31 Dec 2016
Dear Fellow Investor,
Below is the weekly chart of JP Morgan Chase which is traded on the NYSE. In February 2016 Jamie Dimon, CEO of JP Morgan Chase purchased for his personal account 26.6 million USD worth of JP Morgan shares @ USD 53 per share, As of 30 December 2016 the price was USD 86.29 per share.
Weekly chart of JP Morgan. Notice the spring formed during the 2nd week of Feb 2016. It was on ultra high volume.
This is why I follow the insider trading reports. When an insider such as a CEO purchases a large block of his own company shares it means he knows something the average investor does not know.
He knew that the US Fed would raise interest rates which would benefit the net interest margins of his bank. Higher interest rates benefit banks in general.
He bought in a time of maximum pessimism and fear on the classic VSA spring as illustrated by the arrow on the chart.
Every time a fund or company officer buys or sells his shares, he must report as a matter of public record. In Malaysia records of insider buying and selling are on the Bursa website. It is something I always check before buying or selling which are marked clearly on the Bloomberg research platform.
I just returned from a short holiday break to Vietnam. The Vietnam economy is booming, the stock market continues to make new highs. There are strong inflows of foreign funds. There is a vibrant Malaysian community in Ho Chi Minh city. They run restaurants, travel agencies, hotels and export textiles as well as commodities and consumer products.
Quite a number of Malaysian businesses have set up subsidiaries in Vietnam to take advantage of a pool of highly skilled workers and low costs.
I met with Josephine Yei, CEO of SBB Securities in Ho Chi Minh which is a branch of the Berjaya Group. They handle private equity, IPOs, company research and investment/trading accounts. She was positive on consumer shares as Vietnam has a growing middle class who are earning higher income.
She recommended for long term investing in a milk company as well as a beer company.
Vietnamese love to drink milk because they think milk drinking will increase their height and weight as Vietnamese are shorter and thinner than Malaysians. Beer drinking is also popular I suppose because of the intense heat and low tax. Every café/ pub it seems has a crowd of beer drinkers.
The Big Question
The question on most of your minds is when will the KLSE/ SGX recover. We have had 3 years of consecutive down years which has never happened in the history of the KLSE. Several times there have been 2 consecutive down years and on each occasion the KLSE recovered in the third year.
Will the KLSE recover in 2017 ? Statistically the odds favour it but we need to be very selective. Focus on consumer, plantation, and export related companies. Make sure they have clean and solid balance sheets, increasing cash flows, growth prospects and dividends.
When you pick up your paper and read the onslaught of negative news and prices do not go down then we are near or close to the bottom. Foreign funds will be buying. Combine that as Jamie Dimon did when he made a fortune on JP Morgan stock with a classic VSA pattern such as a spring, wash or test of support.
Then you can enter with low risk and high potential reward.
Why I am positive moving forward
In 2 words: Donald Trump
Here is a quote from economist Jerome Booth and his view of Donald Trump. It is why I am positive world markets moving forward.
“ As a businessman he will be used to the positive sum logic of commerce as opposed to the zero-sum logic of politics and international diplomacy.“
Bill
A brass elephant at the Saigon Zoo made in 1931 and given to Vietnam by the King of Thailand. This is a well kept beautiful zoo with many old trees, animals and landscapes and well worth visiting
The Notre Dame cathedral which was built in 1880 by the French and is a replica of the same cathedral in Paris. We hired a private guide Mai who is standing next to Dolly. She is a law student and works part time as a guide. Her English and ground knowledge was excellent.
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