Is the market oversold or overbought? Lets join my talk on next Sunday

Dear Fellow Investor,



The below illustration of this industrial oven gives a good indication of money flow.

 

One of my clients is in the business of manufacturing  these ovens.

He has a full order book and recently won a large contract to produce these ovens for both local and overseas markets. In a bidding contest he beat a world leader in ovens from Germany. 


Why was he able to win the bid ?  Some of the reasons include low labor costs,  low land costs,  low taxes and minimal government regulation. Many companies in Malaysia fit this profile.


When we look for companies which produce quality goods at a competitive  price, earning revenues in  a diversified basket of currencies we may have found a winner.


This is despite the onslaught of media negativity, gloom and doom and pessimism overhanging the KLSE.   

Malaysia is still a good place to do business if you are  business savvy.


Of course we must do our homework which includes examination of their financials, company visits, dividend policy, debt/equity return on equity and the technical position in the market.  (Is the market oversold or overbought?) .


Next Sunday we will be holding our  market outlook conference and I will speak about these investment opportunities. Please click on the below link. There is a small fee to a cover the lunch and 2 tea breaks.

 

 

 

http://www.ivsachart.com/investconference2016.php

Invest well and grow your wealth,

Bill

Advance support by VSA analysis

15 August 2016

Dear Fellow Investor,

To put the odds in our favour we need to be mindful of the economic background.

What is in the background ?  Presently it is  Easy money, QE, and rate cutting.

According to Bank of America global central banks have now cut rates 667-times since the collapse of Lehman Brothers in Sept ’08.  Last week New Zealand joined the bandwagon to cut rates. Malaysia may soon cut again while China, Australia, US  and Japan are on course to cut rates and print more money to push investors into risk assets.

The Swiss national bank is increasing equity holdings in the US and Europe. The Bank of Japan is buying Asian, European  and US equities. Costs are irrelevant as they can print more money. That is why equity prices, gold and commodities  are going higher.

Many prominent investors and CNBC talking heads  say we are in an equity  bubble as shares are massively overvalued.  Mark Faber suggests shares will drop 50 %.  Bill Gross warns of a massive share collapse. For a crash to happen the background must change. Interest rates must rise world wide and  inflation must return. That is not presently happening.

A precedent was the NASDAQ collapse in 1999- 2000. Notice the price chart with, support and resistance lines. Please read the commentaries as they are very instructive.

The NASDAQ in 1999-2000 advanced in a parabolic trend in a background of rising interest rates from 2 % to 6.5 %. Presently rates are not rising so it is safe to hold and buy quality shares/ gold and commodities .

By using simple trend tools such as support and resistance we will have advance warning. Our VSA analysis will help as time the exit. Red arrows will appear.

Last week, I took a position in Apple Computer at USD 108.17 as it is trading at a relatively  low valuation. The PE is now at 12.7 which is unusual for a technology stock. ( Microsoft is trading at a PE of  54)  Apple also pays a dividend of 2.3 % and has cash on the balance sheet.  Apple has strong institutional support including investor Warren Buffet.

In the height of the NASDAQ bubble Yahoo had a PE of 720. Cisco was at 230 while many other household names had PEs in the hundreds. I am not worried that Apple with a 12.7 PE  is overvalued.  

Invest well and grow your wealth, 

Bill

PS Join us for the outlook conference  if you are free. Registration  is on the below link.

http://www.ivsachart.com/investconference2016.php
 

Few qualities and research to explore before you made decisions to buy shares.

6 August 2016

Dear Fellow Investor,

The last 2 years have been challenging but we have outperformed our KLSE and SGX benchmarks by our strategy of dealing in shares which have the following qualities:

·        Focus on companies with stable cash flows

·        Strong profitability

·        Consumer defensive shares

·        Mature slow growing companies with high dividend payments

And with the dividends we buy more shares  to compound our returns.

We also conduct shoe leather research which means we search and visit  off the radar companies not researched by the big unit trusts and funds. We went to Singapore, Penang and even Chang Mai to visit Thai Beverage which is listed on the SGX.

There are many hidden gems in the markets we cover which keep a low profile but continue to chug along meeting our above qualities.

An example is Mr Tong’s weekly portfolio in the Edge. His shares are not the crowd following big caps but off the radar type shares. He has outperformed his KLSE benchmark by over 22 % in the last 2 years.

I do not however recommend buying blindly his share recommendations without doing your own research because he has a large following who might have bought first.  What you should do is buy the weekly Edge and read his column to get into his head and understand his thought process.   

He is transparent and records all his deals so I printed out charts of all his completed deals and marked his buy and sell points.  I studied his entries and exits.

He selects high quality fundamental companies and uses VSA (Volume spread analysis) to define his entries and exits. If he is wrong he cuts his losses. If he is right he averages up and runs his profits.

Monthly KLSE consumer index. 

While the KLSE Index is down over 200 points or 14 % from the 2015 high the KLSE consumer index is trading virtually unchanged over the last 3 years. Your dividends would have beaten bonds and fixed deposits. If you had been selective and disciplined your total returns would have averaged at least 30 % in 3 years.  

The Dow Jones was up 191 points Friday on a positive jobs report .  This should spill over to  Asian markets next week.  With the upcoming US election in 3 months expect no changes in US interest rates . Everything will be done by the monetary authorities, the ruling elite and media  to  get  Hillary elected and keep the stock market party going.

Invest well and grow your wealth,
 

Bill

A Canadian 100 KG Maple Leaf .9999 gold coin worth approx.: 4.3 million USD.  Some ask me if gold is an investment, a trade or a store of wealth ? What do you think ?  I appreciate your feedback.