Wolf Money(Portfolio update end Aug 2026)
Before I start, I would like to pray for the victims of the Nepal-Tibet floods. I hope the survivors and communities can rebuild their lives as quickly as possible. I pray for their recovery and safety. God bless. 🙏
Yours Faithfully, Mr. Lee
I had my eyes glued to one particular auction that happened this month. A Montblanc pen, previously owned by SM Lee Kuan Yew, was back on the market for sale. Previously, the former owner bought it for $4,000 in a 2003 Sotheby’s auction. Mr. Lee is attributed to be the key architect of the founding of modern Singapore after gaining independence from the British. He had donated a fountain pen in the early 2000s for a charity auction.
In the recent auction conducted by Hotlotz, a local online auctioneer, the pen was once again sold for a hair raising $461,500. The reason is clear why the new buyer was willing to pay that kind of price for the pen. The historical significance of the pen shared the same status, in my opinion, as Winston Churchill’s top hat. Many policies and thoughts of Mr. Lee were written using that pen. I wouldn’t be surprised the pen will be worth a million in n years. Many congratulations to the owner of the new pen. It is truly one of a kind.
Mr. Lee’s words of wisdom is timeless, it never fades away even after his passing many years ago. During an interview with Charlie Rose two decades ago, he predicted the use of nuclear weapons in the Middle East is likely to happen. Recently, there was chatter in Trump’s war room about the use of nuclear weapons against Iran to bomb the Iranians into submission. Although the chances of that happening are slim, but if it does happen. There will no peace on earth. Terrorism against Americans all over the world will go up a few notches. The Iranians, being the proud people of Persia, will fight till the end using conventional and unconventional methods. The use of nuclear weapons in the Middle East will usher in World War 3. We are close to reaching that point of no returns. In this case, I hope Mr. Lee is wrong with his assessment. God bless humanity 🙏.
Portfolio as at end of Aug 2026
1.) Cash
*Stocks are not rank in accordance to capital invested.
Lone Wolf Fund had a slight increase in returns of 0.5%. Year-to-date returns stand at 1.5%(excluding dividends and cash yield). LWF sold its last remaining position in Hotel Grand Central with a small profit before the market correction set in. I am totally uncomfortable with the market especially with the situation in the bond and currency market. With many countries’ long term yields reaching levels not seen in decades. The cost of refinancing for many governments and companies with poor finances will be a challenge. The situations in Japan, the EU, the UK and the US have reached dangerous level. Any wrong move either in the interest rate or geopolitical front may stroke a substantial rise in oil which will cause inflation to go out of control. I hope not to be reminded of the Paul Volcker era when he pushed the interest rate close to 16% to force out inflation. It added tremendous pressure on the stock market which experienced a 30% drop between 1981 to Aug 82.
As a market participant, besides researching the fundamentals of the companies within my watchlist. I am spending more time looking at the bond and currency market. There was an unusual market operation done by the Fed and BOJ to pop up the yen. The fast weakening yen is causing domestic inflation to be out of control. The ability of BOJ to raise rates is restricted by the huge domestic debt. The pressures from the Trump administration is another likely reason for the delay in rising rates. Any intervention by the BOJ alone wouldn’t be enough to stop the falling yen without first selling the USD $1.2 trillion in US treasury to defend their currency. The action would have caused the US bond yield to rise further after reaching its highest in a year recently. It wouldn’t be ideal in a mid-term election year. Given the historical drop in the Yen, the Plaza Accord 2.0 would have forced down the Japanese throat by the American government under normal circumstance, but we are far from being a normal situation. The USD is walking on a tight rope. If inflation wasn’t a problem, we would have seen a massive devaluation of the dollar, given the needs of keeping the inflation low before election. The weakening of the USD substantially will push inflation over the cliff.
