Panic Journal – Final edition

It is now 14+ months since the “Covid-19 panic” set in and that I started the “Panic Journal” mini series. After season 1 and 4  episodes of Season 2, I think it is now time to close the series. Of course, Covid-19 is not over yet and currently in India the Virus is rampaging as never before.

However for the stock market it seems, the Virus and the pandemic is “last year’s news”. I think there is some small risk that some of the virus mutations could be a problem, on the other hand, the “magic” of the mRNA vaccine seems to be a decent risk mitigation factor.

So looking back, what are the major learnings/surprises for me from a investment perspective ?

  1. Buying the dip has worked again beautifully

A whole generation (or even two generations) of investors now has first hand experience that for the market overall, buying the dip always works. Personally, I have started my first “baby steps” in 1987 and even back then buying into the crash was a good opportunity.

To be honest, this might be a dangerous learning. This time for instance, back in March 2020, no one could have known that mRNA vaccines will emerge on such a short notice. In addition, Covid-19 also prevented DT to run America for another 4 years and so the damage has been limited. Plus, the unprecedented spending of Governments, especially in the US has been a positive surprise, at least for me. And of course, super low or negative interest rates make issuing debt easy.

Personally, I do think that at some point in time we will have a dip where buying the dip aggressively will be a mistake, such as in the 1970ies or in the 1920s/1930s. If this will be in the next 2-3 years, 5 years or 10 years is any ones guess. Personally I would not recommend anyone to buy blindly into the next big dip.

2. Trying to time the market is too difficult for me

During the pandemic, I did try to time the market a few times, for instance when I sold Italian stocks early last year because I expected (correctly) that there would be almost no tourist season. Or when I thought that buying Digital companies in April 2020 was too late because everything has already been priced in. However forecasting events and the reaction of the stock market together is super difficult. You can be right on what will happen in the real world but still be wrong of what the stock market does. Some timing bets worked better, but in general for me personally the episode clearly proved that I am really bad at timing.

3. Overall, very little big blow ups or bankruptcies happened 

With the exception of some smaller blow ups such as Wirecard, Greensill or recently Archegeos and Huarung in China, very little in spectacular blow ups happened. Clearly, changing or cancelling bankruptcy regulation has contributed a lot as well as direct aid (Lufthansa, TUI etc.). Looking forward, it will be very interesting to see what happens if these bankruptcy rules will be reinstated again. This might be pushed further and further. In Germany for instance, I am very sure that before the election this fall, no politician has any interest in reinstating them.

If this will be a small or big problem is hard to say know, but it should be something to watch. Personally I would be careful in buying stuff that “still looks optically cheap”. That might work for some stocks, but for many companies that had problems before (retail, auto suppliers etc.), the future will not look suddenly bright just because Covid-19 will be over soon.

4. Valuations for many hard hit sectors are higher than before

If I look into my own portfolio for instance, Richemont and Sixt, two companies that have been direct hit by the pandemic, both trade significantly above pre pandemic levels. Both companies indeed might emerge stronger relative in competitors, but still they will need 2-3 years to fully recover. So the “margin of error” for these companies is very small. They really need to deliver.

5. Even more money than ever is looking for risky investments than before

To be honest, one of the biggest surprises to me has been the fact that VC funding and IPOs came back roaring so quickly. After hitting an air pocket in Q2 2020, deal making has increased to a frenzy never seen before. Tiger Global for instance makes Softbank look like a diligent investor in the VC space. Who needs to do Due Diligence on a late stage VC deal if you can “SPAC” anything within a few months ? In my opinion, among these SPACs and late stage VC companies there will be a lot of WeWorks, Nikolas etc. especially in the later vintages. We will find out pretty soon if there are any good companies among especially the later SPACs.

Things in Cryptoland are even crazier. Not much has changed in the problems of the underlying technology since I have looked deeper at Bitcoin in 2016, but somehow the price of Bitcoin managed to skyrocket, helped by promotions form “Heros” like Jack Dorsey and Elon Musk. I can honestly say that I have no idea what is going on in Cryptoland, but being a unregulated market, anything can happen there.

6. Big Tech seems to have won

At this stage, “Big Tech” seems to have won. They didn’t suffer during COvid-19, in contrast, offering the necessary tools for working t home and replacing other entertainment options, most Big Tech companies received a tremendous push during the pandemic and saw their valuations sore.

The question is here in my opinion what happens if we are all going back to “normal” and if and when Governments will crack down on pretty obvious monopoly behavior (app store sand so forth). Maybe it is already too late for that.

I found it almost impossible that a company like Apple will be able to double its valuation again, but who knows

7. Somehow the fight against climate change became serious, this time driven by the financial sector

On a very positive note, I do think that a “tipping point” has been reached in the fight against climate change. Despite the “Friday for future” movement being stalled at home, a lot of big investors have started to take this seriously instead of just “green washing” their old activities. A lot of money is flowing into the space also into new promising technologies and renewable energy becomes cheaper and cheaper. Mr. Biden has brought back the US into the game and a lot of things are happening.

This is one of the areas I will focus on much more in the future.


As mentioned above, despite some remaining risks, the peak of the Pandemic seems to be behind us.

Looking ahead however, I do think that it is risky to think that now all problems will fall away and we will have a multi year super boom that will lead to yet another big general stock market party.

I don’t predict a crash either, as the Pandemic has clearly shown me that I know a lot less about (current) markets than I thought. So the best thing to do is to continue trying to learn what is going on and not trying to make decisions based solely on experiences from the past.


  • Thanks for the wrap-up post, really enjoyed reading it as always mmi!

    #5 You might find this blog post interesting about the S2F model

    #7 Going forward I would enjoy a deep dive on the transformation efforts of big oil/ gas majors, European RE companies or the emerging hydrogen economy players


    • So with this approach to valuation you’re basically saying: it has value because people collect it. So it has value because it has value for people.
      That is not a serious approach to valuation.
      With the same logic, you can put the capital increases per year of public companies (or the number of newly issued shares) in relation to their stock market value (or the number of existing shares).
      Then the stock market values of companies that do not make capital increases should become infinitely large.
      That makes no sense.

      • To be honest, Gold works like this for thousands of years.

        • I wouldn’t buy gold either.
          But gold played an important role in international trade when there was no reliable world currency.
          Today, the USD plays that role because the US has created institutions that build trust between international trading partners.
          Gold cannot compete because it does not provide confidence-building institutions and procedures and the supply is limited. Think of the opium wars that were ultimately caused by the British not wanting to ship so much gold to China.

          But yes, Bitcoin could play a similar role to gold as insurance against the demise of civil institutions. But that also means limited use as long as the dystopias don’t come true and strongly volatile prices.

        • Also, I will add that there are good reasons to believe that the bitcoin incentive mechanism could eventually break down with the halving of reward. See:

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.