Trump trade tweets

11  May 2019

Dear Fellow Investor,

World stock markets last week experienced extreme volatility because of the Trump trade tweets. Traders who bought index futures based on a positive outcome lost money as well as the short sellers.  who bet on a trade talk collapse.

By Friday nothing much happened and the powers that be decided to kick the can down the road. Markets ended flat. Friday the Dow Jones was heavily down but in the last hour reversed losses to close in positive territory. Trump posted a positive tweet near the day’s low saying trade talks will continue.

Hoping for a positive Trump tweet is not a plan I would recommend.

Asian market should be positive on Monday.

A good indicator of impending doom is the gold price. In times of stress and panic, gold will rise as gold is the ultimate safe haven.  In calmer times gold will drift lower. By the end of the week gold ended slightly up signifying nothing.

To prosper in markets we should focus on things we have some measure of control. That would be the companies financials, the companies earnings, sales and revenue growth, and return on equity over at least a 10 year period.

Interest rates, currency values, politics are things we can not control or forecast so why bother ?

Warren Buffet always asks before he invests, “ Will the company be around in 10 years ?”

Three weeks ago, I attended the AGM of a high quality plantation company.

It meets all my financial criteria and is well managed. The dividend is well covered and is trading at a reasonable valuation.  Because the sentiment and news flow is so negative towards the plantation sector, my opinion is that risk is low. Plantation  stocks are not in a crowded space.

Once I finish buying this counter for my clients, I will publish the name of this company in my weekly report.

In contrast, the IPO of UBER was launched Friday on the NYSE. By the close it dropped over 7 %.

This was an IPO in a crowded space. The brokers, financial media  and investment bankers were hyping this share to their clients and public  and those who bought suffered large losses.

UBER has never made a profit, has no earnings and a very unhappy workforce who are on strike worldwide over low wages.

I do not think this business will be around in 10 years.

Invest well and grow your wealth
Bill

Critter of the week is a Penang owl. When we visited the plantation company they told us that owls and leopard cats are crucial in controlling rats which attack the palm fruits. :As investors we need to behave as the owl .