Why China?

Dear Friends and Investors,

Do check out this link by Stansbury Research. Featured are several investors such as Warren Buffet, Jim Rogers. 

https://www.youtube.com/watch?v=CaELQS5kTso&feature=youtu.be

You will see why Chian offers great inestment opportunity more than Western markets.  EWH the Hong Kong Country fund has 1/2 of its exposure to China companies and the other 1/2 to Hong.

Valuations are less than 10 PE as compared to nose bleed valuations in the US. 

Also why China will soon come up with a vaccine for Covid is the hidden message.

Buy Low and Sell High

Bill

The metaphor of a kaleodoscope vs a telescope

25 April 2020

Dear Fellow Investor,

Looking for opportunity :  The metaphor of a kaleidoscope vs a telescope.

Our laser focused investor uses a telescope to uncover hidden opportunities in the markets.   He looks into specific criteria to uncover undervalued quality companies.  The herd looks at the market through the lens of  a kaleidoscope which is unclear, confusing  and unfocused.  The confusion might cause some to gamble, play derivatives, and play the latest darlings of the market.  These strategies are the worst things to do.   

This weeks Edge has an excellent article on page 20, 21 detailing some ideas by 5 professional investors. In particular the comments by Dr Tan Chong Koay head of Pheim Asset Management are currently applicable.  He shares how the performance of the economy at times diverges from the market.    In 1998 when the economy was worse than bad. The economy declined 21.2 % in the 4^th quarter of 1998 but the KLCI was up 137.4 % by the end of the year.  Currently he advises to buy/hold  companies with low gearing, good management and reasonable valuation.  He looks for recovery going into year end.

We hold these types of shares for you to ride out the storm.

Many US states are slowly reopening and people are going back to work. Restrictions are being lifted.   Infection/ death rates are declining. Stanford University did a study showing mortality rate is .02 for those who catch the virus which means 98 % of those who are infected recover. Those over 75 years old with preconditions like diabetes, obesity, and heart disease however are 8 times more likely to die. Those the study concluded who are at risk should isolate and take precautions.

We need to get the economy moving again although a few will die but the vast majority will live and prosper .

Critter of the week is the work horse. There is a saying : If the horse don’t eat, the cart don’t move.  

Headline Thursday

 18 April 2020

Dear Fellow Investor,

Trump announces guidelines to ‘open up’ U.S. economy, ease coronavirus restrictions.

On  this headline Thursday, world markets rose strongly.  32 out of 50 American states have only a few Covid cases and Trump reasoned why shut all of America even areas with no or low infections in a massive lockdown and put millions into the unemployment line and bankrupt many businesses?  He did say protect the elderly and vulnerable but that is not a reason to shut down the whole economy. The plan is to gradually reopen America with strict guidelines and protocols.   

China is using the same policy to open up its economy in a gradual way.

Chinese Aviation Industry Recovery Continues To Offer Hope

The latest data indicates that normal life is making a slow but sure return to China. Airline capacity is increasing week on week and most of the airports, including in hard-hit Hubei province, are reopening for business. Do these tiny  sparks of hope give optimism to the rest of the world?

Capacity returning to China

For the first time since January, China’s aviation industry is beginning to show the green shoots of recovery. Traffic had begun to pick up again over the last few weeks, and today CH-Aviation reports that all airports in the Hubei province apart from Wuhan have reopened for domestic flights.

Although China has a strong international network, a huge proportion of its travel is domestic. As such, the uptick in passenger services seen across the country is largely limited to these domestic services, as most international flights are still limited by national restrictions both at home and in other parts of the world, not to mention the ongoing slump in demand.

This will benefit our positions in Alibaba and EWH, the Hong Kong country fund as well as Singapore and Malaysian companies exposed to China.

Here is an optimistic note from :

Multi-Billionaire Hugo Salinas Price On The Coronavirus
Multi-Billionaire Hugo Salinas Price:  2,835,205 Americans died in the year 2018. (Source: National Vital Statistics System).

Humans have a habit of dying, and as the population of the US has grown since 2018, the figures we shall eventually see for total deaths in the US in 2019, will very likely be a bit larger, and the same holds for 2020.

Let us take the figures for 2018 – 2,835,205 deaths – and divide by 365 to get the daily death toll for the US: 7,768 Americans died every day in 2018.

In three months of 2018 – 90 days – 699,120 Americans died of all causes, including simple old age.

The world is being deliberately terrorized, and fear is a great obstacle to human reasoning – always fairly weak in itself – by a dreadful fear of death due to the infamous Covid-19 virus.

We are told that the US is suffering a pandemic of Covid-19 infections, and the number of deaths it’s causing is the continuous theme presented to us, day in and day out, by the Media.

The fact is that Americans are suffering a pandemic of misinformation, whose object is to terrorize them into quiet submission to the despotism of those who govern.

