16 Nov 2021

Dear Fellow Investor,

Today I reviewed the indexes in the KLSE. Two sectors stand out: Technology and transportation/ logistics.  The consumer products and services index is also showing signs of support as the Malaysian economy  recovers.   Investing in these sectors has the wind in our back. The financial services index is up over 25 % from its January 2020 lows which is positive. For Malaysia to have a robust recovery banks and financial services companies must lead the way.

In the Edge today was an insightful article by Dr Sivapalin about the hits and misses in the budget. The hits included funds and support for the technology sector including RM 200 million for the SME digitalization grant scheme. This could explain the strength in the KLSE technology index. The miss could be that not enough funds were allocated to technology.  

The article by Mr Tong in today’s Edge was also insightful. It explained how to value technology companies and why some are spectacularly successful while others fail.   His case studies included Microsoft and Apple. How these companies are so profitable is a model for choosing technology investments. Our holdings in Inari an Apple supplier  is an example of these dynamics.

As I read the financial news, the inflation topic is a major concern.  It is not so bad in Malaysia/ Singapore averaging less than 2 % while in the US the latest Producer Price Index  was up 6.2 % a 30 year high.  After the PPI was announced last week gold took a 6 % jump. Silver and Bitcoin also advanced.  

The reasons for accelerating inflation in the developed markets and the US are simple. Massive increases in money supply and Biden’s policy of shutting down the fossil fuel industry to favour alternative energy. It has driven up the price of gasoline over 50 % in the last year.

American multinational investment bank Goldman Sachs has issued a warning that soaring inflation in Democrat Joe Biden's economy is the greatest threat facing the United States and the global economy.

According to a new analysis from the bank, inflation will eclipse anything else, such as pandemic-induced lockdowns, as the primary threat to economic growth.

Americans are being hit hard by inflation in Joe Biden's economy

The report from Goldman Sachs states that the Federal Reserve will soon start hiking up interest rates as inflation continues to throttle America.

The below cartoon sums up the problem.

Biden wishes to shutdown a major oil pipeline between Canada and Michigan which will cost thousands of high paying jobs and drive up energy prices and inflation even more.  He is doing so in the name of climate change which is bizarre as they still have to ship the fuel by road which leaves a bigger carbon footprint.

Take care

Bill