Do not built to impress but rather to provide a necessary service at a reasonable cost

14 July 2018

Dear Fellow Investor,

Last week the MOF announced that the LRT 3 project would go ahead with  a cut from 31.65 billion ringgit  to 16.3 billion ringgit.

The previous government had bloated  costs to construct lavish LRT stations  which would rival stations on the Japan’s national railway line. 

Kyoto train station leading to the central business district.

Notice the simplicity of the Kyoto station. It was not built to impress but rather to provide a necessary service at a reasonable cost. A few months ago we visited Japan and we found that the train stations were simple, well maintained, super clean but not lavish expensive structures.  

I am surprised that our local contractors did not visit Japan to get an idea of how to  build cost effective LRT stations.

Dr M realizes the importance of LRT infrastructure so he gave the go ahead to continue LRT 3. He is cost cutting for all the major projects and will eliminate those that do not make economic sense. This will save billions for the taxpayers .  

Last week the KLSE staged a minor rebound with some construction stocks leading the way.  Order books will be cut so there will be short term pain for the construction sector but longer term the economy will be more sustainable as wastage and corruption will be substantially cut.  

A similar thing happened in Singapore. In the last year house prices were up over 9 % so the government decided to prick the emerging bubble by raising down payment requirements for 2nd home purchases. This would make it easier for the average citizen to buy a home and cool the speculation.

Many property developer stocks dropped but Reits however; held up well and Singapore shares in our portfolios were not much affected. Our holdings in Hong Kong land were not effected and advanced to SGD 7.28.

They have properties in Singapore/Hong Kong/ Thailand and Cambodia We have weathered some major storms this year and made progress. We have maintained your capital with our dividend + value strategy. We have avoided the high flying crowd favourite stocks which have resulted in billions of losses for some funds.

If you think about it if you can earn a 5 % dividend yield and if you are careful in your stock selection another 8 % in capital gain that results in a reasonable return of 13 % with very low risk and should markets advance we make more.  

That is my goal but obviously nothing is ever sure and you might pick a stock like Top Glove which is a solid well managed entity but suffered a surprise and shocking  accounting irregularity and took a big capital hit.  I like the rubber glove sector but I do not like buying a high and chasing the hype.  We hold Kossan which has performed well and not effected by the drop in Top Glove.

Invest well and grow your wealth
Bill

Today's ''critter' is the moray eel...of which there are 202 different species.  They're a common sight when scuba diving most warm saltwater coral reef structures of the world . They have some fine examples in the KLCC Aquaria and most Malaysian reefs.