Bull Market

 3 Dec 2021

Dear Fellow Investor,

Fear selling continued this week as the KLSE broke the 1500 support level but closed slightly above on Friday. The fear was amplified by the new Covid strain, Omicron, as well as supply chain disruptions . Our holdings in Inari and Frontken fell. 

A proxy for Inari is Apple which tracks the Inari price. On Thursday, Dec 2 Apple announced that sales of their new I Phone 13 would slow due to inflation, Covid threats and supply chain disruptions . Apple fell initially but closed higher. On Friday Inari dropped 5.16 % but Apple on Friday in New York dropped only 1.17 %. This was on declining volume.  In  my opinion this is a normal correction in an on going  bull market.  The KLSE technology index also fell but is still trading above major support at 90. 

According to my fundamental service Guru Focus, Inari has a financial strength of 9/10 with operating margins expanding and no debt. It has a net cash balance of 0.43 sen per share and a strong LT growth outlook for its RF sector. It is primed and well positioned to capitalize on the industry upcycle. It is also a main supplier to Broadcom in the thriving wireless division.  Inari is highly correlated to Broadcom. 

Inari is a major supplier to Broadcom (AVGO) and went up 1.03 % on Friday despite the negative news on Apple.

The technology story is not going away. To survive and prosper in years ahead businesses must adapt and innovate and the companies we have invested for you fit this profile.  To further put the odds in our favour we will only invest in companies with strong balance sheets and earnings growth potential. There will be setbacks along the way but as long as the underlying reasons for making such investments do not change we stay the course.

In the Edge today, Tong reported on the new Omicron Covid strain. Although much is unknown early reports say the strain is not as deadly or infectious as Covid 19. As we now have over 2 years experience with Covid and health professionals  are trained and experienced in virus treatments and vaccinations, the odds favour recovery, economic openings and a return to normal. 

As long as interest rates do not spike and  governments keep printing money solid equities will beat the inflation rate. Precious metals which in my opinion are undervalued should also perform.

Take care

Bill

Reflects why Biden with his cronies will keep interest rates low and print money. They will pressure other world central banks to do the same. Biden’s popularity is sinking and for him and his party to keep power they have no choice. Another argument to hold precious metals.