Invest Patiently

27 June 2020

Dear Fellow Investor,

Strategy 2^nd half 2020

Every Saturday the Star publishes the Malaysian market dividend report. It is the first thing I read when I pick up my paper.  It lists the announcement date, the ex date, the amount of the dividend and when it is to be paid.

I carefully track this information looking for increases or decreases and special bonus dividends. This is a good financial measure of the companies we hold.   

This helps me in advising clients in my fund management business.  It helps me to survive the extreme market volatility and  maintain our sanity.

I program my brain similar to a real estate investor. A professional real estate investor will carefully research the properties he invests in.  He looks at such things as location, demand, quality of the property, the property cycle,  and the interest rate trend. If he is a REIT manager, he will among other things access the tenant mix, lease duration, the gearing, the condition of the property and of course location. 

When I evaluate a potential share investment I access similar things such things as gearing, quality and track record of the management, competitive edge and sector trends. I have an accountant who who advises me and is well versed in accessing the financials of the company to avoid surprises.

After performing due diligence, I accumulate at a value area with potential upside.  Because of this process of endeavouring to understand the business we invest in, I am not concerned with the day to day share price  fluctuations as I rest assured of the income we collect from our dividends just as rent collected by a property investor.   

For the balance of 2020, we will continue to accumulate quality shares and collect our dividends.  We will also accumulate selectively quality technology shares as mentioned in last week’s report.

Virus hysteria

This virus hysteria has been dominating the media cycle and has stocked up fear and panic among investors world wide.
The Dow dropped over  2.9 % last night on fears of a resurgence of the disease.  But is the over 120,000 US body count reported by the mainstream media true?

You be the judge: Despite extremely high population densities, Hong Kong and Singapore are two of the most prosperous cities in the world. Per capita GDP compares to the US.  Both are centers of international trade and finance much like New York.  Population together closely equals New York of about 13 million. Their covid deaths total 27 while New York has a death toll of 17,389.  

What’s happening ?

In the US if a patient on medicare ( a program for senior citizens to cover medical expenses) is admitted to a hospital for an array of illnesses, the government pays the hospital $5000. If the hospital reports the patient probably has covid the payment doubles. If the patient is admitted to ICU or put on a ventilator, the payment can be over $ 40,000. If he dies more will be paid and this money comes from the government. The US taxpayers have allocated USD 150 billion for Covid to go into the pockets of hospitals in the US and Europe.  Face it, the US government is pouring rivers of money into the pockets in the US and Europe who have a huge incentive to lie about their need for it.  That is why in my opinion the numbers are inflated.  

At some point the truth will prevail perhaps a whistle blower?  Should that happen there will be a market recovery aided by the dormant 5 trillion USD in money market funds earning a miniscule return. At some point a vaccine will be discovered. Progress is being made on this front.

In the meantime we wait for recovery while collecting our dividends. 

Invest patiently, Bill

Now is a good time to travel to Cameron Highlands. Uncrowded, cheap deals and fresh strawberries