Holdings Review

Dear Fellow Investors,

Today I will review some of our holdings and our path forward. Below is a daily chart of the EWM, an ETF traded on the NYSE holding mainly index linked blue chip Malaysian shares.

In the last 3 months EWM has had a reasonable recovery. This has been in the face of massive corrections in overseas markets including the Dow and Nasdaq as well as an onslaught of bad news.

Bad news includes Covid restrictions, political uncertainties, inflation and an economic slowdown. In the face of extreme negativity, foreign funds have been net buying beaten down quality shares and this has been true both in Malaysia and Singapore.   Foreign funds have the best quality research teams as well as deep pockets to buy undervalued assets.

Shares we  hold for many of you are recovery plays which deal in basic products we need . They pay dividends, are well managed and should continue to perform as Covid winds down, visitors return and political issues stabilize,    

Shares we hold  and prices below reflect a 3 month range: 

Malaysia

HEIM  low of 20.52 currently March 25,  22.60 

GENM low 2.71 currently  2.96 

Dialog low 2.58 currently 2.76

Bursa low 6.14 currently 6.95

Inari low 2.58 currently 3.23

Public Bank 4.06 currently 4.66

Singapore

SATS low 2.60 currently 4.24

Comfort del Gro low 1.33 currently 1.47

Thai Bev low 0.65 currently 0.705

Sheng Siong low 1.45 currently 1.50

OCBC low 11.23 currently 12.35

SGX low 8.91 currently 9.84

On 1 April Malaysian/ Singapore borders opening  we should see an influx of tourists and this should boost the prices of our holdings. The products these companies deal in can raise their prices with inflation so they provide an inflation hedge and the dividends they pay are also more than inflation.

My bet is on recovery and with dividends we get paid to wait. With the possibility of an early GE and a resolution of the Russia/ Ukraine war that would boost our returns,   

Take care

Bill

Recovery

 19 March 2022

Dear Fellow Investor,

Recovery.

          VIX Volatility Index measuring level of fear in the market.

The VIX measures the level of fear in the market. The higher the level the greater the fear. It measures the amount of options traded on the S & P Index.  Traders buy options to hedge as well as make large profits. When there is an extreme in the index it signals a potential reversal. That happened on 7 March when the VIX hit 36.2. The Dow and Nasdaq reversed and closed higher. The Hang Seng and most world markets closed higher. This happened in conjunction with an onslaught of bad news including Russia/ Ukraine war, Federal Reserve raising interest rates, inflation hitting new highs etc.  For the next few weeks as long as the VIX stays in the range the market should be stable and recover.

                

Foreign funds are returning to Malaysia to buy beaten up blue chip companies including banks and technology companies. For the last 8 weeks foreigners continue to buy Malaysian and Singapore shares.

 

The interest rate rise in the US was only 0.25 % which is a only a token amount and will not impact inflation or the agenda to inflate, print money and spend. This will boost inflation resistant stocks, commodities and metals which we hold.

 

Take care.

Bill    

                     Animals in Kiev zoo relocated to Poland                         

Turmoil Troubles Stocks

12 March 2022

Dear Fellow Investor,

Ken Fisher, a prominent fund manager, wrote an excellent book, The Little Book of Market Myths or how to profit by avoiding the investment mistakes everyone else makes. One investment mistake he details is: Turmoil Troubles Stocks.

He details every market collapse and panic from 1934 to 2011 including Hitler invading the Rhineland in 1936, Japanese Pearl Harbor attack in 1941, Russia exploding the atom bomb in 1949, Korean war in 1950, French Indo China war 1954, Bay of Pigs invasion in Cuba 1961,  World Trade Center bombing in 1993, Global Financial Panic in 2008 and in 2009 massive economic stimulus by most world central banks.

Bottom line : After 1 year most markets recovered substantially on average of 22 % according to Thompson Reuters in a study done in 2012.

“Profit motive isn’t sapped because humanity faces challenges. In fact challenges and the need for innovation can be motivating factors for those willing to take risks to chase future profits. Capital markets are resilient because humanity is  resilient. Those who have bet against that have been proven wrong time and again.”  Ken Fisher, page 170. The Little Book of Market Myths.