The Internet shows us a total US death-toll due to Covid-19 as of April 13, of 22,000. This so-called “Covid-19 Pandemic” began some 90 days ago, and ought to be compared to the total deaths in 90 days, which in 2018 was of 699,120 Americans. 22,000/699,120 = 3.15% of normal, yearly recurring deaths in the US  in the year 2018.

By way of comparison, the leading causes of death in the US have remained fairly stable over the last five years, and are Heart Disease, causing 647,457 deaths (23.5% of total in 2017) and Cancer, causing 599,108 deaths (21.3% of total in 2017). Source: Medical News Today.

I submit that a “Pandemic” that only produces 3.15% of the normally recurring deaths of Americans, is hardly a Pandemic, while Heart Disease and Cancer, which account for 44.8% of deaths in the US, are quite absent from the news.

I have a very big question: Why are we not favored with data regarding the ages of those dying of Covid-19?

Here’s what I think:  a good number of deaths attributed to covid-19 are deaths of aged people already at death’s-door, from Heart Disease or Cancer, or a host of other sicknesses that carry-off older people. So that when all the data is in, later on, it will be noticed that the total number of deaths registered in 2020, was actually in line with the number of deaths in previous years.

And yet the American Media are terrorizing the American people, 24/24 hours a day, with an overpowering fear of dying of Covid-19.

What should really terrify the American nation, is not fear of dying of an infection of Covid -19, but terror of the purposes of those who govern the US, and who are cowing the Nation into submission to their purpose of achieving total despotic power over a once-free Nation.

That said, what is yet to come will be a devastating collapse of the economy of the US, due to the suspension of normal economic activity for so many months.

That is why Trump is taking decisive action to reopen America. 

The Media induced fear has even infected Malaysia but the MCO (Movement Control Order) has been working :  less infections, less deaths and higher recovery rates. I will be buying for you more quality US/ Singapore and Malaysian shares next  week anticipating further recovery.  

Keep safe

Bill

Critters of the week are some test monkeys in a drug trial by Gilead Life Sciences who have conducted successful experimental human trials as well with remdesivir.

Monkey Trial Shows 100% Success of Remdesivir in Fighting COVID-19

A scientific trial using the experimental drug remdesivir to treat COVID-19 in monkeys has been successful, according to a preliminary report.

Scientists infected two groups of six rhesus macaque monkeys with the coronavirus and treated half with remdesivir intravenously. 

None of the animals given the drug showed "signs of respiratory disease" after treatment, and scans showed their lungs contained less substances linked to pneumonia, the report states.

How the study will translate to treating infected humans is still unknown, researchers say. 

The monkeys were dosed 12 hours after they were infected and once a day for six days after, which follows the same schedule as humans in similar trials.

Researchers checked the monkeys’ symptoms and monitored how much of the virus they were carrying. They were autopsied after seven days. 

The results indicated that as early as 12 hours after the first treatment was administered, levels of the virus declined in the monkeys’ lower respiratory system, the team said.

I post all my reports on my blog if you wish to refer to previous posts

Fear is Subsiding

11 April 2020

Dear Fellow Investor,

Fear is subsiding  

The VIX index which measures fear has dropped over 50% in the last 3 weeks showing that value investors are less fearful and slowly buying beaten down quality US shares. The same is happening across Asian markets.   At the peak of the world wide stock market panic and collapse the VIX peaked at 83. Now it is 41. The VIX high of 83 exceeded  the VIX high of the  2008 market collapse which  recovered in 13 months.

We held our ground during the panic and our portfolios are recovering. In 2008 those who stayed with me recovered all their losses and went on to new equity highs while we were rewarded with dividends along the way. Just as in 2008 I did not anticipate the Lehman bank collapse .  This time I did not anticipate the extreme virus market reaction  but since we hold quality dividend producing shares we are on board for recovery.

I just learned that three months ago Dr. Michael Levitt, a Nobel prize winner and Stanford University biophysicist, analyzed the number of Covid-19 cases worldwide and correctly predicted that Chinawould get through the worst of the coronavirus emergency well before many public health experts were expecting. And that’s happening now. Dr. Levitt expects a similar outcome in the US. He is more optimistic than  the CNN/ BBC health experts.

The full article about Dr. Levitt’s findings is in the March 22, Los Angeles Times – and is well worth

reading in its entirety: https://news.yahoo.com/why-nobel-laureate-predicts-quicker-210318391.html 7

Stand back and see the big picture

Adapted from  David Kuo of Smart Investor Singapore.

This is a classic  impressionist painting by French artist Manet and if you view it in an art gallery up close it would be difficult to see the details. If you stand back, the details become clear. 

Now there is so much panic, misinformation, fake news and fear it is difficult to see the branches from the trees. It is difficult to even know who we can trust.   

That is why I follow the VIX and several tried and true indicators to navigate through the chaos.

Normalcy will return so try to avoid the daily volatility and focus on the big picture. It is not necessary to check the value of your portfolio every hour.  If you do that, that means you are too close.  What you hear and see is noise.

