What we endeavor to do.

23 Sept 2017

Dear Fellow Investor,

As mentioned in last week’s report many Singapore traders are in a state of paralysis driven by fear, bad news and uncertainty.

The STI index has been steadily correcting having fallen from 3350 to 3201 in the last 1 ½ months.

In my opinion this is a buying opportunity because bullish factors are slowly  diverging from the bearish view of the crowd.

OCBC accumulating at a major support

For example, OCBC which we have held for many of our clients for over  5 years on 22 August announced positive results led by their wealth management and insurance businesses.

Singapore's Oversea-Chinese Banking Corp. reported a nearly 14 percent rise in quarterly profit, largely led by sustained growth in its wealth management business and robust results from insurance operations.

Banking performance is a lead indicator of recovery. and OCBC is a premier Singapore  bank exposed to all major sectors of the economy including property, construction, logistics, telco, and consumer products  

Their share price has been steadily rising and the handsome dividends keep rolling in. DBS and UOB have also been performing well.

Some real world economic facts such as higher tourist arrivals, industrial production up 21 % in July, sea and air cargo volume increasing  support the recovery. Global economic recovery is helping Singapore’s neighbors such as Thailand, Indonesia and Malaysia. This indirectly benefits Singapore.

The wealth management business has been steadily growing in Singapore. The growth has been 8 % year on year while in Hong Kong the rate is 7 % while in Switzerland the growth is 3 %.   Money flow  to Singapore from China, US, Europe and Asia is an emerging trend due to Singapore’s AAA credit rating, stable currency and political stability.

This is the macro view but let’s look at the practical way to pick opportunities.

These are 4 guidelines from Joel Tillinghast a billionaire  UK fund manager and writer of Big Money Thinks Small.

1-          Does the stock have a high earnings yield- that is a low PE

2-          Does the company do something unique that will allow it to earn super profits on its growth opportunity ? Does it have a moat ?

3-          Is the company built to last or is at risk from competition, fads, obsolescence or excessive debt ?

4-          Are the companies finances stable and predictable into the extended future or are they cyclical, volatile and uncertain ?

Most companies fail the test so it takes effort and research to find these gems.

This is what we endeavor to do.

On  27 September  Dolly and I will be traveling to Osaka and Kyoto and returning on 5 October. If you have any queries you may email me   

For account queries you can call our customer service desk @  03 2783 0300

Invest well and grow your wealth

Bill

A castle in Japan with a moat. Our shares must have a moat. 

Bullish market for the next 12 months

16 Sept 2017-

Dear Fellow Investor,

My outlook for the next 12 months for the US markets is bullish.

Weekly Dow Jones up 470 points this week

The Dow Jones continues to make new highs and some of the bullish reasons include:

Trump’s willingness to compromise on social issues: 

This will get  liberal members of his own Republican party and the opposition Democrats to support tax cuts, raise  the debt ceiling and infrastructure spending.  

Corporate tax cuts will fund share buybacks and increased dividends. Buybacks increase earnings for existing shareholders.

Individual tax cuts will stimulate consumer spending which is good for business.

These are  the main bull points. So far since Trump was elected the Democrats and liberal Republicans have blocked him at almost every turn. They refused to repeal the Obama health care disaster and blocked/ obstructed many of his judicial/ cabinet  nominees .

The twin hurricane disasters forced the opposition’s hand to grant disaster relief.

Trump crossed the political aisle to forge an alliance with his political enemies to do the right thing. and release the disaster relief funds

I saw Trump on CNN in Florida directing the relief operation. He showed his focus and skills in construction and rebuilding.

Even the mainstream Trump hating media: CNN/ CNBC/
BBC/ Bloomberg could not find fault.

Florida and Texas are recovering much faster than expected and Trump’s approval ratings have jumped.

In my life I have never seen a US president with Trump’s building/ development skills. 

Most like the Clintons/ Obama/ Bush   were political  hacks, out of touch, corrupt, and self serving   

As the US markets represents about 60% of the world’s equity capital, this will benefit markets around the world including Hong Kong, China, Singapore and Malaysia.

I particularly like Singapore due to the extreme negative sentiment as well as, doom and gloom among the investment crowd. 

I read that  Singaporeans  are selling their shares out of fear of North Korea  starting a war.  This is absurd. It is bluster and hot air by Kim.  Russia/ China and the US will never let it happen. Bookmakers in London access the odds at 99.9 % there will be no war.