We are now experiencing 2 major crises: Covid and the Russian invasion of Ukraine.  Covid is winding down  while the Russia invasion is on going. The media is 24/7 focusing on the on going Ukraine tragedy. Fear of economic turmoil, infrastructure destruction, mass causalities, inflation, possible Russia bond defaults, and even escalation  to WW3 are keeping investors on edge.

Today, I attended the Trade VSA Market Conference which I recommended to you last week.  I commend those of you who took the time to attend as the focus was on  how to profit from the on going crises and how to recognize when the current market drop in over.

Signs include extremely bad news combined with VIX at an extreme level showing panic and fear by most retail investors.  Climactic selling based on VSA on massive volume will confirm the bottom. For Malaysia combine this with large foreign fund inflow which is currently the case. For the last 8 weeks there has been major buying of the KLSE by foreign funds after being out for the last 3 years.   They are buying beaten down blue chips including banks, plantations and energy companies.

Here is a link to the presentation notes from the conference. Do take a look at KGB, a share we hold for most of you. It was by Mr Yong, CFO of KGB. It showed that between the lines that certain technology companies offer a good chance for recovery. KGB has no debt, consistent earnings growth, offers a rising dividend and an innovative management.   

https://tradevsa.com/insights-from-Mar-2022-market conference-12-2022/

Take care, Bill.

The Russia/Ukraine war gives Biden the excuse to spend and inflate. We need an investment strategy to buy shares which can help us protect from inflation. Also hard assets.

Stock Market Panic

 5 March 2022

Dear Fellow Investor,

The shock news on Friday was an artillery attack on Europe’s largest nuclear plant in Ukraine by the Russians. There was a fire and there was stock market panic in most world stock markets. Should the plant reactors be destroyed there was the potential of tens of thousands of deaths and radiation fall out that could spread throughout Europe. Uranium stocks in Australia fell heavily and I expected our holdings in Sprott physical Uranium Trust traded on the Toronto Stock Exchange to fall heavily as well. It did gap down to CAD 15.56 but as the truth as to what really happened came out, the trust recovered to 16.31 down 1 cent.  The truth was that the fire did no damage to the reactors and there was no interruption to utility service.

 

On Friday, the Dow initially sold off 506 points but near the end of the trading day recovered closing down 178 points.

Of course, the fact that sudden unforeseen events can rattle stocks greatly in the short term is why we invest the way we do. If you are trying to buy a stock today in hopes of selling in a few days for a fast profit, you are simply guessing at price moves based on headlines rather than fundamentals. Now, a lot of buying and selling is happening indiscriminately by computer algorithms of the largest hedge funds and insiders. They are here in Malaysia and Singapore. They are responsible for the momentum either way.

My focus as a fund manager, however, is to focus on long term wealth and that means buying companies that while their share price may move up and down with the overall market in times like this will emerge on the other side better and stronger.

War or not in Ukraine, our holdings in United Plantation, Sheng Siong, Thai Beverage, Inari, Genting Malaysia, Maybank, Dialog and Public Bank   will be able to raise the prices of their products with inflation and higher interest rates.

I listened to an interview of Charlie Morris who runs the Fleet St Letter, a market advisory. Before taking over the letter, he successfully managed over 2 billion pounds for HSBC in London. He mentioned that 2022 will be a challenging year for most investors with inflation and higher interest rates. He shared that to survive and prosper invest in companies that produce things ordinary people need rather than luxury goods makers that for example sell Rolex watches and luxury handbags. He also likes commodity companies and precious metals.  

In closing, I’d like to say the following again because it’s important — while the events unfolding in Ukraine are concerning on many fronts, I’m fully confident that our portfolio is strong enough to weather whatever may come our way. We own resilient companies, and we’ve amassed a significant dividend stream to boot.                

Take care, Bill

Biden shuts down US Oil pipelines, cuts off oil exploration permits and buys oil from Russia so they can use the money to invade Ukraine. I do not know who is more mad; Biden or Putin.