Why Trump reversed course

15 April 2018

Dear Fellow Investor,

The media hysteria is now 24/7 on Syria and potential increased Middle East conflict . Trade issues have taken a back seat as China and the US have toned down their rhetoric and appear to be finding agreement.

Trump even wants to join the TTP which would be bullish for Asian market trade. particularly Singapore and Malaysia. Trump when he was elected pulled out of the TTP but now he realizes he needs the votes of the US farmers in the upcoming mid term elections who benefit from farm exports and the implementation of the TTP

This is why Trump reversed course. He wants to keep power.

After 3 years of consolidation commodities are coming back to life.

The CRB Index  holds a basket of world commodities

Since June 2017 the CRB has been in a slow and steady up trend. Crude oil, precious and base metals are leading the charge.

It might pay to accumulate quality Australian resource companies. On my recent trip to Adelaide,  I found some opportunities and do contact me if interested.

The KLSE top 100 shares have held up while the broad market has suffered. This is why I have focused on only the top quality shares for income and safety. They are our port in the financial storm.

Once the election is over and if BN retains power my forecast is market recovery. Foreign money will return and the uncertainty is removed. Uncertainty is a market killer.   

In the meantime please follow our defensive strategy.

Invest well and grow your wealth,

Bill

Today’s critter is the white-tailed deer -- and that -- and their ears -- are the most obvious distinguishing feature between it and the mule deer.  It's a medium-sized deer native to the United States, Canada, Mexico, Central America, and South America as far south as Peru and Bolivia. It has also been introduced to New Zealand, Cuba, Jamaica, Hispaniola, Puerto Rico, Bahamas, Lesser Antilles, and some countries in Europe, such as Finland and the Czech Republic. 

Market Metaphor

9 April 2018

Dear Fellow Investor,

The last week has seen a lot of noise generated by politicians and the left wing media,    Trade wars are the current focus.  The Dow Jones plunged over 572 or 2.34 % on  Friday based on the current hysteria. 

Next week, earnings season in the US kicks into gear. Earnings growth drives profits and combined with corporate tax cuts we could see some surprises.  This will spill over to most world markets who are under the trade war clouds. Earnings growth could shift the focus.

I would like to share a market metaphor about 2 dogs fighting as reported by David Kuo of Motley Fool Singapore.

“ I once saw two dogs snarling at each other across a gate. Their tails were up, and so were their hackles.

They looked really menacing, with their teeth bared.

What’s worse, was that neither was prepared to back down. They would not respond to calls to return.

One can only wonder what might have happened, if they could get at each other’s throats. Fire and fury wouldn’t even have begun to describe the carnage.

But we didn’t have to wait too long to find out.

It turns out that the gate that separated the dogs could be controlled remotely. So, as the gate quietly retracted, the two animals suddenly found that were facing each other, without the protection of a barricade.

And guess what?

The barking stopped. Both dogs turned around and went their own way. Occasionally, they would turn back. But that was all.

It was much ado about nothing.

And that is the way the trade between China and the US could end too.

The two economic titans may not want to admit it, but they have a symbiotic relationship. They desperately need each other.

China needs to sell its goods and services to the US. The US badly needs China to carry on buying its debt.

I have little doubt that the two countries will come to their senses. They must because that is the nature of symbiosis.

Symbiosis exists all around us. In the ocean, the sea anemone and the clownfish have a strong symbiotic relationship.

The sea anemone needs the clownfish to protect it from predators. The clownfish needs the sea anemone to protect it from its predators too.

They could easily attack and destroy each other. But what good what that do for either?

The 14 GE is fast approaching. Parliament was dissolved.  The election should be by the 3^rd week of April according to Star News. This will remove a major uncertainty from the market.

Foreign funds will return and quality shares will resume their up trends once the uncertainty is removed.

Markets can absorb bad/ good  news but hate uncertainty. Uncertainty is worse and that has been the affect of the brewing trade war .

 Invest well and grow your wealth,

Bill

Synbiosis between the hungry crocodile and the teeth cleaning bird. For each to survive they must get along.  

Last Vacation

1 April 2018

Dear Fellow Investors,

We just returned from a brief visit  to Penang and Pattaya in Southern Thailand.

Tropical garden tour in Pattaya

Pattaya although a small island the size of Singapore with a population of less than 200,000 attracts over 4,000,000 tourists a year. There are 7 flight arriving every day as well as 4 cruise liners a week . A high percentage of visitors are from Europe, Malaysia, Russia and China and they like to spend money. 

