Returned from Motley Fool share convention in Singapore

7 November 2016

 

Dear Fellow Investors,

 
We returned yesterday from Singapore where we attended the Motley Fool share convention. The concern of many guests was the uncertainty of the US election and should we sell?

The message from Motley fool was this. If we hold wonderful companies

they will cope. If there is a correction we should buy more.

It is similar to the Peter Lynch strategy:   

Look no further than legendary investor Peter Lynch, who successfully navigated through his fair share of market disruptions. He said, "Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves."

So forget selling.

Singapore is slowing. On our visit to SunTech Mall and Raffles City, two of the biggest Singapore malls, there is less customer traffic. We saw empty shop lots. This is even true in the smaller outlying malls. 

That means we should avoid Singapore retail reits.  Many retail businesses cannot afford the high rentals so they close.  

David Kuo, CEO of Motley Fool gave his views on interest rates which he believes will rise. It was based on increased QE in most countries, low to negative interest rates, increasing debts and slow growth.  

Without inflation, deflation will take hold making it more difficult to service debts both private and public.  The end result could be depression and collapse.   Governments will do all in their power to prevent deflation.

As investors, he said we must focus on companies that can raise their prices with inflation. We hold such companies for our clients.  They must also have fortress solid balance sheets, honest management and well established branded products.

He gave the example of Disney and Micky  Mouse. Micky is a 90 year old mouse still going strong. Disney continues to grow, raise their ticket prices and customers line up to be entertained.   

The next speaker was Peng Tee Ong, a successful venture capitalist.  His topic was destructive technology and how companies in this sector will prosper and grow despite an environment of worldwide low growth.

He advised being mindful of destructive technology and how it might affect companies we hold.  He gave examples of how on line retailing such as Amazon and Ali Baba are taking market share from traditional retailing.  Borders Books a retail bookseller has about 300,000 books to sell while Amazon has over 9 million.  It is more convenient and cheaper to buy from Amazon.  

Air B & B offer rooms all over the world at less than half the price of a traditional hotel.  We stayed in a beautiful master bed room  in a private house in the Mt Sinai area , clean, quiet and spacious with a view only a short distance to the Buona Vista MRT.  Air B & B is slowly destroying the hotel industry in Singapore as well as most of the world.

 

Air B & B: large master bedroom, attached bathroom, quiet and clean RM 264 per night, no tax, no hassle and convenient in the Mt Sinai area close to Buona Vista  MRT .

A comparable room in a traditional Singapore hotel would be at least SGD 200 + 15 % tax

Ong shared a technology blog Stratechery by Ben Thompson which updates destructive technology trends.

Invest well and grow your wealth,

Bill

2 week  old baby Rhino in Kruger Park, South Africa