Which door should you choose?

20 Feb 2016

Dear Fellow Investor,

Which door do you choose?

Most things in our life have 2 doors. Which door do you choose?  As an investor the yellow door represents popular convention and the establishment view.  In the KLSE that would represent safe and predictable shares such as Tenaga, Sime Darby, Telecom, YTL Power, Gas Malaysia, Maybank, Public Bank and most of the big cap GLCs.

These shares tend to follow the market trend.  If you are an equity fund manager and buy these shares, chances are if the KLSE goes up you will have positive performance, collect your performance bonus and keep your job.

If the KLSE underperforms, you shares   will probably lose value and you might not get a performance bonus.  However; you will not lose your job because the majority of your fellow fund managers will also not perform.

You will also have a good story to tell your clients. Who can fault you for buying Tenaga as everyone uses electricity or Gas Malaysia because almost everyone uses natural gas to cook?

Personally, I prefer the red door.  This is the unconventional door where you do not have to contend with the investment crowd. The shares you find behind the red door have less research coverage, are not on the radar list of the big fund managers and are not popular with the foreign funds. These shares are perceived to be risky but stock market history has proven this to be misleading. They are the most profitable.

Gervais Williams, fund manager of the year in the UK for the last 2 years and overall for the last 8 years has outperformed his peers and has been profitable even in down years by choosing the red door.

He wrote 2 classic books on why small outperforms big meaning small caps have done better than the conventional blue chips.  

2016 will be a challenging year and I recommend you select small/ mid cap shares. Stocks in companies with lots of cash and little or no debt. Companies with guaranteed contracts and leases and rents. Sellers of necessities with the ability to raise prices.

How to enter the red door:

Next week Sunday, 28 February Nigel Foo, Head of Research for CIMB will give a presentation on Small Cap KLSE shares. Below are the details:  We also have a corporate presentation by Mr Ting, director of Eden Bhd, a small cap  and a Volume Spread Analysis presentation by Martin Wong. (This is the red door method of technical analysis used by George Soros and this is not generally known as I luckily discovered it in a biography of him in a small hidden footnote and how he made billions short selling the UK pound.)

Speaker:

1. Nigel Foo (Cimb top small cap analyst) - Market Outlook 2016 and Beyond and Stock to watch out for.

2. Martin Wong (Creator of iVSAChart) -

3. Mr. Ting (Eden Berhad, Director)

Date: Feb 28, 2016. SUNDAY

Time: 9.30 am - 5 pm

Fees:  RM50 to cover lunch and refreshment.

Venue: UEM Training hall, Jalan Templer, Petaling Jaya (off Federal Highway)

Below is a stricken baby elephant hooked up to drip after vets rescue him in Indonesia

Its legs covered in thick mud, this elephant struggled to get free when one of its front legs got tangled up.

The baby was totally stuck – but vets came to the rescue at the Balairaja wildlife sanctuary in east central Sumatra where it lives.

 

1 good strategy which will be presented Sunday with small cap shares can help you profitably get through the tangle and mud traps in the KLSE.

Invest well and grow your wealth

Bill