Highlights

THE INVESTMENT APPROACH OF CALVIN TAN

Author: calvintaneng   |   Latest post: Thu, 27 Jun 2019, 11:00 PM

 

INVESTMENT NEWS FOR JUNE 2019 BY EAGLE VISION

Author:   |    Publish date:


INVESTMENT NEWS FOR JUNE 2019 BY EAGLE VISION


Dear Friends,

May 2019 has been a very bad month for Equities everywhere. Now we are in June 2019. What will the future months hold?

After pondering over latest developments from US, China & Malaysia we can come to One Conclusion

THE MARKET AHEAD IS FRAUD WITH PERILS & PITFALLS

Why Do We Say So?

These Are Some Reasons

  1. DONALD TRUMP FACTOR

President Donald Trump is waging a Trade War Not Only Against China but the entire world as he tries to Make America Great again. Trump is perceived to be a very bad guy all over the world among traders. Far from it. The truth is. Trump did not even take a salary from the White House. His intention is to help America. It is not Trade War that Donald wants. It is Fair Trade as he called it. True indeed. USA is now heavy laden with USD20 Trilllions in debt. How to balance it Unless Very drastic measures are taken. So Trump sets out to right the wrongs of wastrel years.

 

2. CHINA UNDER XI JINPING

Xi Jinpin has recently been given absolute power by the Communist Party. Not since Chairman Mao has such power been vested with one man. And with support of 40 Trading Partners  from the recent NEW SILK ROUTE XI is embolden further to face a rising belligerent US.

There is a Malay proverb which says

“Gajah sama gajah pelanduk mati di tengah tengah”

When 2 Elephants Fight the deer died in between.

SO WHEN 2 SUPER POWER FIGHTS A TRADE WAR OTHER SMALLER NATIONS WILL SUFFER.

 

 

As of now there is an impasse and Donald hinted another coming USD300 Billions tariff against China

ALL THESE ARE BAD. GOING TO BE VERY BAD IN THE FORESEEABLE FUTURE

IT WAS THE HOOVER TRADE TARIFFS THAT EXACERBATED THE GREAT DEPRESSION OF THE 1930S

 

IT’S LIKE THIS

 

TRADE IS THE FINANCIAL LIFEBLOOD OF WORLD ECONOMIES.

ANY BLOCKAGE OR BREAKAGE WILL LEAD TO DISASTER

IF A BLOOD VESSEL IN OUR HEART SHOULD BE BLOCKED OXYGEN SUPPLY FROM OUR HEART WILL BE IMPEDED.

THIS WILL LEAD TO A HEART ATTACK. AND THAT COULD BE LIFE THREATENING UNLESS RESOLVED

AND IF A BLOOD VESSEL IN OUR BRAIN IS BLOCKED IT MIGHT LEAD TO STROKE AND PARALYSIS

WITH THE UNCERTAINTY OF TRADE WAR MANY COMPANIES ARE IN A STATE OF UNCERTAINTY & PARALYSIS

BOTH HEART ATTACK OR STROKE WILL CAUSE A BREAK DOWN OF THE HUMAN BODY AND HE CANNOT FUNCTION PROPERLY

IF PROLONGED HE MIGHT DIE

SO MANY BANKS AND COMPANIES FAILED IN THE US DURING THE 1930S GREAT DEPRESSION

AND IN MALAYSIA DURING THE MULTIPLE STOCK MARKET, RINGGIT, REAL ESTATE CRASH OF 1997/8 OUT OF 49 BANKS & CREDIT COMPANIES LESS THAN 10 SURVIVED

 

OF COURSE DONALD TRUMP DOES NOT WANT ANOTHER GREAT DEPRESSION AS HE IS LOOKING FOR A 2ND TERM IN THE WHITE HOUSE

ULTIMATELY THIS TRADE WAR WILL BE RESOLVED

THE QUESTION IS WHEN?

FOR NOW THESE ARE SOME IMPORTANT STEPS WE SHOULD TAKE TO PROTECT OURSELVES

 

  1. KEEP AT LEAST  6 MONTHS CASH BUFFER FOR EMERGENCIES. BETTER IF YOU HAVE MORE CASH RESERVES THAN NOT

IF YOU HAVE LOTS OF CASH THEN DIVERSIFY TO AS MANY BANKS IN MALAYSIA. EACH BANK ACCOUNT IS INSURED UP TO RM250,000

SAY IF YOU HAVE RM1.5 MILLIONS. THEN DIVERSIFY INTO 6 BANKS. WHAT IF YOU HAVE RM3 MILLIONS. THEN PUT HALF IN YOUR SPOUSE’S NAME.

