Pendulum may be swinging back to Asian markets from developed market

Dear Fellow Investor,

The pendulum may be swinging back to Asian markets from developed markets.

That is because Asia is still growing relative to Europe and the US.  Foreign investors are slowly switching back to Asia.

There are many factors affecting  stock markets and investor confidence.  Some include trade wars, emerging market crisis of confidence, world economic prospects and the likelihood of a US recession.

The window for strong global equities performance is closing, especially in the US:

1 Trajectory of non farm payrolls in the US is losing momentum

2 Yield term premium for US Treasuries is on track to turn negative some time in mid 2019

3 Philly Fed US leading indicators point to a US recession in mid 2019.

4 US Residential property markets are sagging. Existing home sales are trending lower.

5 Building permits for multi dwelling buildings are at 29 month lows. Drops in building permits   are a recession indicator.

6 A synchronised global growth slowdown appears to be in place. China exports to the US have dropped 9.7 % since the USD 250 billion in tariffs were implemented.  

7 Interest rates and inflation are picking up.

How do we prosper in this environment ? We need to be in strong companies in strong sectors.

In the KLSE,  For example YTD consumer is up 11.8 %, and Finance up 5.8 %, By using  filtering software  such as MetaStock, Bloomberg, VSA, sharetrading.com we can identify the strongest sectors  and shares and focus our effort on them.

Look for line changes on above average volume for entry.

We avoid sectors such as Construction which is down YTD 36.4%, and Property down 18.2 % .

I have always focused on strong established companies with low or no debt. If shocks happen such as rising interest rates/ recessions all companies will be affected. Warren Buffet in one of his shareholder reports said  that imagine a swimming race where all the swimmers have to carry a 10 kg lead weight. The strong swimmers will survive while the weak swimmers will underperformed or drown.

Invest well and grow your wealth

Bill

Today's 'critter' is a real denizen of the deep... the coelacanth, of which they are now two known species.  They were thought to have become extinct in the Late Cretaceous, around 66 million years ago, but were rediscovered in 1938 off the coast of South Africa.  Coelacanths are a part of the clade Sarcopterygii, or the lobe-finned fishes.  They has no real commercial value apart from being coveted by museums and private collectors.  .