The fact is that Central Banks world wide are injecting massive liquidity into the markets and keeping interest rates low. They are giving financial support to businesses and individuals to lessen the blow.

The movement control order (MCO) in Malaysia is working. More are recovering than being infected. Some businesses will be opening next week which means more people will be back to work. Even in New York City which is a virus hotspot infection rates are levelling out. New York Governer Cuomo gives a daily briefing and in the last few days he has been reporting less deaths and infections so after he makes a positive report New York traders push up the markets.   

Keep safe

Bill

MCO: Zoo Negara needs food donations

·          

KUALA LUMPUR (Bernama): Zoo Negara needs food donations such as meat, vegetables and fruits to ensure adequate supply for its animals during the movement control order (MCO) period.

Those who wish to donate can contact the zoo via email at veterinar@zoonegaramalaysia.my or visit https://www.zoonegaramalaysia.my/adopt.html for cash donations.

Light at the end of the Tunnel

4 April 2020

Dear Fellow Investor,

Light at the end of the Tunnel

Comments from Mr Ang Kok Heng, CIO of Phillip Capital

Like the past virus epidemics, the whole trouble will be over within 3-6 months. China has

effectively proved that coronavirus is a transitory outbreak and the lockdowns in its various cities and provinces have been lifted. In fact, health workers are leaving Wuhan and factories are re-operating again. Korea, Taiwan, Hong Kong, Singapore, Japan  and Malaysia are taking strong action as infection rates slow and recovery rates increase.

Unfortunately, outside Asia the number of people infected by the Covid-19 virus has been escalating sharply, starting from Iran, Italy, Spain, UK, Belgium, Australia and Germany.

Authorities are now taking firmer action in these countries, closing beaches, night clubs, churches, mosques and parks. They have been strictly enforcing social distancing, quarantines  and even arresting resistors.  It is working and infection rates are slowing.    

Now the epicentre of this  pandemic has moved to the US and the authorities are taking stronger action to contain the outbreak.  President Trump has invoked the Defense Production Act a WW 2 law which in a national emergency forces manufactures to produce needed equipment such as ventilators, masks, test kits  etc. This insures there won’t be a shortage of vital life saving medical equipment.  Corporations such as GE and MMM joined forces  to produce ventilators and masks. It is happening now as Americans pull together to fight a common enemy.

 With this, the G20 has joint forces to pump in US$5tr to provide liquidity and provide some confidence to the financial markets.

How much will the economy be impacted by the lockdown and movement control in managing the Covid-19 depends upon the commitment by respective governments and effectiveness of their control measures. The sudden surge in new cases of the Covid-19 in  Europe and now the US has caused investors to flight for safe instruments i.e. the US dollar/ gold.

The sharp fall in the US markets in the middle of March was unprecedented. Most of the major stock markets have

plunged into bear markets (more than 20% decline) including the FBMKLCI which fell 34% by 19 March 2020 Some said the present Global Pandemic Crisis (GPC) could be worse than the Asia Financial Crisis (AFC) and Global Financial Crisis (GFC). The AFC was led by the collapse of the currencies in Asia, which caused several large corporations with large USD loans to collapse.

Meanwhile, the GFC was due to the collapse of the financial system as many banks were suffering from losses mainly driven by the subprime mortgages. As for the present GPC, the crisis is due to pandemic-led lockdowns resulting in supply chain disruptions and demand shutdown. Some supplies are unable to reach out to their consumers while most consumers are unable to go out to spend.

Bernanke, the former US Federal Reserve Chairman described the involuntary economic halt following the global Covid-19 outbreak is like a ‘major snowstorm’ which hits a country and resulting in severe losses to lives and properties. Such major calamity will be a setback to a country and it will lead to massive losses. Consequently, this requires the government to spend extensively in order to help its nation to go back to where it was.

Overall, we are confident that this pandemic is unlike crises experienced during the AFC and GFC. However, the ways the West handle this outbreak have not been promising. Stern efforts especially social distancing need to be stepped up further, same for Malaysia. The recent tightening of the MCO(Movement Control Order) is encouraging and hopefully we will see a marked improvement in the number of newly infected cases. For the time being, we are waiting for the number of new infected cases in the US and Europe to peak.

Since stock market is always trading ahead of the fundamentals, this is a good leading economic indicator

“Coronavirus economic halt is more like a ‘major snowstorm’ than an economic depression. This is very different animal than the Great Depression....expect a ‘very sharp US recession but also a fast recovery”. Ben Bernanke

Keep safe,

Bill

I hope you enjoy this amusing story 

Seattle area man arrested after allegedly letting his pit bull drive his 1996 Buick more than 100 MPH: report

A resident of the western US state of Washington was arrested following a high-speed chase that left officers dumbfounded after they found the man’s pit bull behind the wheel.

The incident unfolded Sunday afternoon after police received calls about a driver hitting two vehicles in an area south of Seattle and then speeding away, state trooper Heather Axtman told AFP.