Andrew Packer - Uncharted: Your Guide to Investing in the Age of Uncertainty

By Andrew Packer

2013 by Humanix Books

A Humanix Books publication

First Edition

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Packer, Andrew.

Uncharted : your guide to investing in the age of uncertainty / by Andrew Packer. 1st ed.

p. cm.

ISBN 978-0-89334-895-3 (pbk.) ISBN 978-0-89334-897-7 (e-book)

1. Investment analysis. 2. Portfolio management. 3. Investments. I. Title.

HG4529.P33 2012

332.6dc23

2012027217

By Bob Wiedemer

THE GLOBAL ECONOMY is stalled in an unprecedented fiscal and monetary sea. Five years after the start of the financial crisis, which burst a housing bubble and nearly took down the financial system, no clear path to prosperity remains.

Some countries have tried austerity, which sacrifices necessary growth to pay down the excesses. Others have tried to stimulate the economy, but fickle and timid consumers havent taken the bait. Meanwhile, the causes of the crisis havent been addressed. The same problems that got us into this mess could still occur again and soon.

Investors, meanwhile, must now read between the lines of every politicians promise and central bank statement. Any future government plan can have huge and immediate implications for the markets.

While we are truly in uncharted waters, the world continues to move on. Investors must rebuild decimated retirement portfolios.

But theres a problem.

Ask ten different investors what their method or style is, and youll likely get at least ten responses, if not more.

There are many who claim to know the secrets to investment success. Some focus entirely on some small niche in the markets and patiently wait. Others take a more expansive and global view. Some focus entirely on what makes a successful company successful, and others look entirely at the numbers.

Whatever styles or combinations are used, all investors are looking to do one thing: achieve excellent results in investing relative to the risk they take on.

In Uncharted, Andrew Packer reveals the fragile and unique situation that pervades the globe right now.

He then ties together the main threads necessary to create a successful investment tapestry rigorous analysis, a global macroeconomic view, and the psychological behavior of the people who make up the market and combines these elements in a way that accentuates the best of each of these investment strategies while minimizing their downsides.

To map out a course of action and follow it to an end requires courage.

Ralph Waldo Emerson

INVESTING IS BOTH an art and a science.

In a way, it reminds me of antique maps. Theyre fascinating, and since they werent mass-produced and measurements were often inaccurate, they (literally) illustrate the best of art and the best of mankinds early attempt at accurately recording knowledge.

Think about it: The shapes of familiar countries and continents on an antique map arent quite right. Theyre more jagged or out of proportion. Early maps left unexplored territory to future explorers. On some of them was the Latin phrase: Hic sunt dracones... Here be dragons.

While some may interpret this literally, it was (at least in later years) meant more symbolically. Dragons were the great unknown... ignorance... the real monster to be slain by brave explorers.

Today, weve mapped the heights of the Earth. Were mapping the depths of the ocean and using incredible telescopes to peer further and with greater detail beyond our solar system. There is little left on Earth to explore in terms of new land, new territory, and new cultures. Gone are the days of the great expedition where a group of men can embark on a journey to find whats beyond the last-known mountain peak or horizon.

But, still, we face the uncertainty of the future. Even with no new land to discover, mankind continues to make tremendous scientific and technological progress. We find ways to do more with less. That prospect alone has tremendous investment implications. A new development could render one of the darling stocks of Wall Street obsolete. Indeed, in the investment world, fraught with sudden fortunes and sudden reversals, the future is the great unknown.

For example, at the start of 2008, oil prices stood at over $90 per barrel. By midsummer they had surged to $147. By the end of the year, however, oil prices had plummeted to under $40. It was easy to see rising prices continue or to see prices fall once they had moved up in such a parabolic fashion. But listening to the talking heads on CNBC or reading the pages of the Wall Street Journal at the time, you might have thought it was completely unpredictable and that investors would just have to deal with these extreme changes by simply staying the course and ignoring these short-term gyrations.

Wall Street is no different. Thats partly by design millions are employed on Wall Street to keep the average investor constantly putting money to work. In some years, investing especially in stocks but more recently in commodities and real estate is seen as the road to endless, and more importantly, easy prosperity.

In other years, it has been a recipe for ruin. But we had a good run before it ended, right? And either way, the house (i.e., your brokerage firm or bank) always wins, whether its with your commission dollars or with trillion-dollar taxpayer-funded bailouts.

Its a bit of a contradiction. These extreme moves in the market are at odds with what Wall Street tells investors. Were told to be sensible and own investments for the long term, but we end up acting like tourists at a Las Vegas craps table. We