U.S. interest rates. A common news headline. Interest rates should not be of any major concern for good companies with stable interest coverages and good business models.
Historically, government do not make deliberate moves that is against the interest of economic growth. Since the Great Depression (1930), the U.S. government has very much used Keynesian economic theories (gov intervention) among others that have benefitted stocks tremendously; from below 70 on the Dow Jones Average (DJIA) to above 17000!
U.S. Banks should benefit from the rise in interest rates (whenever it comes) as the banks will be able to charge more on their loans net of deposit rates. This is assuming:
- There is no panic amongst investors regarding any new bank scandal
- Average defaults (no massive oil related, large size defaults)
- Stable loan growth environment ahead
Note: Investors might still be jittery in investing in banks due to the losses the financial crisis caused. A sudden bear market might hit the banking sector. However, the reverse could happen should sentiment built on a margin expansion storyline.
Besides banks (our repetitive theme in 2015), one might want to explore companies that provide parts for larger industries as quoted by Mario Gabelli of GAMCO, $40bil AUM. Among mentioned: O’Reilly Auto Parts (search for interview with Gabelli on CNBC:The Halftime Report, 30/10/2015).
Precision Castparts, a parts manufacturing company, a Buffett (Top 3 richest man) linked deal and Gabelli’s stock picks might suggest despite the acclaimed global slowdown by news sources, businesses will keep chugging along.
In conclusion, our recommendations are stocks we’ve mentioned since 2014. In September,
we advised purchases of beaten down stocks. October has been a good month for numerous U.S. stocks. However, it is opined, most of our Malaysian recommended stocks (besides IBM) are still undervalued.
Looking forward, we see some turbulence ahead. Our model portfolio has been constructed to withstand the next 5 years via China's strong consumption rise story and strong localised property development stories among others.
Looking forward, we see some turbulence ahead. Our model portfolio has been constructed to withstand the next 5 years via China's strong consumption rise story and strong localised property development stories among others.
Stocks in View
Parkson Retail Group Ltd (3368.HK), Parkson Holdings Berhad (5657.KL)
Turnaround story
Perak Corporation Berhad (8346.KL), Majuperak Berhad (8141.KL)
A local-state development story.
Twitter
NOT a recommended investment stock. A trading stock, noting a generally high interest in technology stocks and a recent new large shareholder, a Prince of Saudi.
Happy investing until next time.
NOT a recommended investment stock. A trading stock, noting a generally high interest in technology stocks and a recent new large shareholder, a Prince of Saudi.
Happy investing until next time.
[DISCLOSURE: The writer currently owns minority stake in Parkson Retail Group Ltd, Parkson Holdings Bhd, Majuperak Berhad, Perak Corporation Berhad among the mentioned stocks as of 30/09/2015 under his personal account. JR Capital LLP does NOT have any interest in mentioned stocks as of mentioned date.]
[DISCLAIMER: Everything stated in this blog is purely the opinion of the writer and any decision taken should be based on sound judgement with risks fully born by the decision maker. The writer shall bear no responsibility for any losses due to adherence of advices blogged by the writer or any commenters. Informational discrepancies are possible and will be corrected if any.]
