Wolf Money(portfolio update for end Oct 2024)early release

 

(Image credit: Freepik.com; Happy Holidays for to my readers celebrating the festival)

(Image credit: The Straits Times; Coffee bean prices going through the roof)

Musings

I have been observing how the inflation situation is developing. Given the renewed attack on ships in the Red Sea by the Houthi. The geopolitical tensions in the Middle East between Israel and Iran added a layer of uncertainty to the price of oil. The better than expected job numbers in the US are all inflationary. The lower inflation numbers around the world may not last beyond this year. So far the equity market has not priced in the potential higher inflation numbers next year. Furthermore, the market has all, but ruled out a possibility of a rate freeze or even a reflation of the Fed fund rates. Although it is not a done deal. Participants of the equity market should brace themselves for any eventuality. Another high inflationary environment might send the stock market running for cover. Just saying. It is one of the possible scenarios I considered when I deployed capital. With a rising Ringgit, our inflation may go up again given we import a lot of things from Malaysia. It is hard to see lower inflation for the foreseeable future. My coffee just went up another 10 cents. The second time this year, the culprit, the decade high price of coffee bean.

Disruption is happening everywhere. I previously mentioned how the stock brokering industry got disrupted due to the prevalence of internet trading. As economic conditions turned weaker, the race to the bottom affected some industries. Some haircut saloons are willing to undercut the neighbourhood barber shop by offering a haircut at less than $5. Another industry ripe for disruption is the real estate agency industry. I came across agents willing to charge a flat fee for their agency service, in order to get more volume business. Some agents are willing to charge as low as $1999 flat fee for selling a HDB or a condo at $4999 nett. The flat fees model is likely to be more common in years to come, as deals are harder to come by and prices of property stagnating. The aum model in real estate can be a game changer. I foreshadow an agent providing other services like calling pest control, actively managing leasing to be more common in the future, providing a one stop shop solution. Agents must up their “game” in order to sell more 아파트 아파트 아파트 apateu apateu apateu, uh, uh-huh, uh-huh….

(Source: Homeseller; Flat fee services might be more common in the future when competition hots up as agents try to be competitive by undercutting each other for business)

(Source: The Straits Times; prices of condo drop in Q3)

The stimulus by the Chinese government gave some relief to the HK and Chinese equity markets. The basic fundamentals don’t change. The trade war and the de-risking of the western economies against China will continue at a much greater intensive going forward. In the long run, Chinese-made products have to find alternative outlets for sale. Unfortunately, it is not an easy task when you offend your wealthy customers in America and Europe. The Chinese products fetch a higher selling price if they are sold externally. To further boost domestic spending is hard to achieve even after the big stimulus as the Chinese save too much of their money. Coming from the Chinese ethnicity stock, we believe in saving for rainy days. If one don’t spend much during the boom, will they be spending more, especially after the bust of the property bubble and the collapse of their stock market? Given the poor social safety net and jobs market in China, the locals will be hoarding cash instead of spending money given by the government.

I went past some local pubs. From my observation, the drinking crowd was decent during Thurs with 60% of the tables occupied and Friday represented the peak of their business with 80% of the tables occupied. Sat surprisingly, was quiet with less than 50% of the table occupied. Have they stopped drinking or have they decided to go for cheaper alternatives like coffeeshops? During my era, Saturday always represented the best happy hour for pubs. Where have all the drinkers gone? Had a chat with a friend who owned a coffeeshop. Breakfast business was down 30% over the past week. Are customers skipping breakfast for health reasons? I am confused 🫤 

Elon Musk has officially aligned his political affiliation with Trump. It is just my suspicion, he might be preparing the ground to inherit some of those Trump’s political capital if Trump for whatever reasons lost the election. The Tesla boss own ambition to the top job at The White House is within sight one or two elections down the road. If Trump wins, he is set to benefit from pro-Elon regulations. Ultimately, the real winner of this Presidential election, not Harris, not Trump, but the Tesla boss.

Commentary 

The US market is on a continuous uptrend. The US market was making new highs every other day this month. Whether the market continues to go higher, it is important relook at one’s portfolio to do a rebalancing exercise. I don’t want to sound like a broken record. I am uncomfortable with the current market trend given it had survived the uptick for more than 2 years. I have chosen not to partake in an overvalued market. God knows where it will goes. I feel if I continue with the market, I might be cheating death. By the way, my feeling has nothing to do with how the market will perform going forward. Up or down no one knows.

STI is trading above the mean valuation, but I wouldn’t call our market in a state of bubble. As disclosed earlier, I have sold my holdings in SingPost. I find the returns attractive enough for me to take the money off the table without waiting for SingPost to undertake any of their divestment initiatives. I am not greedy. I am grateful for whatever gains. I am just happy that my charities can benefit from it. I like to encourage my readers that have done well this year to do a small donation to any charities of your choice. There are many people needing every help we can give. 

Willing hearts is one of the charities that I support. The soup kitchen provides 7000 meals a day to those beneficiary. As food prices goes up, more people in-need are joining the program. The charity organisation needs more volunteers. I have list down the website for anyone interested to volunteer their time. 

(Source: Willing Hearts; https://willinghearts.org.sg/)

SingPost(sold)

SingPost is a situational play. I try to keep my holdings in the company as short as possible. I did a sale of my position in SingPost to take my profit off the table. Their asset divestments are taking longer than I anticipated. Nevertheless, it was a good return for the short holding period. Part of the reason for the sale was due to my upcoming travel plan in Nov and Dec. The extremely elevated valuation of the US stock market is another concern of mine. With the election to be held in less than a week, the market could swing either way. The Australia logistics business may look good on the ebitda basis but after netting off a 30% corporate tax, interest cost and depreciation. The net margin is within the low to mid single digit, not actually a high margin business. Without the consideration of the asset divestments, SingPost is trading at 18x forward p/e. The situational play at SingPost produced a gain of more than 25% for a 1.5 months holding period.

Cash 

With the sale of my SingPost shares, the cash level has climbed to 100% of my portfolio, the highest in 2.5 years. The last time I had such a high level of cash in my portfolio was during 2022 right before the tech meltdown. In the meantime, capital will be hot-house in some high-yielding savings account. 

Summary 

Lone Wolf Fund made steady progress by adding another 3% return to the fund due to SingPost gains. Ytd gains stand at 33% unleveraged return (excluding dividends and cash yield). I will be taking a break in Nov and Dec to recharge and to work on my strategy for 2025. I hope to return with fresh ideas on the market. I am unlikely to deploy the capital through to the end of the year unless there is an irresistible opportunity. In the meantime, stay safe and I will be back soon. God Bless.

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Disclaimers 

All investments is highly speculative in nature and involves substantial risk of loss. We encourage our reader to invest very carefully. We also encourage reader to get personal advice from your professional investment advisor and to make independent investigations before acting on information that we publish. Much of our information is derived directly from information published by companies or submitted to governmental agencies on which we believe are reliable but are without our independent verification. Therefore, we cannot assure you that the information is accurate or complete. We do not in any way whatsoever warrant or guarantee the success of any action you take in reliance on our statements. All information provided are for education only. Buyer beware,do you own due diligence.