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Some links

The Undervalued Shares blog has started an interesting “Behind the scenes” series

A good summary from A16Z on how moats develop

Ben Thompson with some deep thoughts on platform business models (Shopify)

A good summary of the crazy things in the capital markets that happened in the last few months

An interesting in depth story on the Luckin Coffee fraud (WSJ, paywall)

Deep Dive on stock based compensation

Alternative data use for predicting asset prices is booming

 

Some links

The ProfitHunting blog with a nice series on Disney – Part 1, Part 2, Part 3

Larry Swedroe thinks that even 10 years are too short to judge active investment managers

Some deep thoughts on E-Sports and value creation

How an oil ETF become the driving force of the recent oil price crash

The case for (Quality) Small Cap Value stocks

Must Read: Paul Singer’s (pesimistic) letter to investors 

Jeff Bezos letter to Amazon shareholders

Panic Journal (4) – Consolidation

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:

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Panic Journal (3) – Why Expert Virologists seem to be really bad (or careless) with statistics

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:

  1. Number of Covid-19 Infected persons (per day and daily change)
  2. Number of persons that died due to Covdid-19 (again per days and daily change)

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.

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Panic journal (2) – Fear & Bullet proof your portfolio

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.

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Travel stocks revisited – building up a watch list

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.

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