Cooling day? What does that mean anyway?

What an interesting week it has been. Is it me or has it become more interesting as time passes? We started off with Obama's present to US voters, Osama's death. If that is not going to improve his lagging ratings, I really do not know what will. Especially with the news that Donald Trump is going to make himself eligible as a Republican candidate, Obama is showing some sense of urgency. The question I would like to ask Mr Trump is whether he will be going for a proper hair weave or will he stick to his current toupee. For those people who claims that our beloved PAP bought votes through their growth dividend payout before the elections, Obama has gone one better by handing voters a corpse to buy votes. As we get older and become more experienced, we become jaded by realising how everything on the surface is not what it really is. That is the story of our lives in this society today.

Today is "cooling day", a day reserved for us to cool down and let our emotions rest before deciding who to hand the next five years of Singapore's future to. The rallies have stopped and all those meaningless figure pointing and rhetorical problem identification has finally stopped. I think the real purpose to "cooling day" is to allow our ears to cool down from all the bull shit that has been spouted over the past 2 weeks. Pardon my french. Really can't wait for this election to be over. Sick and tired of people telling me their political views and asking about mine. Let me just set it straight. My view is that I will vote for the party that will not only point out problems or mistakes but also provide the solution for them. Which opposition has clearly outlined all their proposed solutions to make Singapore a better place? None. I rest my case. If rallies are all about finger pointing and assigning blame, then there really is no meaning to it. You may or may no agree with me and I respect that. To each his own. Lets get on with this week's posting.

Last weekend, I said that Silver and Gold looked pretty elevated. I guess someone in the CME read my post and raised margin requirements twice! Silver has fallen 31% in a matter of 4 days. That is impressive. Well it is looking like a very good trade now. What do you think? I am going to come out and call for a short term buy on silver at $35 bucks an ounce.

Internet fever is back! Especially Chinese internet IPOs listing on the Nasdaq...RenRen (China's version of Facebook) rose up to 40% percent on its opening day. This is equivalent to 100 times price to sales. It is a wonder how no one sees it as insanity. If we cannot learn from history, then we are beyond help. The current valuation of RenRen is even higher than that of Facebook (in the private listing market), just when you thought Facebook was trading at crazy valuations, RenRen comes along to make Facebook look like a value stock. Mark Zuckerberg is going to be a very happy man. Now he can justify even higher valuations for his beloved creation.

For me, I prefer to stick to things that are more down to earth. When I was younger, my dad always felt that I did not have my feet planted on the ground, ironically now I feel I am so deep rooted on value that it would take a excavator to pull me out from the ground. This week ISDN (my recent call) reported a great result from the last quarter which makes this call look even better.

Another great call was Heng Long which announced on Friday that their substantial shareholders have received indication of interest from external parties to buy into the business. If you can recall, Heng Long is one of the top 5 tanneries in the world. Niche business that is highly profitable will always attract investors. Just buy and hold and pray someone will see the value you see in them. My fair value for this stock is $0.56 cents but do not ask me how I came out with this valuation. I explained it to my protege so I am not too keen to explain it now.

After Heng Long's announcement, it got me thinking, why did I not buy more? Greed is settling in once again. So it got me started on the search for the next possible candidate for a takeover. I have a few in mind but I am a little too tired to write about it because of all the brain juices spent on thinking of who to vote for in tomorrow's elections. So I will leave it for another time.

My prediction of "Sell in May and go away" seems to have gotten off to a nice start. The USD has started rebounding, commodity prices have fallen and equity markets have pulled back. Lets focus on the STI index. Most of the pull back has been due to jitters over the election results. I have listened to so many so called "experts" on how the market would react to the election results and this has caused a little anxiousness in local investors. With all the hype of the opposition winning possibly one GRC, investors are not ready to hold positions over the weekend with a possible poor election result hanging over the horizon. Cannot blame them for feeling that way.

No doubt there is a good chance that the PAP may actually lose quite a high percentage of the popular vote but we have to consider what will change even if that happens? Do you believe that the few opposition seats is going to make a difference? Why would the companies underlying those stocks be hit? As I always say, when there is a change, we got to ask ourselves whether this change is really a fundamental change to the market or whether the change will affect the businesses on a permanent basis. My answer to you is, not a chance. The PAP will still be in power, the opposition will make more noise, but remember, majority vote will still lie in the hands of the PAP. Therefore, let me just put it straight to all of you, THIS IS YOUR BUYING OPPORTUNITY. If you are a lover of blue chips and government linked companies, you should look at any weakness after the elections as a good entry point.

Do not worry, elections in Singapore tend to have a negligible effect on the Singapore market over a 3 month period. There will be knee jerk reactions but do not get too emotionally involved and start getting caught up in the irrational reactions of short term minded investors.

Not going to write to much this week because I am just too tired to type anymore. Too much cooling for me today.

Have a great polling day and vote wisely!

Best,

SVI