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.