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.