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.