Keep calm & Salam Ramadan

27 May 2017

Dear Fellow Investor,

The sentiment of almost all world markets is super bullish. With share buybacks, historically low interest rates in most of the world  and easy money policies the investment crowd continues to pile in.  What is the background? What is the fuel for the bull ?  Simply put: Easy money

Donald Trump has the option to appoint 3 Federal Reserve Board officials to fill 3 vacancies. They will likely be easy money advocates even more dovish than Janet Yellen. With Trump's plans to revive infrastructure and defense spending credit will be further loosened.

A lot of this easy money is finding its way into equities world wide.

Bad news promoted 24 hours a day by the Trump hating main stream media has not stopped the bull run in the S & P/ Dow and Nasdaq and other world markets.  

Investors have become immune to the lies and misinformation promoted be CNN, BBC  and CNBC concerning Trump, political witch hunts, Putin etc. Markets continue to go up.

To protect ourselves from getting caught up in the crowd euphoria continue to focus on off the radar screen companies trading at reasonable valuations. These are companies that are under researched, not in the popular press and overlooked by the crowd.  

In this way when there is a correction, you will be protected. Value is always value, property is always property and gold is always gold.

Invest well and grow your wealth and I wish all our Muslim clients a happy Ramadan. 

Bill

This is a fisher, a member of the  weasel family. They live in Northern

Canada.

The sun rises again.

20 May 2017

Dear Fellow Investor,

The sun rises again.

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That was the theme of yesterday’s presentation on The Asian Economy held at the Swiss Garden Hotel.



Prominent speakers included Charles Lee, Portfolio Manager from Phillip Securities Singapore, Louis Wong, Director, Phillip Capital Hong Kong, Ms Pikun, Fund Manager from Phillip Securities Thailand and Mr Phua Lee Kerk Market Strategist, Phillip Capital Mgt.



Statistics and charts were presented to support the rising sun theme.



The sun is definitely rising in japan. Exports are picking up. Tourism numbers continue to increase. Deflation is ending. Consumers are spending. The employment market is robust and wages are going up. Abonomics is working. Valuations of 13.9 PE are reasonable and there are quality small and mid caps which offer opportunity.



The sun is also rising in Thailand. The 3 year drought has ended and the farmers are happy. They have more money to spend and that is boosting consumer stocks. As the Army is in control for at least the next 5 years that provides economic and political stability which is attracting foreign investment. Ms Pikun recommended several Thai consumer stocks to ride the trend.



The sun is definitely rising in Singapore after 3 under performing years. Property is beginning to recover with government initiatives to loosen policies imposed to cool off the property market.



The policy of strategic alignment with China is the new focus. This alignment includes goods, services and finance . Over 100 China MBA grads are now in Singapore studying at a local University the Singapore model of growth and business development so they can replicate this model



This will provide support and growth to the Singapore/ China economy.



The compelling valuation of the Singapore market is PE 13 with a price to book of only 1.2. Average dividend yield for the blue chip index is a generous 3.4 % which beats the FD rate by a wide margin.



Charles Lee continues to like selected REITS as a income plays as well as transportation and infrastructure stocks.



The sun in Hong Kong is also bright. With the PMI expanding in China growth is accelerating and spilling over into Hong Kong. Valuations of the Hong Kong share index are at PE 13.2 which are reasonable.



I have bought the EWH as a play on Hong Kong for our PGWA clients. This is a fund listed in New York managed by Blackrock which include a selection of blue chip Hong Kong shares. So far it has been performing and should continue to perform with the China recovery.



Malaysia is also benefitting from the rising sun and I am focusing more on small and mid cap stocks with solid fundamentals. We visited Kossan last week to get a review of the rubber glove sector and also attended the AGM of ECS IT. Kossan is expanding with a new plant which should boost profits. Since inception 30 years ago I was told that Kossan has never had a losing year.



The prospects for ECS are bright as they are expanding into the Internet of Things and establishing a presence in the Penang free trade zone.



