me.
No, I'm afraid the historic weakness of September is fated to be just an interesting footnote to the history of investing. It doesn't even have the power of "sell in May and go away," which some people actually use as an investment strategy.
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My investment idea today is a Mexican telecom company that's turning into a regionally dominant provider of voice and data network services. Founded in 2000, American Movil (AMX) provides both wireless and fixed-line communications, but it's clearly the buildout of the wireless network that's stirring things up.
The company offers the whole spectrum of cellular services, such as short messaging, content downloading, video streaming, GPS and Internet access in addition to standard fixed-line services like Internet, cable TV and data transmission.
With more than 180 million wireless subscribers and nearly four million fixed-line subscribers, America Movil has a presence in Mexico, Guatamala, Nicaragua, Ecuador, El Salvador, Brazil, Argentina, Colombia, the U.S. Honduras, Chile, Peru, Paraguay, Uruguay, the Dominican Republic, Puerto Rico, Jamaica and Panama. That's a huge geographic base, which provides access to many emerging markets.
After a couple of quarters in which earnings dipped slightly, the company showed a 5% gain in earnings in Q2 with a 24.0% after-tax profit margin. The stock pays a small dividend (1.0%) and has 280 institutional investors on board, leaving lots of room for growth. The stock put in a double bottom at 23 last November and March, and has pulled back slightly after doubling off that bottom.
As the Latin American region begins to power back up after the global recession, America Movil will be leading the way.
For Cabot Wealth Advisory