Headwinds are facing world markets

26 March 2018

Dear Fellow Investors,

I would like to thank all of you who attended our Quality Value Investing course Friday.  I  hope you found some useful takeaways. We will repeat this course in the Fall due to the good response.

I recently watched on Astro HBO a very inspiring movie entitled The Founder. It is the true story of Ray Kroc who transformed two brothers innovative fast food restaurant, McDonald’s into the biggest restaurant chain in the world with a combination of ambition, hard work and focus. 

MacDonalds has all the qualities of a sound value investment.

It reminds me  of what we look for when we want to invest in a quality business. It checks all the boxes for a Warren Buffet investment.  

For you value investors and business persons   you need to  watch this movie.

Headwinds are facing world markets  so we need to keep a low profile.  These headwinds include talk of a possible trade war . This is being hyped 24 hours a day by the media. The hype is causing extreme fear and uncertainty among the crowd. Popular shares followed by the crowd including Facebook, Amazon, and Google are being hammered.

As Warren Buffet said we should avoid popular shares and focus on value shares. That is our best defence. Our portfolios are weathering the storm and we maintain our cash position to be able to pick up bargains once the markets quiet down.

I will be in Penang and Thailand from Sunday to Wednesday and you can always contact me by email should you have any concerns.

Invest well and grow your wealth

Bill

Today’s critter is a Komodo Dragon from Indonesia. You can see this magnificent creature in Zoo Negara as well as the Singapore Zoo.

Get 10 CPE points by attending our Quality Value Investing Course soon.

17 March 2018

Dear Fellow Investors,

“Value investing requires looking beyond the headline numbers” is the title for Tong’s value investing column in this week’s Edge.  

I might add look beyond the headline news and announcements and look at the business you might invest in.

The CNBC news parrot in the above illustration proclaims, “The bottom’s in… The bottom’s in, The bottom’s in, Buy, Buy, Buy !

What I do mean is by all means look at the numbers and ask if the financials are sound. Are sales, earnings and revenues rising ?

If your investment idea passes the financial filters, then examine the quality of the business.  Quality is a subjective issue. It includes honesty of management. Does the management operate prudently for the benefit of the shareholders?  Does the company have an investment moat to protect itself from competition ? Do they finance acquisitions via organic cash flow or via cash calls ?  Do their  acquisitions synergize with their existing business or are the managers trying to build an empire ?

Much of this information can be known by attending the AGM, reading the annual and quarterly reports as well as visiting the company.  Every listed company has a website and that will give you a lot of information.

Isn’t this a better way than listening to the parrot ?  

If you want to know more about Quality Value Investing:  

On Friday 23 March, I will be conducting an in house Quality Value Investing Course at my office in Phillip Capital. It will be from 9 to 5 30 and carry 10 CPE points for licence renewal.

The focus will be on selecting Quality companies using qualitative analysis. 

We will use the IVSA price and volume filter for timing buys and sells.

This is a great bargain of only RM 192. No one in town will give you this price for a CPE 10 point course with such take away value.

Others charge RM 1000 + for a similar syllabus.

We have only 9 seats left so if you wish to attend, please ask the administrator.  Tan Tze Mee  and she can send you a brochure.tzemee@poems.com.my

Invest well and grow your wealth

Bill

Today’s critter is a beautiful leopard from the Namib dessert. It is highly endangered and keeps a watchful eye for predators at the watering hole.

RSVP FOR CPE COURSE 23 MARCH 2018

Dear Fund Managers/ Investment Planners

Kindly ignore previous email. Please refer email below:-

We would like to invite you to join “Value Investing in quality Bursa Malaysia Shares” on 23rd March 2018. Details of this training as per below:

To register for this training, please reply to this email. Your email should include all of the following information: -

·  Full Name

·  NRIC/Passport Number

·  CMSRL License No. (If any)

·  Email Address

·  Contact Number

·  Proof of payment RM 190.80

 To make the payment, you may bank in to the company’s account as below:-

Bank                              : Maybank

Account Name               : PC QUOTE (Malaysia) Sdn Bhd

Account Number            : 514011722786

Fee                                : RM 190.80

Important Note: Please note that the places are limited, First come first serve.

