Malaysian Technology Shares Corrected

15 Jan 2022

Dear Fellow Investor,

Last week Malaysian technology shares corrected but the underlying reasons we hold these shares has not changed.  Foreign funds were taking profits however buying dips of quality companies is still a viable strategy. By quality I mean low or no debts, increasing revenues and consistent positive return on equity.

The technology focused Nasdaq had a large drop in the last few days but quality technology shares such as Microsoft, Apple and Ali Baba were well supported.  The technology shares we hold supply to companies such as these and meet my quality standards.   The majority of underperforming Nasdaq technology shares have extremely high valuations, huge debts and declining return on equity.

These are mostly dream and hope stocks promising great wealth in the future.  I want to see the cash now.  

Below are 2 charts which support why buying dips in quality shares is a profitable strategy. Money printing and inflation are tailwinds for shares.

Since 1980 the purchasing power of the US Dollar has dropped over 60 %  according to the US Bureau of Labor statistics. It is the result of massive money printing.

This chart shows in more graphic form the effect of inflation and loss of purchasing power . It is a worldwide trend and shows that the mandate of central banks is to inflate and suppress interest rates.

This is why I am not so convinced that central banks will dramatically raise interest rates. There will be token raises which will cause volatility but stock markets will continue to go up. A dramatic raising of rates will cause a severe recession and stock market collapse. Joe Biden has politicized the Federal Reserve and appointed some ultra- loose  governors  to keep his power and print more money. The game will continue and the trend of fiat currencies will continue to fall.

To protect ourselves, commodity related shares and trusts, income producing value and growth shares, precious metals  and banks and energy related shares should allow us to grow and protect our wealth.

The new Covid variant does not appear to be as dangerous as the previous ones. According to my client a doctor it attacks the upper respiratory tract rather than the lungs so there are less deaths, hospitalizations and faster recoveries.    Vaccinations, boosters and  medical advances  should gradually ease the fear and hysteria advanced by the media.  That will give us a run way for the shares we hold.

Take care, Bill

Taking a bite out of dollar.