26th June 2016
Dear Fellow Investor,
Below is a letter from a friend who is a Canadian and former Englishman:
Hello Bill,
The English have risen up against the Establishment, and the will of the people will be implemented.
Now, instead of looking inward at a bunch of socialists, England has the option of forging new trade relationships with the USA, Canada, Australia, New Zealand, and India. This is the Anglosphere, a group of countries with a far bigger GDP than any other trade group.
Also trade will be initiated with China, Russia, Iran, Malaysia, Singapore and growing Asian countries.
Best,
Roger
This can only be positive for the UK economy, the pound and the UK stock market going forward. Money and trade will flow to business focused Asian economies from the UK rather than being controlled by the dictatorial jack boot of the unelected socialist/ fascist European Union.
As a metaphor imagine that we were a colony of Indonesia and all political and monetary decisions were made by the Indonesian central bank and government and that Malaysia had no voice. Not only that but that we would have to pay Indonesia a 4 Billion USD tribute every month. That is about how much money the UK pays the EU every month to finance their lavish, wasteful schemes .
Instead of helping bail out failed economies such as Greece and economic basket cases such as Italy, Spain and Portugal, the UK will have more money to raise the economic standards of their own people. The EU is proposing to form an EU army to counter the Russians. How much would that cost and who would pay ?
According to the Daily Mail, over 90 % of English servicemen voted to leave the EU as they want no part of this bizarre EU army proposal. The purpose of the EU Army is to poke the Russian bear. Hitler and Napoleon learned the hard way what happens when foreign armies invade Russia.
The 90 million Turks will never get a free pass to live and work in the UK as well as other economic basket case East European countries who are waiting to join the EU as PM Cameron and his corrupt cronies were planning.
In the short term do not fear the Big Bad News:
In the turbulent world of investing, bad news is often actually good news and good news is actually bad news. Nowhere is that more true than in value investing. In fact that is the very definition of value investing.
As value investors we want to buy stocks at the cheapest price. We can, because the lower we pay the greater will be our long term return. Of course the price we pay has to be cheap relative to their intrinsic value.
Apple stock (AAPL) is an example of a good value buy at current price. When you take out the cash per share off the balance sheet their PE is only 7.
The UK pound is also a good value investment for those with children in the UK or for those who just want to sit on pounds for a capital gain or have a stock of pounds for a UK holiday. Maybank Bhd offers interest bearing UK currency accounts for this purpose.
The Chinese and Malaysian stock markets had only minor losses Friday. Malaysia has only a less that 1 % exposure to the UK in export terms. With the UK out of the EU this exports should increase over time and benefit Malaysian exporters.
I would be more concerned if there was a major bank collapse such as Lehman Brothers in 2008, or a currency crisis such is in 1998. These were monetary crises and required central bank intervention. The current panic is political and will be easier to solve. What does magnify the volatility is the constant media fear mongering and herd behaviour of the investment crowd.
If you focus on value investing do not be overly worried or concerned.
Invest well and grow your wealth,
Bill
The crow is a powerful and cagey bird. It survives by its hunting skills and tough character. It knows how to avoid danger. Observing the behavior of crows can make you a better investor and trader.
