This paper sheds new light on why the timing and entry mode should be considered concurrently in the international investment literature. We derive the income levels at which it is optimal to change from exporting to establishing a wholly possessed subsidiary, making a to, or licensing creation to an area firm. The most well-liked entry mode depends on uncertainty about future revenue, taxes differentials between the home and the foreign country, the cost advantages of local firms, institutional requirements, and the amount of cooperation between companions in a joint venture.
Paul: The course which I sponsor at Western Washington University is a four-credit course so they get about 40 hours of education and tests. In that 40 hours they don’t learn just what a PE ratio is. There is no reason for a young investor to know just what a PE ratio is. Now, I understand there are people right now saying, “Are you kidding! It’s one of the most important things that we ought to know.
How can you know if a stock is good or bad? ” And that’s why I don’t want those teenagers to know just what a PE ratio is because I don’t want them to even consider buying individual stocks. Actually, I want these to be an index account so they never have to undergo that painful educational process to learn that in trying to pick individual stocks they’re more likely to come out in back of instead of forward.
That’s how Personally I think about the PE proportion. Rob: You and I are extremely similar because you inform people not to “time the market” but I do know that as you said, half your profile is market timing approach. I inform people never to spend money on individual shares and stick with index funds just. I spend money on individual stocks so does that make us hypocrites? Paul: Well, actually I think what it makes us are, better educators.
I used to do six-hour workshops once I was building my business. The morning was focused on buy-and-hold and the evening was dedicated to market timing The. People would go out of there and say, “What the heck does this guy have confidence in? Is a Republican or a Democrat? ” because I made the situation that both strategies are reputable. Because that’s what the general public claims they believe in.
So my job and I believe your job is to teach people to be better buy-and-holders. You and I both know that if we tried to instruct them what we know about being a stock pickers-I mean, are you experienced to instruct that, really? Rob: I don’t think I’d show it.
I’ve hardly ever really thought about whether I’m qualified. Ask me that in 20 years, Paul, and the answer are got by me for you. Paul: Okay. But you want to share information with individuals who they are likely to apply and put to work and change their lives. And my sense is, from everything that I’ve seen, the majority of people who have individual stocks number, haven’t any basic idea what their long-term return has been on that profile. They haven’t any way to measure.
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I cannot find a stock broker that will show me his / her track record on how they’ve done for their portfolios of equities. Whereas, I could look at the S&P. I can look at Fidelity Magellan. I possibly could, I can look at mutual funds which have 30 or 40 12 months track information and know what they look like in the nice times and the bad and the long-term.
How can you make a genuine judgment regarding a strategy if you can’t measure that stuff? Rob: That’s so true. I monitor the performance on my specific stocks but I hardly ever look at it. Actually, you were talking I looked it up. I tracked everything Morningstar. But it’s not a simple move to make actually. Particularly, with dividends and investments, rather than reinvesting them and taking some money out-it’s a hassle. It’s much simpler to track your performance with an index fund.
Okay. So, at the end of your day the goal here was to help people shape out-number one, if they ought to use type PE or some view of market valuation to decide whether to invest. I believe we’ve covered our views on that. And the second one was how to help people stick to their investment plan when the market eventually does decrease, as everybody knows it’ll at some true point.