More on Tangible Assets

 Dear Fellow Investor,

Place a Priority on Tangible Assets

Worldwide governments have been unable to protect the purchasing power of the currencies they issue. Inflation in the US is over 8.5 %, in the UK 7.5 % and some countries in Europe over 10 % . Singapore is over 4.5 % and Malaysia at 4 % . This is like a tax affecting everyone rich or poor. 

How can we protect ourselves ?  As governments continue to print money out of thin air and create budget busting programs, the purchasing power  of currencies will continue to decline. We need to allocate our capital into assets which need no support from the government.  These could be productive farmland, precious metals, rental property including REITS, commodity producing companies, and high quality blue chip dividend shares of companies producing basic necessities.  Diversification in these types of assets is the key for wealth preservation.  

In this weeks Edge, Tong's column lists the 200 biggest losers from their 52 week highs in Malaysia, Singapore, S & P 500 and Russell 1000 stocks.  Most have suffered over 50 % or greater losses. Most are highly geared growth stocks trading at high price earnings multiples, declining revenues and suffer from rising interest rates. Netflix Inc, Zoom Communications, Facebook and Pay Pal are on the list. A careful study of these shares will help us avoid potential disasters .   

Because of rising inflation the US Federal Reserve has been under pressure to raise interest rates.  The hawkish rhetoric has been magnified in the mainstream media and has spilled over into stock markets. There has been panic selling and bearish sentiment is at an extreme. 

As mentioned in  a previous report the benchmark 10 year US treasury bond   has not spiked which would be the signal of a market collapse and a world wide bear market.  If the 10 year bond continues to rise gradually, our strategy will keep us safe and help us ride out the storm. Because  the US Mid term election in November is fast approaching, I do not foresee any dramatic interest rate rises or dramatic stock market falls. 

Biden is behind in the polls  by a wide margin and a market collapse would guarantee his party losing power. Biden and his party control the US Treasury and Federal Reserve and they have many tools to control the market.  One tool is the plunge protection team which has unlimited funds to buy equity ETFs should there be a market collapse. 

Our Malaysian and Singapore shares meet the high quality requirements and our shares should benefit with the opening up of the economy. I  read in the Star today that pubs will reopen next week.

Take care

Bill

A giant grouper over 60 years old and weighs over 100 kg from the Underwater sea world in Langkawi. We visited last week and is a great time to travel. not crowded, reasonable costs and friendly locals. Business is recovering after 2 years of Covid.