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.

 

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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.