The property market is booming. Shops are filled with customers and it is a challenge to get a taxi. Cashew nuts and local honey are a good bargain. Seafood and fresh fish are plentiful and offered at reasonable prices.

In Penang we visited the Public Gold Museum and our guide showed how gold and silver  are discovered, mined and refined into bars and coins.   Public Gold deals in physical gold and silver and have outlets throughout Malaysia. They offer a fully secure and insured safe deposit box service at only  RM 99 per year in contrast to banks which charge upwards of RM 300 per year.

The museum guide shared with us that they have large demand for physical silver at this time as now physical silver is selling for less than the cost of production. Gold bars are also selling well.

Markets world wide are consolidating. Volatility has increased as retailers sell the imaginary fear. Insiders/ smart money are taking the opposite side and continue to buy.

I would like to share with you some comments from David Kuo CEO of Motley Fool  Singapore

“ The quick thought this week has nothing to do with the legal shenanigans between the buxom actress and the temporary resident at 1600 Pennsylvania Avenue. Instead, it is to do with the stormy conditions in the markets right now.

If you haven’t already noticed, the market can swing from uncontrolled euphoria to deep despondency from one day to the next. It just depends on what catches the attention of traders.

One morning, it could be the ongoing trade dispute between the US and China that sends traders scurrying for cover. But as soon as the market gets wind of promising high-level negotiation between the US Trade Secretary and his counterpart in China, then the market can jump with delight.

On Wednesday, a report from the World Trade Organisation claimed that a trade war between the world’s two largest economies could hurt global growth. It sent Singapore shares markedly lower. But any signs of a thaw in the dispute could send shares back up again.

Experience tells me that jumping in and out of the market is no way to invest. Instead, investors should take full advantage of times like these.

We just need to be roughly right. That’s infinitely better than being totally wrong, which is what we would be doing if we try to time the market.

Those intrinsic-value calculations are my friend in times of turbulence. Together with a decent margin of safety, I can, and often do, acquire stocks in the comfort of knowing I am buying something worth a dollar for a less.

We need to remember that the market is not always efficient. Quite often it isn’t. And it is the short-term inefficiency of the market that provides us with the kicker to turbocharge our long-term gains.”

This applies to the KLSE. Sentiment has turned bearish but  solid well managed companies continue to perform. Focus on these.

Invest well and grow your wealth

Bill 

Critter of the week is a Thai jungle cat. Thais love cats and they keep exotic breeds in their homes to control the mice and rats. This one seems to have eaten his share.

Headwinds are facing world markets

26 March 2018

Dear Fellow Investors,

I would like to thank all of you who attended our Quality Value Investing course Friday.  I  hope you found some useful takeaways. We will repeat this course in the Fall due to the good response.

I recently watched on Astro HBO a very inspiring movie entitled The Founder. It is the true story of Ray Kroc who transformed two brothers innovative fast food restaurant, McDonald’s into the biggest restaurant chain in the world with a combination of ambition, hard work and focus. 

MacDonalds has all the qualities of a sound value investment.

It reminds me  of what we look for when we want to invest in a quality business. It checks all the boxes for a Warren Buffet investment.  

For you value investors and business persons   you need to  watch this movie.

Headwinds are facing world markets  so we need to keep a low profile.  These headwinds include talk of a possible trade war . This is being hyped 24 hours a day by the media. The hype is causing extreme fear and uncertainty among the crowd. Popular shares followed by the crowd including Facebook, Amazon, and Google are being hammered.

As Warren Buffet said we should avoid popular shares and focus on value shares. That is our best defence. Our portfolios are weathering the storm and we maintain our cash position to be able to pick up bargains once the markets quiet down.

I will be in Penang and Thailand from Sunday to Wednesday and you can always contact me by email should you have any concerns.

Invest well and grow your wealth

Bill

Today’s critter is a Komodo Dragon from Indonesia. You can see this magnificent creature in Zoo Negara as well as the Singapore Zoo.

Get 10 CPE points by attending our Quality Value Investing Course soon.

17 March 2018

Dear Fellow Investors,

“Value investing requires looking beyond the headline numbers” is the title for Tong’s value investing column in this week’s Edge.  

I might add look beyond the headline news and announcements and look at the business you might invest in.

The CNBC news parrot in the above illustration proclaims, “The bottom’s in… The bottom’s in, The bottom’s in, Buy, Buy, Buy !

What I do mean is by all means look at the numbers and ask if the financials are sound. Are sales, earnings and revenues rising ?