Extreme fear by the sheep is always a good buying opportunity especially when the odds favor you by 99.9 % of winning. 

Because of the negativity we can buy selected quality shares at a discount while enjoying healthy dividends.

The same is true for the KLSE especially selected quality mid cap shares trading at reasonable valuations.

Invest well and grow your wealth
Bill

One of my colleagues  at Phillip owns a similar cat. It is a rare leopard cat. She told me it is an expert rat catcher.

Value represents assets while growth represents ideas.

10 Sept 2017

Dear Fellow Investor,

A  tragic but ultimately   bullish event happened last week in Texas.  

This hardy Texas dog knows how to survive. without help. Hurricane Harvey destroyed over 100,000 homes and billions of dollars of infrastructure but  in the crises lies opportunity.  

Trump joined with the Democrat leadership (opposition party)  to raise the debt ceiling for 3 months to avoid a government shutdown and release over 10 billion in aid to the Hurricane Harvey victims. 

Even the liberal democrats, socialists and Trump haters could not refuse life saving aid in the face of misery and suffering. 

They put their ideology aside for the greater good.

This is evidence of Trump willing to meet with the opposition and compromise rather than taking a hard line stance.  

It could mean there will be progress in reducing taxes for individuals and corporations, providing funds for rebuilding infrastructure and building the Mexican border wall to keep out the drug dealers, criminals, terrorists and illegals  

Trump’s leadership and expertise in infrastructure and property development  his shined.

His response to Hurricane Harvey  and the debt ceiling has resulted in a jump in his approval ratings from the low 20’s to over 45 %.

This will boost stock markets world wide.  It will boost commodities and companies linked to building and development. Even gold and silver have caught a bid and awakening from a 5 year bear market.

Lets continue to focus on value stocks that offer growth. Value represents assets while growth represents ideas.   I like a combination of both.

Invest well and grow your wealth

Bill

Today’s ‘critter’ is the Patagonian mara…a relatively large rodent…and somewhat rabbit-like animal that is found in open and semi-open habitats in Argentina. The KLCC Aquaria has a similar animal.

Trip to Osaka

2 Sept 2017

Dear Fellow Investors

Some of our successful investments  in the KLSE over the years  have been Japanese, American  and Taiwanese companies  with Malaysian subsidiaries.

For example Japan Tobacco, Inari, Tasco and recently purchased Uchi Tech are some which we bought.

They are able to leverage on lower wages, lower  taxes  and less government regulations than they would suffer in their home, countries.

If they export which all do they  benefit from  exchange rate differences.

Because they must report to their home office, they  tend to be more prudently managed. Aji a  maker of MSG is an example.

On 27 September, Dolly and I will be taking the night flight  to Osaka.

 We will spend 4 days in Kyoto and 3 days in Osaka to view the historical attractions, including the world’s largest aquarium which has a giant whale shark.

I am planning a visit to Nidec in Kyoto,  which is  the world’s largest manufacturer of miniature electric motors.

I want to find out if they have a Malaysian or Singapore subsidiary. If they do that could be a good investment for us.  Subsidiaries tend to perform better than their mother company.

The KLSE/ SGX continue to consolidate with poor momentum.  Singaporeans/ Malaysians are  pessimistic and have reduced their spending and increased their savings.  

My bet is the sun will rise again- it always does. So I do not advise being pessimistic and leaving your money in a fixed deposit. Look for good value while the market is quiet.

Continue to focus on solid companies with earnings growth/ dividends  Rubber glove demand is picking up and that will benefit our holdings in Kossan. 

The floods that have hit Houston, Texas  have destroyed over 100,000 homes, power lines roads and schools  with an increased risk of disease among the thousands of homeless.

Trump will allocate money to buy more hospital supplies, construction materials and rubber gloves. Trump is taking a hands on approach to the disaster so progress will be made to help the victims  

Trump in my opinion has a good heart although he is a rough, rude and frank talker. He donated out of his own pocket 1 million USD to the flood victim's cause. The Clintons, Bush or Obama never opened up their wallets to disaster victims. All talk and sympathy but no money. Money talks.  

Our investment  in Kossan is steadily rising and should bear more fruit.

Invest well and grow your wealth
Bill.

Today’s critter is a Zoo Negara sun bear. It is fun to watch them climb
They are really fast despite their lazy appearance.