Monday, July 14, 2008

Where Are We?

High inflation due to rising food prices and oil. Economy growth is slowing down and major countries in the world are heading towards recession. You can call that stagflation. Construction and properties industries are basically bleeding to death soon with rising material costs like steel, cements, bricks and transportation costs. The rakyat are not having enough disposable income to live a normal life. Our government is busy hurling allegations against the opposition. You bombed a pitiful Mongolian lady, shout the opposition. You poked a pitiful young lad's ass, shout the government. Now I declare, now I don't declare (because I am under duress when I declared).

Here we are. Trapped in a rubble worst than those caused by a 9 magnitude earthquake.

From the day we started our fund i.e. 1 March 2008, KLCI has since dropped 14%. Our fund, as expected, also suffered a drop in value by about 10%. Key point here is to continue to be able to outperform the KLCI. We are now outperforming KLCI by 4% as of last Friday. We have 30% in the form of cash (approximately RM10,000) and have the benefit of cashinflow every month. We can easily average out some of our cost of investment but the strategy now is to keep the proportion intact, adopt a defensive stance while monitoring the political situation. Stocks are cheap at the moment but as mentioned, we will retain the RM10,000 cash.

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