The Market Dogs that did not Bark

12 March 2018

Dear Fellow Investors,

There is more upside in global markets according to Citi Bank Research:

As of 18 Feb, Citi Bank monitors 18 factors that provide warning signs before a sustained world market selloff. As of Friday in the US markets there were only 3.5 of the indicators flashing a red signal.  – these were stretched equity valuations, a flattening yield curve, and extreme bullish sentiment by retail investors. 

By comparison, during the great financial crises and dot com bubble 13 of the 18 indicators were flashing red.  Outside the US equity valuations and investor sentiment remain modest. This includes Malaysia, Singapore, and Hong Kong.  

Last week there was a great article in the edge about The Market Dogs that did not Bark by a Russian economist, Anatole Kaletsky.

It was based on a Sherlock Holmes case involving a house robbery. When a suspect was brought to the house the dog did not bark meaning that the dog was familiar with the thief.

 

 

Skaletsky uses the Sherlock  metaphor to describe the 3  dogs in today’s markets. The dogs are the oil dog, the interest rate dog and the currency dog. None of these dogs are barking now, maybe growling. If they do, that is the warning sign.  

Oil is ranging between USD 50 and 60 per barrel, interest rates are  gradually rising but not accelerating while currency rates are stable.  

On Friday 23 March, I will be conducting an in house  Quality Value Investing Course at my office in Phillip Capital. It will be from 9 to 5 30 and carry 10 CPE points for licence renewal.

The focus will be on selecting Quality companies using qualitative analysis.  

We will use the IVSA price and volume filter for timing buys and sells.

This is a great bargain of only RM 192. No one in town will give you this price for a CPE 10 point course with such take away value.

Others charge RM 1000 + for a similar syllabus.

I will send a separate flier with  registration details. Space is limited so please book early if you wish to attend. You can email me and we can arrange to reserve a place for you. 

wermineb@gmail.com

 

Invest well and grow your wealth

Bill

Today’s critter is an Abyssinian cat sent to me by a friend in Canada

“Despite the cold and the snow, there was a cat I hadn't seen before helping him/herself to the free cat food I leave out all the time, now that both of our own cats have passed on.  It wasn't a pure bred Aby, but there was Aby in it, so that's today's 'critter'...the Abyssinian cat. “ .

 

 

 

Smart money is buying while the uninformed emotional retailers have been heavy sellers.

3 March 2018

Dear Fellow Investors,

Dolly and I just returned from a relaxing one week holiday in Adelaide. Adelaide is laid back, uncrowded with many attractions including a world class zoo, interesting museums and friendly and honest locals.

My brother and his wife from the US joined us and he left his hand phone in an airport taxi on the way to our AirBB  The next morning my brother’s phone was returned by an honest driver.  

Our hostess had made  calls to the airport taxi operators and they messaged all their drivers.

The Australian economy is doing well. My shopping basket indicator which observes how much people are buying shows Coles supermarket customers have full baskets which include high quality cuts of meat, fish fruit and vegetables .  Australians are very health conscious and spend a lot on high quality food.

We got an objective view of the economy by visiting Phillip Securities who have an office in Adelaide. The office  is manned by an independent fund manager who has extensive knowledge of Australian shares.

He shared some valuable research on the resource sector and the market in general.

For Malaysians who have Phillip PGWA accounts, we can purchase quality shares in Australia without being subject to their high capital gains taxes.  Do call me if you want more information on this.

This can provide us with diversification into a strong AUD currency, a well managed economy and a strict regulatory environment.

Gut wrenching volatility and extreme emotions have dominated world market action in the last 2 weeks.

Smart money is buying while the uninformed emotional retailers have been heavy sellers.

Fears include a potential trade war initiated by Trump, higher interest rates and QT (quantitative tightening).

I am not concerned presently but should the smart money move to the sell side we must take preventive action.  Our shares are holding well. Our  shares are all solid value, low or no debt  and pay solid dividends. Our recent purchase of HL Bank is  of  the highest quality and will benefit from higher interest rates.

Invest well and grow your wealth,

Bill

Today’s critter is a greyhound we met in Gleneig  a seaside resort near Adelaide.

Australians love animals and this greyhound was adopted after having retired from racing.  Perhaps he under performed at the race track and the owner put him up for adoption ?