Invest well and grow your wealth

Bill

Secretive and largely solitary by nature, the cougar is more closely related to smaller felines, including the domestic cat…rather than the large cats of Africa, India, Siberia…or the jaguar in South America.

Time to look for undervalued shares

14 May 2017

Dear Fellow Investor,

Some of you have asked me why we hold large cash positions. One reason is that we recently took profits on some big winners which became overvalued compared to the price paid. We hold cash to take advantage of a7 low risk and potential high reward opportunity

 

When a share becomes overvalued based on the metrics of P/E and revenue growth our margin of safety decreases and our risk increases.

 

Our plan is currently to look for undervalued shares that have not attracted the interest of the media and the crowd. We wait for line breaks of accumulation using price and volume spread analysis.

 

 

There are currently some out of favour beaten down property / plantation/ rubber glove and oil and gas companies which are now at value levels.

 

 

You must be patient to wait for line breaks on volume before taking a position.

You must also be mindful of the fundamentals of the companies you buy. A line break on high volume is a sign of insider buying. They know more than us so why not follow them?

I use the Bloomberg research station in my office to filter the fundamentals and check the financial statements before planning a line break entry. That increases our odds for profit.

 

 

Please do not be concerned or anxious about holding too much cash. Be patient. Cash is the ultimate hedge and when the odds favour our play we make the bet. That is why the majority of stock market players and casino gamblers lose. They do not have an edge and the patience to wait. 

 

  

Going forward, low interest rates in most of the world, QE in major Central Banks, coming election in Malaysia, will provide support for carefully selected shares.

 

Add caption

 

Invest well and grow your wealth,

Bill

 
 

Please ignore the liberal media noise and propaganda, the majority who are Trump haters. It is simply a distraction from our investing in quality companies. I do not see much news on the favorable trade deal Trump just made with China Obama tried for 8 years to make a deal and failed while Trump took less than 100 days.

 

Coming ECS AGM

8 May 2017



Dear Fellow Investor,



On 17 May, I will be attending the ECS IT AGM to be held at the Tropicana Golf Club at 10 30 am. For those who hold ECS in your EPF/ managed accounts, I am happy to get you a proxy form from our trustee so you can attend the meeting but you need to let me know by Monday.



I personally know the MD and his son who is an MIT graduate in computer science. They will explain the ICT trends moving forward and this will explain why we need to focus on these trends to align ourselves with what is making money.



Semiconductor stocks such as Inari are making new highs as well as many other technology companies around the world.



ECS IT is a driver of Malaysia’s digital economy and distributes products from Apple, Huawei, Lenovo, IBM Samsung and all the major ICT companies.

Unlike the ICT trends, other trends are not presently in our favour: These include traditional brick and mortar businesses, oil and gas, plantations and commodity related counters.



Some of the counters in these sectors have made new highs and there is a high degree of complacency and supreme confidence. Value is difficult to find. I suggest taking profits as we did with Press Metal



Headwinds include the recent rise in China interest rates and credit tightening which caused a crash in industrial metals/ materials such as coal/ copper/ and iron ore. The CRB commodity index is now down to the same level before the Trump rally.



I read that to buy a big house in Bejing, you need an 80 % down payment and a small house is 60 % The authorities are cooling the speculation.


There has also been record plantings of soybeans, corn and wheat in the US which will put downward pressure on palm oil.

The CRB Index which represents a basket of world commodities is in a fierce downtrend.

As commodities are cyclical, they will recover but in the meantime focus on what is making money now.



I am adding a momentum mandate to diversify your investing portfolio . Obviously the shares that come up on our IVSA(Volume Spread analysis) filter must meet our high investment standards but we add the filter of momentum and line change to increase returns.



When I bought Gas Malaysia for you a few months ago, I bought on a line change and increasing volume. Risk was low compared to potential reward. Gas



Malaysia is also a high quality fundamental counter. Once I get clearance from our compliance, I will forward you a mandate letter to sign so we can proceed.  



Invest well and grow your wealth,
Bill

A Bali Mina bird which is highly endangered. THere are only a few left in the world. There are some in the Negara Zoo.