If your investment idea passes the financial filters, then examine the quality of the business.  Quality is a subjective issue. It includes honesty of management. Does the management operate prudently for the benefit of the shareholders?  Does the company have an investment moat to protect itself from competition ? Do they finance acquisitions via organic cash flow or via cash calls ?  Do their  acquisitions synergize with their existing business or are the managers trying to build an empire ?

Much of this information can be known by attending the AGM, reading the annual and quarterly reports as well as visiting the company.  Every listed company has a website and that will give you a lot of information.

Isn’t this a better way than listening to the parrot ?  

If you want to know more about Quality Value Investing:  

On Friday 23 March, I will be conducting an in house Quality Value Investing Course at my office in Phillip Capital. It will be from 9 to 5 30 and carry 10 CPE points for licence renewal.

The focus will be on selecting Quality companies using qualitative analysis. 

We will use the IVSA price and volume filter for timing buys and sells.

This is a great bargain of only RM 192. No one in town will give you this price for a CPE 10 point course with such take away value.

Others charge RM 1000 + for a similar syllabus.

We have only 9 seats left so if you wish to attend, please ask the administrator.  Tan Tze Mee  and she can send you a brochure.tzemee@poems.com.my

Invest well and grow your wealth

Bill

Today’s critter is a beautiful leopard from the Namib dessert. It is highly endangered and keeps a watchful eye for predators at the watering hole.

RSVP FOR CPE COURSE 23 MARCH 2018

Dear Fund Managers/ Investment Planners

Kindly ignore previous email. Please refer email below:-

We would like to invite you to join “Value Investing in quality Bursa Malaysia Shares” on 23rd March 2018. Details of this training as per below:

To register for this training, please reply to this email. Your email should include all of the following information: -

·  Full Name

·  NRIC/Passport Number

·  CMSRL License No. (If any)

·  Email Address

·  Contact Number

·  Proof of payment RM 190.80

 To make the payment, you may bank in to the company’s account as below:-

Bank                              : Maybank

Account Name               : PC QUOTE (Malaysia) Sdn Bhd

Account Number            : 514011722786

Fee                                : RM 190.80

Important Note: Please note that the places are limited, First come first serve.

The Market Dogs that did not Bark

12 March 2018

Dear Fellow Investors,

There is more upside in global markets according to Citi Bank Research:

As of 18 Feb, Citi Bank monitors 18 factors that provide warning signs before a sustained world market selloff. As of Friday in the US markets there were only 3.5 of the indicators flashing a red signal.  – these were stretched equity valuations, a flattening yield curve, and extreme bullish sentiment by retail investors. 

By comparison, during the great financial crises and dot com bubble 13 of the 18 indicators were flashing red.  Outside the US equity valuations and investor sentiment remain modest. This includes Malaysia, Singapore, and Hong Kong.  

Last week there was a great article in the edge about The Market Dogs that did not Bark by a Russian economist, Anatole Kaletsky.

It was based on a Sherlock Holmes case involving a house robbery. When a suspect was brought to the house the dog did not bark meaning that the dog was familiar with the thief.

 

 

Skaletsky uses the Sherlock  metaphor to describe the 3  dogs in today’s markets. The dogs are the oil dog, the interest rate dog and the currency dog. None of these dogs are barking now, maybe growling. If they do, that is the warning sign.  

Oil is ranging between USD 50 and 60 per barrel, interest rates are  gradually rising but not accelerating while currency rates are stable.  

On Friday 23 March, I will be conducting an in house  Quality Value Investing Course at my office in Phillip Capital. It will be from 9 to 5 30 and carry 10 CPE points for licence renewal.

The focus will be on selecting Quality companies using qualitative analysis.  

We will use the IVSA price and volume filter for timing buys and sells.

This is a great bargain of only RM 192. No one in town will give you this price for a CPE 10 point course with such take away value.

Others charge RM 1000 + for a similar syllabus.

I will send a separate flier with  registration details. Space is limited so please book early if you wish to attend. You can email me and we can arrange to reserve a place for you. 

wermineb@gmail.com

 

Invest well and grow your wealth

Bill

Today’s critter is an Abyssinian cat sent to me by a friend in Canada

“Despite the cold and the snow, there was a cat I hadn't seen before helping him/herself to the free cat food I leave out all the time, now that both of our own cats have passed on.  It wasn't a pure bred Aby, but there was Aby in it, so that's today's 'critter'...the Abyssinian cat. “ .