Dear Reader,

There’s no time to waste.

Last night, South African Investor Pillar One Advisor, professional economist, financial advisor, university professor and author of more than 20 books, Dr Mark Skousen sent me an urgent email detailing the strategy of one of the most successful investors of all time. No, I’m not talking about Warren Buffett – this is an investor who’s even more successful than Buffett!

But that’s not the important part... Mark’s actually unveiled the secret behind this investor’s success. Read today’s issue for all the details.

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Meet the man who outperformed Warren Buffett
Dr. Mark Skousen

Last week, I picked up the new, 10th edition of A Random Walk Down Wall Street by Burton G. Malkiel - a long-time friend and Professor of Economics at Princeton University.

I remember the time I sat in his office in December 1999, as we stared in awe at a chart of the S&P 500. We were right in the heart of the dot-com bubble and the index was blasting into the stratosphere under the influence of the boom.

We knew it couldn’t last and that the bubble would burst.

But despite knowing that the stock market had become way overvalued in 2000, great market timing is rare.

The most successful investors are long-term fundamentalists, who buy sound companies and hold them over time. Warren Buffett is a classic example, with Berkshire Hathaway consistently beating the S&P 500 for decades.

Over the past ten years, Berkshire hasn’t performed as well, but it’s still outperformed major stock indexes (which have been in a ten-year bear market).

However, there’s a guy who may have done as well as Warren Buffett over the past 30 years... If not better...

Want to outperform the market? Look at this key ratio...

I’m talking about Wall Street veteran, Donald G. Smith.

Holding an MBA from Harvard and a law degree from UCLA, Don uses a different approach. He specialises in finding “deep value” companies, whose fundamentals turn positive.

Among the many factors that share analysts use – such as price-to-sales, price-to-earnings (PE), price-to-dividends, return on equity, etc. – Don discovered that the price-to-book ratio offers the most opportunity to outperform. And especially shares selling below their book value.

After going through an in-depth screening process, evaluating out-of-favour companies, Smith attempts to measure “tangible” book value using various factors. He adjusts for hidden assets, goodwill and dilution from options and convertible debt. His company spends time talking to company executives and conducts hands-on due diligence to determine the company’s future prospects.

Smith says, “We stress test. That’s the first of the value traps, buying something that ends up going bankrupt on you. The second trap is buying a cheap asset that stays cheap forever”.

Smith seeks to avoid both.

How have his investigative techniques worked out?

The “for sale” sign is hanging over these two sectors

In over 30 years since its inception, Donald Smith & Co. has earned a compounded annual return of 15.3%. And over the past ten years, when global stock markets have gone nowhere, his company’s annual return is 12.1%.

So what is Smith & Co. buying now?

The same as Red Hot Penny Shares analyst, Gareth Stokes!

Two sectors that jump out include...

•    Gold mining companies.
•    Technology.

Incidentally, Gareth’s just unveiled the names of four shares that have blown his Ten-Four Selection Strategy away – one of them is an IT share, while another is a gold miner. And today he wants to share them with you so you can invest in them before everyone else does and have the potential to turn R10,000 into R308,600!

This special report tells you how to get your hands on these "super" shares...

Until next week…

Here’s to your financial freedom,

Karin Iten and Mark Skousen