Investing for 2013 | Mark Liew

Just found out that China experiencing significant slowdown now:?? no need to look at fake govt stats, better indicators below:

KFC same store sales yoy% change
2010: 6%
2011: 19%
1Q12: 14%
2Q12: 10%
3Q12: 6%
4Q12: -6%

Ajisen Ramen:
1H12: -24.7%

Mcdonalds Jan yoy sales:

• U.S. up 0.9%
• Europe down 2.1%
• Asia/Pacific, Middle East and Africa (APMEA) down 9.5%

As usual, I think equity markets are only adjusting expectations slowly -divergence between reality and expectations.?? (like in the US housing peak was in 2006, mkt rallied through to 2007)? Year-end came and left, US fiscal cliff was a non-event, and it was risk-on again for most equity markets.??? After the hard rally in emerging mkts equities in the past few months, I would expect 2h of the year to be disappointing for companies and investors ? will be good buying opportunity for those who know where to find value.

Inflation and disinflation, leverage and deleveraging, bubble and bust are now the normal state of world economies and markets under our global fiat fractional reserve banking money system.?? We have no choice but to navigate this as best as we can.? We are into the 4th year of a leveraging up cycle and some of the weaker areas have popped.? I would believe that the next downturn is now sooner rather than later.

In the US, I?m cautiously bullish on stocks, although some select stocks are way overpriced ? some recent data points which i find encouraging :
- record low foreclosures and recovery of housing
- record low crude oil imports (lowest since 2000), and rising domestic crude production
- cheap nat gas => large car companies (Ford, etc) recently announced plans to mass produce more? hybrids and electric vehicles.
- together with the above, this energy revolution will save america?s wallet over the next 10 years. record numbers of americans have turned from housing speculation and construction to producing energy (real value) which is great.? This transition would have been faster if the fed meddled less in the price and qty of money

Companies that I would expect to continue doing well and are not overvalued: Berkshire Hathaway (BRK.B), Google (GOOG), Kinder Morgan Pipelines (KMI), Kohl?s (KSS).
Companies that I would expect to disappoint investors at some point this year: Amazon (AMZN), Rackspace (RAX), Mastercard (MA), Visa (V)
I had been bullish on MA and V since 2007 (less than <20x p/e and they were the best hedge against helicopter ben), but I feel that their valuations have run past their fundamental values now (>25 p/e).? The anti-trust suits that were delayed for 10 years by their IPOs? ? well ten years will be up soon in a few years.

On currencies: I think there is room from here for relative strength of USD vs EUR, JPY, SGD.?? Have been bearish on JPY for more than a year, and continue to be so.? See my old presentation Japan Long Term Challenges.?? However, longer term I no longer believe in fiat currencies as a store of value.? The recent G-20 statement was BS, the world has been in the midst of a currency war this past decade (not unlike 1930s and 1, and the pressure to continue has increased Neither does Gold meet the highest criteria, although Gold-backed currency would be the best for human innovation and progress.?? I take buffet?s approach that real assets (or partial ownership via equity) continue to be the best store of value throughout time and circumstance.?? His 2011 Berkshire letter here. And I am reminded that timberland was the best store of value through WW2.? Everything else got destroyed, but the trees grew back .

Canadian stocks and currency are still overpriced by about 20+%, in my view.? However, I have learnt to appreciate that there are so many natural monopolies here (telcos, utilities, pipelines, postal service, etc) because of the natural geographical distance and only 3 major urban centers.? Several of these would make excellent investments at the right price and I would be looking to purchase them when the correction arrives ? S&P/TSX Venture Composite Index is already down 50% from last peak in early 2011.?? The high risk assets in Canada (venture mining stocks and mcmansion suburban houses) have already been selling off hard and its a matter of time before blue chips and CDN catch up (or catch ?down?).

Source: http://blogs.ubc.ca/mliew/2013/02/16/investing-for-2013/

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