What will the management do next to us ?

28 July 2018

Dear Fellow Investor,

Mr Tong in his latest Edge column sums up my value investing approach and how to profit from the current uncertainties and fears dominating market action.  The only way to overcome emotions and profit is to have conviction in your purchases and sales.  This requires careful and objective research into your decision process. It means to access the quality of the company you are considering.

SINGAPORE (July 30): It is important to have conviction in investing. Stock markets are very much driven by sentiment and emotion. This is underscored by the roller-coaster ride we have experienced for the better part of this year. 

Markets are faced with a growing list of uncertainties, not least because of the difficulty in assessing and quantifying the potential damage from a trade war or geopolitical flare-ups. And when investors are uncertain, they tend to err on the side of caution.

As a result, share prices overreact and valuations get compressed. Over time, the picture will become clearer and fundamentals will reassert their influence on stock prices. 

But since markets are very short-term-oriented, this translates into opportunities for longer-term investors — if you can ignore the noise and focus on the underlying dynamics of the business, the secular trend for the industry and future outlook, earnings and cash-flow prospects as well as balance sheet strength. 

Crucially, we must hold on to our convictions, even (especially) when they are against the tide of sentiment.

By: 

Tong Kooi Ong

Last week, I sold all our Power Root shares for a small profit.  We still retain the bonus issue and warrants and will exit when the warrants are credited to your accounts. The reason I sold is because  the recent corporate exercise dilutes our shareholdings. The exercise is mainly for the benefit of the management/ insiders and to the disadvantage of the minority shareholders.

My concern is: What will the management  do next to us ?

There is nothing wrong with their coffee  business as demand for their coffee is rising but I do not feel we are being treated fairly. There are many other quality value opportunities run by ethical managers.  

Our analysts are diligently searching for you.

I advise that you pick up a copy of the latest weekly Edge and read Mr Tong’s entire column. He explains the rational for his recent transactions and why he is a value investor.  

Out of the blue, Mr Trump met with the European trade officials, and they and they worked out a trade deal.  This was a pleasant surprise and caught many analysts by surprise. Many expected an escalation of trade issues. European and US markets rose after the deal.

Perhaps, Trump can work out something with China and that would remove a major uncertainty from investor’s minds.  

Invest well and grow your wealth.

Bill

Today's 'critter's' opossum ..or 'possum' as it is known in the southern and Midwest U.S.A. It is a house cat-sized creature not known in the part of North America. They are table fare for some -- and their pelts have long been part of the fur trade.