DURING THE GREAT DEPRESSION YEARS OF 1929 to 1939 WHEN  OVER 1,000 BANKS IN THE US CRASHED MANY INNOCENT PEOPLE LOST ALL AS THERE WAS NO BANKING INSURANCE THEN

THOSE WHO HAVE HIGH VALUE ASSETS LIKE A HOUSE WORTH USD700,000 THEN COULD DO NOTHING AS NO ONE WILL BUY IT. EVEN IF THERE IS A PURCHASER NO BANKS WILL LEND MONEY TO THE WOULD BE BUYER

SO MANY RICH PEOPLE (IN ASSETS) SUFFERED BECAUSE THEY HAVE LITTLE OR NO CASH

IN YEAR 2002 ARGENTINA SUFFERED THE SAME FATE. ALL CASH IN BANKS WERE BORROWED BY GOVTs. ALL WERE GIVEN IOU SLIPS. AND WITHDRAWAL LIMITED TO ONLY USD1,000 PER MONTH PER ACCOUNT (THOSE WHO HAD BOUGHT ASSETS WITH HIGH LOAN REPAYMENTS ARE STUCK)

OF COURSE MALAYSIA WONT GO SO LOW LIKE ARGENTINA

 

2) WHAT ABOUT THE KLSE STOCK MARKET?

It will be down trending for the majority of shares as most companies will report tepid earnings (Of course there are exceptions!)

But watch out and AVOID THOSE COMPANIES IN OVER EXPANSION WITH HIGH DEBT, HIGH BORROWINGS & HIGH UNSOLD INVENTORIES!!

MANY WILL POSSIBLY FACE CASH CALLS IN COMING DAYS AS MALAYSIAN BANKS ARE NOW VERY STRINGENT IN LENDING (All Real Estate Firms & Car Companies can testify to loan rejection up to 50%!)

WITHOUT ACCESS TO LIQUIDITY THESE WILL HAPPEN

 

 

  1. ISSUE PRIVATE PLACEMENTS TO RAISE CASH
  2.  RIGHTS ISSUE (In some cases sweetened by bonus & free warrants). For some Rights issue followed by more Rights Issue
  3.  IF BOTH FAILED THEN THIS WILL HAPPEN. SALE OR FORCE SALE OF COMPANY ASSETS IF ANY
  4.  FINALLY. LOAN DEFAULT AND PN17
  5.  WAITING FOR WHITE KNITE & FINAL DELISTING

SO GO FOR COMPANIES WITH MANAGEABLE BORROWINGS AND SECURED REVENUE STREAMS. AND THOSE WITH RECESSION PROOF QUALITIES THAT ARE DEFENSIVE

BEST IS TO GET OUT OF THE STOCK MARKET ALTOGETHER IF YOU CANNOT FIND ANY SURE THING IN THESE UNCERTAIN TIMES

NOW IF YOU STILL ITCHY TO INVEST THEN THESE ARE SOME POINTERS

 

  1. WITH USA IN DEPRESSION JOHN MAYNARD KEYNES STILL SURVIVED WITH 2 FUNDS. BOTH DID OK AS HE INVESTED IN RECESSION PROOF UTILITIES WHICH PAY DIVIDENDS. LOOK FOR CASH RICH COMPANIES WHICH PAY DIVIDENDS. OR ASSET RICH COMPANIES UNLOCKING VALUE BY SELLING PROPERTIES

2. GOVT SUPPORTED INFRAR WORKS THAT STILL GIVE JOBS IN BLEAK TIMES. THAT WAS WHAT ROOSEVELT DID BY CREATING INFRAR JOBS

3. FOR MALAYSIA THERE IS A NEW FOCUS OF FDI DIVERTED FROM BOTH CHINA & USA. BUT DON’T BANK ON IT TOO MUCH AS MANY ARE ON THE SIDELINES

A POSSIBLE GOOD FACTOR COULD BE AN INCREASE OF TOURISTS FROM CHINA DUE TO THESE FACTORS

A) AFTER TUN DR M AFFIRMED HIS SUPPORT FOR HUAWEI THE CHINA AMBASSADOR WROTE A 7 PAGE THANK YOU LETTER TO MALAYSIA.