The benevolent of the US treasury action to prop up the Yen is driven by self-interest. The whole operation is likely to have limited effect as any big spike in the Japanese yen will cause the yen carry trade problem coming home to roost. The US Treasury’s decision to dump the Euro bonds to save the Japanese yen has angered the Europeans, especially the Bank of England and ECB which are facing record bond yield of their own. It is quite astonishing to see the US at odds with ECB, their largest creditor that holds close to USD $3 trillion combine in US debts. Will we see a bond war among nations as they try to lower their interest rate by selling other countries’ debt? The financial trickery deployed by the Department of Treasury to pop up the long end of the bond market is making the market edgy. The mess in the bond and currency markets is hard to ignore. The only way forward to solve America financial problem is by declaring debt restructuring or through a series of austerity. Nothing beats the time-tested formula of hard work and thrift. Singapore holds USD $272b in US treasury. I hope our government is prepared for any eventualities. The $272b are hard-earned sweat money accumulated over generations.
Hotel Grand Central(sold)
I sold the stock because I was expecting them to reward shareholders with some sort of interim dividend. Unfortunately, they have decided to hold on a substantial amount of cash. I could understand each company should exercise prudence during uncertain times, but hoarding cash above and beyond what they need is not a wise use of cash. It depressed shareholders’ returns. Given the poor TSR over the last 5 years, the management should strive to improve shareholders’ return. If everything fails, a privatisation offer should be forecoming to buy out the minority. Enough said.
Cash
The interest on saving accounts and fixed deposits are trending up again. The increase in long-term bond yields worldwide is putting pressure on the banks to raise rates. One of the deals I found was a 2.08% p.a for a 12-month fixed deposit. There was an increase in cash due to Hotel Grand Central sale. LWF is back to 100% cash and cash equivalent.
Summary
In my view, the next few months before and after mid-term election are the most dangerous for the market. There are a lot of politics at play. As the bond vigilantes circle around those western economies. A potential financial disaster among the G7 will spark a crisis of confidence for the stock market. I rate the UK finances to be most under pressure, followed by Japan and the US. Any election called by the UK government at this moment will be a big mistake. A win by Reform UK will caused UK gilts to be sold off. A bailout of a G7 country by the IMF or the G20 can’t be rule out. Both UK, France and the US are caught between a hard place and a hard rock. Those countries have very little room to move, politically, to reform the country’s budget system. Any political parties that tries to propose raising taxes and spending cuts will lose the election, which will make the job of the government more perilous.
To summarise the main point of my blog. Gold going up is not a good sign for the market, long term bond yields and inflation going up at the same time is not a good sign for the market. The Department of Treasury’s intervention in the bond market is not a good sign for the market. As you can see, I have plenty of things to be concern. Druckenmiller in an opinionated piece to the WSJ warned Scott Bessent about messing with the bond market. The only way to fix America’s fiscal problem is to cut spending and raise taxes which no parties are willing to do given the mid-term election is just 3 months away. Scott Bessent’s plan was to turnover the long dated bond to short term T-bill which Fed has more control over interest rate. Long term bonds interest control by the market, short term treasury interest under Fed’s control. Throw in stable coin into the picture. You get it? It is a clever little scheme requiring all stars to be aligned. I encouraged those who are interested to study the relationship between stable coin and the US treasury.
If Republicans did badly for the mid-term elections. Pete Hegseth and Scott Bessent will be the fall guys for Trump.
The secondary sanction on Iran will quicken the pace of de-dollarisation. What is propping up the dollar system beside the legal trades, are the illicit commerce. If more and more countries are barred from the dollar system, demand for US debts and dollars assets will collapsed. There are many moving parts in the market. Some things will break. I just haven’t figured out which and when. Even if we don’t get a full blown dollar crisis, a dollar scare would bring the market down by at least 10%. On an individual basis, I try not to have any exposure in the market over the next few months, but I wouldn’t rule out some situational play. God Bless. 🙏
*I will be taking a couple of weeks off for holiday. Updating of the blog will be irregular.
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