Inside-the-market

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Inside-the-market

Five Decades of Wisdom. One Powerful Methodology.

It all started with a chance meeting, the sort of fortuitous connection one makes when on a journey of discovery. With two decades of experience in the market, Ross Healy could have been excused for dismissing the radical theories of Canadian economist Verne Atrill. But the more Ross read about Dr.Atrill’s ideas, the more he became intrigued. Eventually, Ross joined Verne to start the process of developing what we now call Structural Valuation Analysis, a thirty year voyage that has weathered through Black Friday, the bust and boom of the 90s, the Dotcom bubble, the Credit Crisis, and the current age of runaway monetary stimulus, currency debasement, and economic stagnation.

Fortunately, that voyage has been chronicled extensively through the investment advisory service of Strategic Analysis Corporation and the writing of Ross Healy. After years of encouragement from clients and friends, Ross finally sat down to write his own account of his five decades in the market, and how SVA has helped him stay at the top of his field for two generations.

The result of his efforts is “Inside the Market”, available as complete eBook in April. To offer readers a taste of what Ross has in store, we have copied an excerpt of the introduction below.

Introduction: Oh, No - Not Another Investment Book!

I have a library full of investment books. Over the past 50 years in the investment business, I have read hundreds of such books. In recent years, many of my contemporaries have also felt the urge to put the sum total of their experience and understanding of the investment process into a book for their clients, friends, and the general public to read. One may well ask, what is left to say? Realistically, there are but a few real classics in the genre, and once you have read those, you will find that nearly everything else tends to be a rehash of the same advice. Buy those few classics as that is all that you need to understand how to be a successful investor. Later, I will briefly review which few books there are that I think fall into this category. Truth to tell, however, every truly good book on investing comes down to only three principles:

Buy Quality: Only buy good balance sheets.
Buy Value: Buy stocks with lots of upside potential.
Watch the Trend: Buy cheaply.

And if you must have a fourth principle:

Have a sell discipline: Remember to cash in your winners.

So what (you may well ask) am I doing writing yet another book? First, I freely admit that all that I am going to do is revisit those three simple principles of investing. However, I will put a very different spin on the process by introducing you to process by which the balance sheet becomes valued by the market. The balance sheet is a surprisingly rarely used document, and I will show you how we use it in the work that we do at Strategic Analysis Corporation (SAC). I am going to take you into an altogether different investment world than the one with which you are familiar. It is one which is logically consistent, easy to understand, mathematically sound, and best of all, has worked very well over the many years that we and our clients have been using it. I will quantify the risks in investing in a way that is easy to see and even easier to use. I think you will find, as I have over the years since I began to work with this methodology, that what we have is far better than whatever is in second place.

The first thing that you must do is leave the familiar miasma of the investment world as you know it. I personally have had two educations in the investment business. The first was the formal one as taught in business schools and is typified by the Chartered Financial Analyst (‘CFA’) designation. FYI, I have a degree from each. It may be all very wonderful but you wouldn’t know it from the performance results of the average mutual fund or stock analyst.

My second education started in 1980 at the feet of the late Dr. Verne Atrill, and has led to the discovery that things are a great deal more transparent and understandable than I ever thought, as you will find out in this book. But to enter my world of investing, you may have to give up some of your cherished notions. You will also have to learn some new terminology. The words may sound familiar but their application will be quite a bit different. Be warned, however. Once you embrace our approach to analysis, you will never be able to go back again to the old ways.

I am often asked about how I got involved with the balance sheet analysis that we do at SAC and inevitably I say that it was a fortuitous set of circumstances more than anything else. My involvement started back in 1979, a year when political and economic change was clearly in the air. After decades of left wing interventionist-government inspired by John Maynard Keynes, state incursions into private enterprise, budget deficits that went on forever, and floundering economies, people were ready for change. While Ronald Reagan and Margaret Thatcher were still not really on anyone’s radar screens, the peanut farming US president from Georgia was on his way out and the social economics of the decades following WWII were nearly totally discredited.

The US in particular was ready for change, and at the Financial Analysts Conference in San Francisco in 1979, so many speakers were talking about the need for change that when I returned home, I wrote a memorandum to my partners at Sceptre Investment Counsel to the effect that something big was in the air. Arthur Laffer had fairly recently issued his Laffer Curve of taxation which seemed to promise a way out of the morass into which we had all fallen. Jude Wanniski soon wrote a book about it, The Way The World Works, to amplify Laffer’s economics. After that conference, I read everything I could find that would point the way to a potentially seismic change in politics and economics. I wanted to be ready to invest my clients’ money to take advantage of that change.

BNNBloomberg Appearance -Market Call Tonight- March 16, 2020

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