Do not fear the US election and whether Trump or Clinton wins

25 Sept 2016

 

Dear Fellow Investor,

 

Do not fear the US election and whether Trump or Clinton wins  

 

We profit no matter who wins even if there is a correction. We are value investors and carefully select our companies to withstand shocks, volatility, panic attacks and the fear promoting hyper media.

 

We are not gamblers watching every  price move, or CNBC/ Bloomberg  viewers who intensely focus on the latest news or talking head Federal Reserve banker who professes to know the future of interest rates or currencies.

 

We deal in simple easy to understand businesses with good managers who watch the bottom line.  We collect our dividendS. We sleep at night. We grow our capital.

 

In the current environment stability and predictability are what grows our wealth. 

 

I recently bought a Singapore bakery- QAF for our managed accounts.

Disclosure: This is not a recommendation and I take no responsibility for your dealings in this share. I currently hold this share.  

PE of QAF at the current price is 13.1. Dividend yield is 4.1 % . They have grown their earnings consistently and have a wide network of established destributers for their bakery products. They have a strong established brand – Gardena.

 

They have recently bought into a pig venture in Australia which   will diversify their product line.

As long as Singaporeans eat bread and bakery products, QAF should continue to prosper.

With this kind of company it makes no difference if Trump or Clinton prevail in the upcoming November  election.

  

From the chairman of QAF in their 2015 annual report:

 

Dear Shareholders, I am pleased to report that despite the challenges of a softening global economy caused by the deepening slowdown in China, sluggish economic growth in the Asia-Pacific region, and the adverse impact of a strengthening US dollar, our family of brands proved resilient and was able to deliver healthy contributions to profits in all our major business segments. For the financial year ended 31 December 2015, the Board is pleased to recommend a final dividend of 4 cents per share.

 

We focus on only a few businesses and do our best to understand them. We visit the company, talk with the management, carefully review their financials and buy during periods of uncertainty, pessimism and fear. As Warren Buffet would say it gives us a margin of safety. 

 

If there is a panic market reaction because of the US election we would bring out our hit list of selected companies  and choose a bargain. We buy with confidence and reason;  not sell because of emotion, fear and panic.

 

We do keep some cash in reserve to exploit  developing opportunities.  

Last week one of our clients left a pair of high end glasses in my office in Phillip Capital Mgt. If you wish to claim please contact me at 012 685 1207.


Phillips Fame system to access your account is down so if you want your current statement I am happy to What App t to you.

Invest well and grow your wealth,

Bill

 

 

Flexible business is the best business in Malaysia

18 Sept 2016

 

Dear Fellow Investor,

 

In times of fear, pessimism and uncertainty it always pays to review the wisdom of Warren Buffet, the world’s greatest investor.

 

When Warren Buffett gets into a discussion of investing philosophy, he reminds us all that most investors are blinded by the markets’ gyrations and spend far too much time trying to form macro opinions or listen to market predictions; rather than investing simply and prudently for the long-term. “Too often, owners of stocks let the irrational behaviour of their fellow owners cause them to behave irrationally. Because there is so much chatter about markets, the economy, interest rates, price behaviour of stocks, etc, some investors believe it is important to listen to pundits and, worse yet, important to consider acting upon their comments. You don’t need to be an expert in order to achieve satisfactory investment returns. But if you aren’t, you must recognize your limitations and follow a course certain to work reasonably well. Keep things simple.

 

Weekly Dow Jones with last weeks price holding at 18000 support. Notice the ultra high volume on the last price bar to the right as attempts to drive prices lower failed. Price was up 38 points for the week. The whole investing world is focusing on the Dow. In my opinion this is short term noise.

 

Another example of why we need to heed Warren Buffet’s advice is Apple shares:

 

In early September 2016, 458 mutual funds and a mass of retailers dumped their Apple shares citing negative media views that Apple’s new I Phone 7 sales would flop.

 

Other negatives included declining revenue, lack of innovation, no more a growth company, dropping the self-drive car venture etc.

 

The average Joe if he or she listened to CNBC, CNN or Bloomberg would have dumped their shares bought put options or short sold.

 

Look at the right edge of the Apple chart on last week’s price action. It was an ultra-high volume wide range price bar cleaning out the short sellers and misinformed experts.

 

Warren Buffet bought 3 billion USD of Apple shares in May and June and I am sure he followed his own advice and is still holding.

 

For Tim Cook to cut his losses on self-driving cars is a smart move. Cars are not his strong suit. He said he will focus on his core hand phone business.  The market reacted negatively to his move in June but again this was a short term panic reaction. It is always smart to cut losses on something that is not working.

 

The best businesses in Malaysia/ Singapore are those with flexible management like Tim Cook who innovate, manage their financials and keep a low profile. They tend to reward their shareholders with rising dividends, sales and earnings .  I focus on these shares for my clients. I am not concerned with irrational moves in other markets such as the Dow.

