Donald Trump Tweeted

1 June  2019

Dear Fellow Investor,

On Thursday Donald Trump tweeted that he will impose a 5%  tariff on Mexican imports in punishment for  not stopping  the free flow of illegal migrants storming into the US. If Mexico refuses to agree, tariffs will rise 5 % a month until Mexico takes action  

On this news world markets dropped losing several hundred billion of value.

If that was not enough. Trump threatened Hong Kong with sanctions for allowing an Iranian oil tanker on its way to China to  transit Hong Kong. He has also threatened sanctions on Europe if they bypass the US controlled SWIFT money transfer system to conduct trade with Iran.

Trade war news headlines and sanction threats   seem to be a daily occurrence so what is the solution for us as investors to survive the volatility ?

In a word own and buy Quality Value Stocks preferably with rising dividends.

Our fund manager Kevin Christopher  competed a research study using Warren Buffet’s favourite indicator  Market Capitalization  over GDP

This measures the value of the stock market relative to the gross national product.  The indicator low of 86 % in 2008 reflected the world stock collapse and a deep value area. Presently we are at 118 % which is a 5 year low and does represent value for selected stocks.

Kevin then presented a study of 32 KLSE value stocks showing cumulative returns . All showed positive returns over the last 12 years. Many of these we hold

Presently, as we hold quality value shares in our portfolios we can hold the shares we own and not worry about the latest Trump headline.

Yesterday, I attended a one day workshop on Value Investing by 2 Singaporeans whose main focus is the SGX . They reviewed our Singapore holdings and  liked our holdings with the exception of Kepple Reit.  I agree with their analysis so we can sell Kepple Reit and replace with a better one.

They reviewed the Singapore property market and said the recovery is still not happening due to the government’s restrictive policies. Another words the government does not want another property bubble.

They said banks are OK as interest rates may rise. Valuations of banks in Singapore are at multi year lows.

I trust their opinions as they use a very objective method of value investing modelled from the Warren Buffet method.  They also mentioned there was deep value in Hong Kong as valuations in Hong Kong are at recession levels.

They advised to avoid the US markets as valuations are generally over stretched.

Invest well and grow your wealth
Bill

Our annual investment conference will be on 29 June. Main topic will be trade war. For clients no charge. If interested please send me your name, IC and phone number and I will forward to our administrator for registration.

 

Critter of the week is a rare white panda with red eyes.