Bear Trap and Opportunities
https://www.youtube.com/watch?v=Cw9Rb6VIJ9o
This channel, Fallible has been pretty accurate in the last 2 years that I track. It is extremely bearish and feels that the markets have a lot lower to go.
Bear traps can go up a lot. From my calculations, it may even rebound by another 8 to 10%.
But it is likely to retest the lows seen on 23 March. The economy will likely be smashed like never seen before. In fact, it is likely to be worse than the Great Depression. It is comparable only to WWII and WWI. Why? Because demand and consumption is totally smashed.
A BCA report estimated that the lock downs around the world will be in July 2020. That's another three more months. If you need the report, please give me your email address and I'll forward to you. The US is still the world's biggest economy and BCA estimates that the lock down nationwide will end on the 3rd week of July.
By the third week of July, some SMEs, restaurants that we are familiar with will have gone bankrupt. Pubs that we love, those that are highly geared, may no longer exist. But if Fallible is correct, after about one month from the end of the lock down, the virus may come back with a second wave. Another mini lock down may occur in Aug or Sep and last for a month to two. This will continue until a cure or a vaccine is found, which is probably in 2021.
I am still neutral or slightly net long, holding on to a lot of cash, probably around 50 - 60% cash. Be prepared that this recession will last at least 12 months from today.
Lastly, the opportunities I foresee are as follows:
1. Gaming revenues will rise. Streaming for games has actually gone up by 400% during working hours! The biggest gaming company in the world is Tencent, or 700 HK.
2. Credit card companies. Visa and Mastercard will survive the onslaught. True that spending will fall. But I suspect more people will buy things online from now on. They will get used to staying at home more. This Pandemic will push people's habits even deeper into going online to buy groceries and daily needs.
3. Paypal. Online transactions will drive Paypal's revenue. Cash is dead because it is unhygienic and transmit diseases.
4. The ETF called IPAY will be a good candidate to invest. IPAY tracks an index of global equity in credit card firms, and companies providing payment infrastructure, payment services, payment processing and payment solutions.
5. Meituan Dianping, 3690 HK will prove to be a big winner. Meituan-Dianping (Chinese: 美团网; pinyin: Mĕituánwǎng) is a Chinese group buying website for locally found food delivery services, consumer products and retail services. In the US, Amazon will be a good candidate.
6. Search engine companies like Alphabet, social media companies like Facebook will probably see their ad revenues fall but survive this crisis as they are lowly geared and have very low operating costs.
7. Veeva Systems. This is a little known company. Veeva Systems Inc. is a cloud-computing company focused on pharmaceutical and life sciences industry applications. Headquartered in Pleasanton, California, it was founded in 2007 by Peter Gassner and Matt Wallach. It works with software as a service in the global life-science industry.
This channel, Fallible has been pretty accurate in the last 2 years that I track. It is extremely bearish and feels that the markets have a lot lower to go.
Bear traps can go up a lot. From my calculations, it may even rebound by another 8 to 10%.
But it is likely to retest the lows seen on 23 March. The economy will likely be smashed like never seen before. In fact, it is likely to be worse than the Great Depression. It is comparable only to WWII and WWI. Why? Because demand and consumption is totally smashed.
A BCA report estimated that the lock downs around the world will be in July 2020. That's another three more months. If you need the report, please give me your email address and I'll forward to you. The US is still the world's biggest economy and BCA estimates that the lock down nationwide will end on the 3rd week of July.
By the third week of July, some SMEs, restaurants that we are familiar with will have gone bankrupt. Pubs that we love, those that are highly geared, may no longer exist. But if Fallible is correct, after about one month from the end of the lock down, the virus may come back with a second wave. Another mini lock down may occur in Aug or Sep and last for a month to two. This will continue until a cure or a vaccine is found, which is probably in 2021.
I am still neutral or slightly net long, holding on to a lot of cash, probably around 50 - 60% cash. Be prepared that this recession will last at least 12 months from today.
Lastly, the opportunities I foresee are as follows:
1. Gaming revenues will rise. Streaming for games has actually gone up by 400% during working hours! The biggest gaming company in the world is Tencent, or 700 HK.
2. Credit card companies. Visa and Mastercard will survive the onslaught. True that spending will fall. But I suspect more people will buy things online from now on. They will get used to staying at home more. This Pandemic will push people's habits even deeper into going online to buy groceries and daily needs.
3. Paypal. Online transactions will drive Paypal's revenue. Cash is dead because it is unhygienic and transmit diseases.
4. The ETF called IPAY will be a good candidate to invest. IPAY tracks an index of global equity in credit card firms, and companies providing payment infrastructure, payment services, payment processing and payment solutions.
5. Meituan Dianping, 3690 HK will prove to be a big winner. Meituan-Dianping (Chinese: 美团网; pinyin: Mĕituánwǎng) is a Chinese group buying website for locally found food delivery services, consumer products and retail services. In the US, Amazon will be a good candidate.
6. Search engine companies like Alphabet, social media companies like Facebook will probably see their ad revenues fall but survive this crisis as they are lowly geared and have very low operating costs.
7. Veeva Systems. This is a little known company. Veeva Systems Inc. is a cloud-computing company focused on pharmaceutical and life sciences industry applications. Headquartered in Pleasanton, California, it was founded in 2007 by Peter Gassner and Matt Wallach. It works with software as a service in the global life-science industry.
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