 

Invest well and grow your wealth,
Bill

 

Hillary Clinton recently in a speech to a group of hedge fund billionaires and the 0.1 % elite called 50 % of Donald Trump supporter’s deplorable meaning racist, ignorant, and bigoted. This could be the inflection point that could turn the ordinary people against the elitist, hypocritical Hillary. This is a cartoon based on a painting of the French revolution that brought in Napoleon who restored the glory of France. Notice the Trump flag and the giant eagle.   Let’s wait for inflection points in the market: they can be very profitable.    

Why has the US Federal Reserve suddenly changed from supporting Clinton to supporting Trump ?

10 Sept 2016

Dear Fellow Investor,

On Friday, we had a hawk scare as the Dow Jones dropped 408 points.

Weekly Dow Jones as of Friday 9 Sept 16

 

Major support at 18000- 18050  held which was a bullish  line change going back to May 2015. Volume was relatively moderate. If volume was ultra high that could have signalled a bearish trend turn.  If price holds above the support it means the bullish May line change is confirmed and expect higher prices medium term.

Federal Reserve board members have been exceedingly hawkish in the last few days. They have been beating the drums for higher interest rates to be administered on 28 Sept, the next FOMC meeting.  That was all that was needed to precipitate a market correction by program traders.  The hawks stirred up the retail crowd and they joined in the panic selling.  Everything was sold- crude oil, gold, commodities and bonds world wide.    

If prices continue to fall as happened on the December 2015  hawk scare when the Federal Reserve raised interest rates ¼ point, Donald Trump will get a substantial boost to his election chances in the upcoming November election. That could be the reason the Federal Reserve officials orchestrated the market drop. 

Why has the US Federal Reserve suddenly changed from supporting  Clinton to supporting Trump ?  

Clinton and her socialist supporters such as Bernie Sander, Elizabeth Warren  have said last week they will take away the independence of the US Federal Reserve and place it under political control. It means taking away the independence of the bankers and putting control back in the hands of the people.  

This is a radical and dangerous policy.  The US  people will vote for more entitlements, more welfare, more hand outs, free healthcare, free university education, and open borders to let in more migrants who will become fast tracked to become voters .  

The Chinese will not stand by idly. They will devalue the Yuan and this could precipitate a world recession/ depression. They will do so to protect their vast store of US Treasury bonds which would lose value should the US raise interest rates. 

From a practical point of view, Clinton would have a difficult time implementing this radical proposal as she does not control congress who pass the laws. It does not look like Clinton’s party  will take back congressional control.

For this reason, expect the Fed Reserve hawks to fly back to their nests for the time being.  The selling panic will subside. 

To protect against interest rate rises, we have allocated your capital to only the most solid companies with low or no debt . We  also have increased our cash holdings in HK and Sing Dollars.

Invest well and grow your wealth,
 

Bill 

One of our clients rescued 4 abandoned orphan pups from a drain. The mother was killed. They are healthy, frisky and very active. If anyone wishes to adopt, please let me know.

Do your own thinking

3 Sept 2016

 

Dear Fellow Investor,

 

Last Sunday  we held our investment conference at the Club @ Bukit Utama. It  was well attended and we appreciate your support.

 

For those who did not attend, I will share with you a brief review:

 

Nigel Foo, the small cap analyst from CIMB was bullish for the Malaysian market giving a KLSE target of 1920 .  He presented several bullish catalysts including a positive October budget yet to be presented, an increase in foreign fund inflows from developed markets including Japan and Europe as these areas suffer from negative interest rates and low growth and are moving large funds to Asia.

 

He also felt that interest rates in Malaysia would drop marginally and  this would benefit Reits and well established property companies. 

 

The October budget he anticipated would favour large infrastructure businesses for road building, LRT projects and development. This will be positive for job creation and spending.  

 

He also felt the US Fed would not raise interest rates this year which would negatively impact world stock markets. S & P will continue to give Malaysia positive ratings.

 

The next speaker was William Hon, CEO of BioAlpha Holdings. He runs a listed alternative medicine company which supply to MLM companies as well as pharmacies.   This is a small cap company which is recommended by  Nigel Foo .   Mr Hon showed that alternative medicine is a growing sector as we become more health conscious. BioAlpha Holdings is well positioned for this growth.

 

My conservative/ dividend  mandate for my clients does not allow me to invest in such a company so I would not recommend it.

 

Martin Wong and his team promoted IVSA, a web based price and volume platform which identifies trading opportunities.   This software filters for low risk/ high potential gain opportunities in Malaysia, Singapore, US and Hong Kong.  It also has  built in risk management using ATR stops (Average True Range Volatility Stops)

 

For more information on this Please contact Martin @ www.ivsachart.com

I spoke about off the radar screen opportunities. These are solid companies not popular with the crowd/ the media which trade at attractive valuations. I advised listening to the media/ CNBC/ 

 
Bloomberg as they may lie to you and lead you into a losing position. I gave the example of a smiling Donald Trump.

Donald Trump with his wife Melania.

 

 

The media portray Trump as an angry scowling man . Rarely do they show him smiling. Trump is a good family man who has raised his children well. He is not the monster CNN would have you believe. He would be good for America and the World.

 

Most media has an agenda. It is not for you to make money or get Donald Trump elected.  Another words, read and listen to less news if you wish to be profitable. Do your own thinking.  

 

Invest well and grow your wealth

Bill