When Mike Tyson was asked by a reporter whether he was worried about Evander Holyfield and his fight plan he answered; “Everyone has a plan until they get punched in the mouth.”
This is how the current crisis developed so far for me personally and that is why i decided to do this more frequent “Panic journal” in order to document my actions and to hopefully learn a thing or two.
Transaction summary:
The last few days were almost “High Frequency Trading” for me with more transactions in 10 days than the 2 years before. Here is the overview (also in the comments) after my “Panic Journal 1” Post including a short assessment. I have also listed the stocks that I bought before the panic as part of my “German” basket, but which I should have clearly bought later.
Overall, I added 10 11 (!!) new positions, sold 3 positions and ended up with a cash position of 14,4% (this is also an effect of the ~-22% lower portfolio value YTD).
I was clearly too early in many case, but what I have learned over the last 20 years or so is the following: In a tanking market you always look stupid in the short term as a buyer and smart as a seller. In the long term, you look smart when you have bought at cheap valuations and you look stupid if you sold at cheap valuations.
This week I need to slow down a little more and think if everything that I did really makes sense ;-). I will try to limit daily transactions to 0.5% of the portfolio in any direction.
My overall assessment at the moment is that some sectors (Travel, events) will be hit much longer than I initially thought. I do think that “The Hammer and the Dance” scenario is a very likely one.
Here is the the transaction list:
Disclaimer: I am an anonymous investment blogger and not a Virologist, so please be aware of this. I also think that Covid-19 is a huge threat and that everyone should contribute to public safety by staying at home and avoiding contact for some time.
The Problem
As mentioned above, I am a “stock guy”, however mostly a fundamental/Behavioural type of investor. If I see a number, I want to know where it comes from and how it is derived.
The current discussion on Covid-19 is, at least in Germany, mostly about numbers. Two numbers stand out and get reported all the time and everywhere:
The official source for this number is the Robert-Koch Institute (RKI) named after the German scientist who discovered the tubercolosis bacterium more than 100 years ago.
Upfront remark:
Although this blog is mostly about investing, I hope that none of my readers will lose any dear ones because of Covid19. Stay safe, stay at home as much as possible and don’t take any unnecessary real world risks especially if you belong to or have regular contact to people who are most vulnerable.
Panic turns into fear
At the time of writing, Spain and France have gone into lock down after Italy last week and the US has implemented a National Emergency and Austria even tries to ban meetings of more than 5 persons. In Germany, Schools and Kindergartens are closed and the coming week will bring more lock downs as well. So it is pretty useless trying to predict what will happen with the economy in the coming weeks/month. It is pretty clear that there will be a recession, but it is close to impossible to figure out how deep and how long this will go.
Disclaimer: This is not investment advice. DO YOUR OWN RESEARCH !!!
Readers of my blog might remember that I already owned Fitbit in late 2018 at 5 USD per share. I was lucky to sell the stock with a small profit before the stock lost more than half of its value in summer 2019:
This is what I wrote initially as part of the investment case:
This post is written mostly for myself in order to document my thoughts and actions and to learn from my obvious mistakes. But I promise that the blog won’t turn into a short term trading site !!
Today was a lot worse than I expected. Who would have expected that OPEC members disagree and the Oil price would tank more than 30% overnight ? In general, lower oil prices are good for most economies, but such a move will create some issues with regard to margin loans, counter party risk, indebted frackers etc etc.
So instead of the expected Monday “Corona panic” we have now the “Corona + Oil super panic”. Plus some strange moves like the EUR gaining strongly against the USD, despite Europe always being in the weaker position, even now with the Corona Virus.
Nevertheless, I started to put some money at work. Surprisingly not in the tourism sector, as I need to do more homework there. Not everyone might have read the comments but this is what I bought today:
My long term readers know that I did a lot of research on travel stocks in the past, however with little result other than a only slightly profitable investment into Expedia.
With the current situation, I decided to have a quick look at the travel sector again.
Up until now, the tourism industry has been seen as a secular growth industry, mainly due to 2 mega trends: Emerging market middle class tourists and older, more wealthy first world tourists were driving tourist numbers and subsectors such as cruises or AirBnB rooms. Just last year, “overtourism” became a major trend in social media, I guess this problem will not be a big issue in 2020.
(legendary) VC Investor Sequoia Capital tells its portfolio companies to batten down the hatches
A deep look into US Pay TV which looks more and more like a Zombie product
The march newsletter of spinoffstockinvesting (Registration required or read via RSS)
The Zephir blog thinks that Belgian stock Barco could be a buy now
Yetanothervalueblog is still positive on Airplane Leasing company Aercap
RIT (Rothschild Investment Trust) 2019 annual report
Congrats, the GlobalStockPicking blog is now 5 years old
Intro
Most readers know that I normally don’t do market comments, however this post will be an exception (and should therefore maybe ignored ?).
To be clear, I have no special information or personal opinion on how far the COVID virus will spread and what the ultimate effect of all this might be. Will there be a recession due to supply chain disruptions ? Will we see another stock market drop like 2002/2003 or 2008/2009 ? No idea, but in any case it makes sense to review what I think is the most reasonable way to behave for long term investors.
20 rules that might help you to survive, or at least sleep better
Situations like this are not unique and over the years I have created for myself some rules that might be helpful or not:
Must read: Why the (VC backed) technology sector seems to look very similar to the US shale industry some years ago
John Kingham thinks that DIageo is a good company but overvalued
UndervaluedShares with a great feature on the Lundin Group and how to make money in the “Dark Corners” of the capital markets
Are travel related stocks now a “Buy” ?
The Rational Capitalist blog has an in depth look into Buffett’s share repurchases over the years
GlobalStockPicking likes Greatview Aseptic, a competitor to Tetrapak
A critical viewon the “secret sauce” of the Private Equity industry
value and opportunity 