Reward By The Market For Following My Favourite Indicator

15 Feb 2020

Dear Fellow Investor,

Today Saturday we held our investors club meeting. I do appreciate those who supported the club by attending and sharing your views.  You will be rewarded by the market if you follow my favourite indicator.

It is the seminar indicator.  If we hold an investment seminar and attendance is low, we are close to a bottom. When attendance is full house, we are close to a high. Of my 20+ years of holding investment talks this consistently works.

Fund Manager Kevin Christopher shared Warren Buffet’s favourite market indicator. Market Cap vs GDP. The lower the ratio the better the value of the market. The US markets according to the World Bank is at 158.3 % and the KLSE is at 113 % as of the end of 2019.

This means Malaysia is undervalued compared to the US and it pays to focus on high quality undervalued KLSE shares.  Malaysia is near a 30 year low based on the market cap to GDP indicator.

Are Malaysian equities that bad? The consensus of our group who are mainly market professionals is that not all is doom and gloom- there are opportunities.

I did a brief analysis to answer the question are conditions in the world deflationary or inflationary. I showed the chart of the UST- the 20-year US T Bond- which is the benchmark of world interest rates. It is in a solid up trend as defined by the declining short term and long-term interest rates.  In days ahead it shows lower interest rates worldwide. This is deflationary. Governments keep lowering rates to stimulate demand but it has not worked.

The chart of the CRB confirms this. The CRB index represents a basket of declining commodity prices. This indicates lessening demand for world commodity prices and is deflationary.

The declining oil price confirms this. Coronavirus also has slowed demand for commodities.

We shared the chart by Google Trends of Coronavirus infection rates over the last 30 days showing that momentum rate of infection is moderating.  The same is true for death rates. It is not as bad as the media suggests.

Hopefully the virus will have passed by our next club meeting and we wish all of you good health.

Bill and team

Critter of the week is a lucky dog

Man Tried to Bury His Dog Alive Because He “Didn’t Want Her Anymore”

Pedro Dinis was walking his dog near Paris, France, when he came across an awful sight: A French Mastiff who was halfway buried alive in the dirt.

The poor dog was extremely dehydrated, and her eyes were caked with dust from the dirt. She had a leash on that was attached to a sack of gravel to prevent her from breaking free if she got out.

Luckily, Dinis got there just in time and worked quickly to free her from the dirt. Dinis’ dog even helped with the rescue by digging a hole in the dirt around the trapped pup.

Once she was free, Dinis gave her water and alerted police. Paris has strict anti-abuse laws regarding animals, so an investigation was underway immediately to find the cruel person who did this.

Eventually, police were able to track down her owner, who was then charged with animal cruelty and faces up to two years in prison.

Thankfully, the dog made a full recovery and was adopted by a loving family.