Valuable Insight by Motley Fool

19 August 2017

Dear Fellow Investor,

Last night I listened to a podcast from Singapore with Tom Gardner  co-founder and CEO of Motley Fool. For those who might not know, Motley Fool is an investment research service with a world wide presence. They provide members with fish but also teach how to fish.

He shared some valuable insight which can benefit all of us as investors.  He shared Warren Buffet’s advice to only buy companies with the ability to raise their prices.   Uchi Tech Bhd, maker of micro processors for coffee machines  is one as well as Well Call Bhd, a maker of custom hoses.  

Tom also likes businesses  run by their founders. Uchi, WellCall, Inari and ECS IT are examples. He said that statistically: owner operated business outperform by 2 % year on year on average compared to those run by CEOs/ managers  with no skin in the game.

We hold UchiTech, Inari, ECS IT and Well Call for  clients and ourselves.

He also believes we should learn and add to our winners. I believe in learning from our winners  but in my opinion adding to our winners when valuations are stretched is a dangerous strategy .

Tom mentioned the  trends which will benefit in the years to come.  They include robotics, artificial intelligence, medical diagnostics and automation. These sectors are where money is going. I am looking hard for opportunities in these sectors especially those companies who automate. The government announced they will raise worker levies but I do not forecast  a tax on robots

His last takeaway was to believe in entrepreneurs  rather  than most financial analysts. For me that means know the management, their vision and confirm that from our study of their financial statements. I trust analysts who visit the companies they recommend  Those who are arm chair analysts, I discount.

Motley Fool visits all the companies they recommend.

The KLSE is in a state of hibernation. Liquidity has dried up. Investors are pessimistic. There is a cloud of gloom and doom overhanging the market.

I remember an old saying. Never sell a quiet market. We buy strong well managed businesses which have held up well in this atmosphere.  We continue to collect our dividends and sleep at night .

Look at the bright side. S & P maintained the Malaysia financial rating at -A which is investment  grade. GDP is gone up to 5.4% The general election is coming.  and that will remove an uncertainty that may get foreigners back into the market. Steve Bannon, senior adviser to Trump was fired yesterday by Trump as Bannon wanted a trade war with China. Bannon was a good friend of Trump but with Trump business is first before friendship and China is good for business. Hence no trade war or war with North Korea.

Invest well and grow your wealth

Bill

Today’s ‘critter’ is a fossa…the largest mammalian carnivore on the island of Madagascar — and has been compared to a small cougar.  It is a member of the Eupleridae, a family of carnivorans closely related to the mongoose family.  Although the species is widely distributed, it is locally rare in all regions, making fossas particularly vulnerable to extinction. Photo Credit: Ran Kirlian.