THIS SINGLE GOOD GESTURE HAS TURNED MALAYSIA INTO CHINA’S FAVOR

B) CHINA ISSUES WARNING TO ITS CITIZENS THAT EDUCATION & TOURS TO USA MIGHT BE UNSAFE.

C) THESE WILL DIVERT MORE TOURISTS TO MALAYSIA AS NEXT YEAR WILL BE VISIT MALAYSIA YEAR 2020 (WMY2020)

WILL TOURISM THEME BE THE COMING FOCUS JUST AS OIL & GAS HAS ITS BULL RUN FOR EARLY 2019?

IT REMAINS TO BE SEEN

 

FOR NOW AS THE STORM RAGES ON JUST KEEP SAFE IN CASH

 

BEST REGARDS

 

Calvin Tan Research

Singapore

 

Please buy/sell or keep to Cash after doing your own due diligence

 

FURTHER NOTE:

NOT ALL RIGHTS ISSUE ARE BAD. EXAMPLE: NAIM GAVE OUT RIGHTS ISSUE AT 45 SEN AND SHARE PRICE OF NAIM CRASHED TO 45 SEN

THEN NAIM ROSE BY MORE THAN 100% AFTER MARKET DISCOVERED NAIM USED RIGHTS ISSUE MONEY FOR PROFITABLE PROJECTS

HOWEVER, KLSE IS DRIVEN BY UP TO 80% TO 90%  DAYS TRADERS, CONTRA PLAYERS AND SHORT TERM PUNTERS = ANY CASH CALL WILL BE BAD FOR OVERLEVERAGED GAMBLERS – ESPECIALLY THOSE HOLDING MARGIN LOANS. SO BE VERY CAREFUL & DEFENSIVE

THE RISK AND REWARD OF TRADING IN THESE TIMES PAY LITTLE AND NOT WORTH IT. BETTER DON’T TAKE RISK FOR SMALL REWARD!!

STICK TO   LONGER TERM INVESTING BY BUYING VALUE AND SPACE OUT AVERAGE DOWN OR JUST KEEP TO CASH FOR NOW

 
 
 
 

 

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teoct Mr Tan, thank you, this is one of your better post.
09/06/2019 11:39 AM
chinaman It's amazing an Singaporean, Calvin can be so clear, articulate on MY's current economy. Sifu Calvin-look forward for your visions on SIN's economy direction as well.
09/06/2019 11:45 AM
calvintaneng Good morning

Thks. As long as trade war not resolved we must be very defensive in all investments

THE US on its own cannot survive as its debts now over USD20 trillions
10/06/2019 9:15 AM
hooi calvin sifu;
how is your kps ? die naturally.
10/06/2019 10:45 AM
calvintaneng Hooi

Kps?

All profit left for perpetuity
10/06/2019 11:07 AM
calvintaneng As expected

XOX going to raise funds by rights issue with warrant. Nobody want any private placement from XOX. Banks also won't lend money to XOX

Many more hard-pressed for cash will be giving out Rights issue soon

So caveat emptor!

Buyers beware!!
11/06/2019 9:58 AM
calvintaneng Don't simply buy shares especially those with high debt like payable. Or those with high borrowings. Especially high current borrowings which payment is due soon. Or those with high Receivables on balance sheet for umpteen years

AND those with unsaleable high Inventories which incur high expense to keep or might go obsolete later

All these signs will point to financial stress and out come Rights issue asking money from shareholders later
11/06/2019 10:02 AM
calvintaneng Xox is asking money to pay bank loans from shareholders

Better reject the Rights issue

Sell XOX and keep whatever cash left
11/06/2019 3:46 PM
calvintaneng Many more companies in coming months will find it hard to pay off debt

More will be going for private placement

If that failed they will give Rights issue with warrants to get money from shareholders

Better don't be itchy to get the free warrants as you will waste good money after share prices continue to sink and sink

Just keep to Cash rich companies
Also asset rich companies with assets that can be liquidated easily for cash in case of emergency
11/06/2019 3:57 PM


 

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