Motley Fool Convention in Singapore on last Saturday

29 October 2018

Dear Fellow Investor,

This Saturday we attended the Motley Fool Convention in Singapore.  The most interesting speaker was the CIO of UOB Bank who is a value investor. She detailed why the current world correction led by the US is based more on fear than reality. Economies are doing well. Jobs are plentiful. Consumers are spending.   Price inflation is still low. Interest rates are up but not by much and corporate earnings remain strong. Holiday season is approaching.

Even so investors are nervous and feel good conditions won’t last. Corporate earnings may drop, the Trump trade war will worsen  and interest rates are due to rise. There is also a worry that the 10 year world bull has peaked.

All that matters is that reality will over come fear. It always does.  If the economic expansion continues unabated, earnings remain high, the trade dispute with China is settled (as happened with Canada, US and Mexico ) prices will rebound.

South East Asian stocks  offer attractive historical valuation particularly the quality dividend producers. They will follow the turn in sentiment from fear to reality.

 Invest well and grow your wealth

Bill  

Today’s image is an Air Asia plane. We experienced extreme turbulence and a violent wind storm as we approached KLIA. The highly skillful pilot almost landed. With only a few hundred feet of runway. The wing almost touched the ground. The pilot aborted the landing and we diverted to Langkawi . We were delayed several hours but at least we are safe.  I did not mind paying  the RM 4 charge for a small bottle of water.

Temporary shakeout exaggerated by machine trading

24 October 2018

Dear Fellow Investor,

The world wide share market correction is in my opinion a temporary shakeout exaggerated by machine trading and the doom and gloom stories promoted by the media.

Corrections are designed by insiders and smart money to washout the uninformed and fearful weak holders and speculators.

Since January 2018 there have been 12 corrections exceeding 400 Dow points and the market has recovered every time. The February correction was over 1300 Dow points.

One of the major sources of demand has been company share buybacks and this has been removed temporarily by the black out period.  Blackouts mean a company can not buy back shares during earnings releases.

It means once the blackout period is over, companies can buy back at cheaper prices.

Another sign of the correction ending was a Wall St Journal report Thursday that Presidents  Trump and Xi will meet to discuss trade issues.  The news sparked a world wide stock rally.

Our portfolios all have a dividend machine that works 24 hours 7 days a week for you. These are high quality companies with low debt, recurring revenues with sales and earnings growth. They share their profits with ever rising dividends. This is an inflation hedge unlike fixed deposits or bonds.

During market weakness they go down less as they are supported by institutional investors. They also recover faster.

Dolly and I will be visiting Perth from 14 Oct to 21 Oct.  I will be visiting South 32 a mining company for a possible investment opportunity for your PGWA accounts.

If you need to contact me about your investments  please WhatsApp or email me.

For any account queries you may call Nora at customer service @ 03 278 0300 .  For EPF queries, our planner Rianne @  012 303 8126

Invest well and grow your wealth,

Bill

012 685 1207

Critter of the week is the Perth Zoo koala bear. Below the bear is the siren call of socialism. The US mid term election is a battle between free market Trump and the Democratic socialists. The socialists are promising free education, increased hand outs, free healthcare for all, open borders etc. but the problem is: where’s the money ?

 

 

 

The Great Minds of Investing

6 October 2018

Dear Fellow Investor,

An interesting book was written by William Green, The Great Minds of Investing. He interviewed 24 of the world’s richest investors and shares the common characteristics that contributed to their success.

I highly recommend you listen to an interview he gave in London:

https://www.youtube.com/watch?v=vQadYnrJeh0

I have not read the book but I intend to order it.

From the you tube interview he detailed 4 characteristics of the great investors:

1. Diverge from the crowd and be willing to be lonely. You must be different. Reading the Edge, watching CNBC/ Bloomberg and following Facebook will not make you rich.  We do our own independent on the ground research and visit unpopular companies, unloved and under researched companies to get a research edge before the crowd is interested.

2.  Be humble. We are imperfect as human beings so network with those who are more intelligent and knowledgably  than us. No matter how much money we make if we become arrogant and think we know everything , we can lose everything.  Be willing to admit our mistakes and move on.

3. We must have the ability to take pain. We call that emotional resilience.  If we do not play, we can not win so when we play make sure we understand the risks and rewards. Have an exit plan for profit or loss.  Diversification  in uncorrelated assets will help us mitigate pain. All great investors follow these guidelines.

4. We must have a return on life, not just equity. Return on life means your family, your hobbies, your holidays and your interactions with friends, pets and colleagues.  For me, this gives me peace of mind and reduces stress. Every day I take  my dog Rover for a long walk. It helps me interact with nature and is a form of meditation. Sometimes I get investment ideas from walking  Rover and this gave me the idea to comment on the US 10 year treasury bond.

The 10 year US bond is the benchmark for world interest rates. The US 10 year treasury bond last week has  broken a 10 year high  and currently is at 3.22 %. US ISM Mfg. came in at 61.6 an all time record high. This is pushing up interest rates Unemployment in the US is at 3.7 % the lowest since 1969. Bond markets are saying the US economy is very strong and inflation is picking up.  Highly leveraged, FANG and internet stocks have taken a big hit. The CAPE ratio for the S&P  is at the 2^nd highest level in 150 years. 

We must be mindful and defensive at this juncture as we are on thin ice.   Banks, consumer stocks and some tech stocks are OK for now.   Any leveraged company with high debt must be avoided.

Invest well and grow your wealth

Bill

Critter of the week is a magnificent leopard.