The best performing KLSE index since beginning 2016

22 October 2016

Dear Fellow Investor,

The best performing KLSE index since the beginning of 2016 has been the consumer index.

Weekly chart of the KLSE consumer index. Notice the last price bar. It closed higher as the budget was announced on Friday. It means the budget is friendly to consumer stocks.  

 

Let me share with you a personal experience and I am sure you can share similar experiences.  About 15 years ago, I decided to plant a a  mango tree in  front my house. I went to my neighbourhood nursery in Ampang Jaya and bought a 6 foot mango tree. I asked the nursery owner the cost of transport, fertilizer, and a labourer to dig the hole. The cost was RM 100.  I decided the price was reasonable so I agreed. Today the tree is bearing sweet mangos.

Fast forward to today: I decided to plant 2 more mango trees in the back of my house  so I returned to the same nursery and asked the same owner the price.  The Kuala Lumpur price is now RM 400 per tree- no discount- take it of leave it.  I left it and have decided to look for another nursery with a reasonable price.

I found one in Ipoh and the cost is only RM 50 per tree but that is cash and carry. l will plant them myself so at least will get some exercise and have some money left over.   Even paying the toll and petrol to Ipoh is still worth it.

 

Enjoying the sweet mangos is the same as enjoying the cash from  your quality dividend shares.

 

  

This in my opinion this is how to survive inflation. If possible, do not pay the asking price, live frugally, shop for the best deal and avoid expensive restaurants and  luxuries.  As  investors look for companies that deal with necessities that everyday people need  and can raise their prices with inflation.     

Most of the companies representing the consumer index can raise their prices with inflation. Examples of KLSE consumer index shares are Nestle, Dutch Lady, Padini, Panamay, QL Resources, Kossan and F & N .

In Singapore examples include QAF, SATS, THAI Bev, while in Hong Kong there is Chong Kong Hlds and in the US, Apple fits the bill.

Caveat: I hold some of these shares for myself and client but I am not recommending you buy any of these shares before consulting with your professional licensed adviser.
 

 

The whole world is expanding credit and money supply.  Paper money is just that paper money and based on the laws of common sense and  supply and demand we have more paper chasing real goods. It takes virtually no effort and low cost of capital to print billions of currency notes compared to producing rubber gloves, houses, milo, Apple I Phones etc.  

This means quality companies that produce real in demand goods will survive and prosper while paper fiat currencies will depreciate.  

If crooked Hillary wins the US election expect money printing on steroids. It might be prudent to buy some physical gold as an insurance policy. Even the Donald will print should he win. 

Invest well and grow your wealth,

Bill

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