Musings about Life and Investments

https://www.worldometers.info/coronavirus/ I am not a pessimist. By looking at the infection rates rising on the left graph, and the death rates falling on the right, I know that ultimately the right side will rise. The western world is opening up their economies and I don't blame down. The world cannot shut down just to save a few. Ultimately, this virus will burn through the entire world's population and by end of 2021, perhaps about one to two million people will perish, over 60 million people infected. A vaccine will probably be discovered by end of 2020. But it may take a year to reach Singapore. https://www.bbc.com/news/health-52354520 This is where globalisation breaks down. Singapore thrives on globalisation, on the belief that countries will always trade with one another. However, we have seen countries closing their borders. We could not produce our own testing kit because we didn't have the manufacturing nor raw materials to do so. https://www...

AK Fallible used to be very bearish since Feb this year. They got it right that time, but didn't catch the rebound of 30% over 40 days. https://www.youtube.com/watch?v=3DjWWpSotaE They were very sure that the stock markets will fall below 23 Mar 20's level. However, they are not as bearish now. I actually will stick to my guns to say that we may have seen the bottom on 23 March. Of course, again I'm not 100% sure, that's why I'm not 100% invested. Heck, I'm only about 50% long into equities. I'll explain that later. Here are the factors for a V shaped stock recovery. 1. Financial support from the governments. 2. Virus will get less deadly after 1 to 2 years. 3. Vaccines and cure found within 1.5 years. 4. Herd immunity where 70% of population achieve immunity and the virus doesn't spread easily. Here are the factors that point to either a W or L shaped stock market. 1. second and third waves so forth of infections worldwide. Another ...

https://www.bloomberg.com/news/articles/2020-05-12/druckenmiller-says-v-shaped-recovery-for-u-s-is-a-fantasy Stan Druckenmiller said the risk-reward calculation for equities is the worst he’s seen in his career, and that the government stimulus programs won’t be enough to overcome real world economic problems. “The consensus out there seems to be: ‘Don’t worry, the Fed has your back,’” said Druckenmiller on Tuesday during a webcast held by The Economic Club of New York. “There’s only one problem with that: our analysis says it’s not true.” “It was basically a combination of transfer payments to individuals, basically paying them more not to work than to work,” he said. “And in addition to that, it was a bunch of payments to zombie companies to keep them alive.” On a relative basis, he’s as bullish on long-short strategies as he’s been in 10 years. “That’s partly because I’m worried about everything else,” he said. Druckenmiller was also bullish on Amazon.com Inc., saying ...

I've forgotten to add the following sector: 1. Banking / Finance. with the financial aid package which allows SMEs, private individuals to delay paying their loans, banks will likely get hit the hardest. The buck literally stops with banks. Their NPLs may shoot up in the short term and bankruptcies mount. Even with government aid, many highly leveraged companies may go bankrupt.  Banking: short term -8, longer term 0. Disintermediation of banks will continue even after this pandemic.  2. Insurance. Insurance premium payments may stop temporarily but insurance companies can allow the surrender values of the policies to be impacted short term without hitting the P&L. But there may be an increase in death payouts.  Short term -2, longer term +2.  Have I missed out any sectors?

Let's remove the element of timing. We value companies using DCF and relative PE, EV / EBITDA, price to book etc. But DCF, PE, EV / EBITDA is useless if the earnings of a company plunges to negative for 1 to 2 years due to the pandemic. Even price to book, which I feel is the most conservative and most useful to value companies without earnings, may turn negative if highly geared and one big loss wipes out all equity. A successful virus does not intend to wipe out the human host instantly, but mutates to stay in the host and infect more hosts. So my guess is the virus will become less deadly as the years passes by, until a new strain comes along to wipe out more people. However, habits and the way we live will change. Habits that will change after Covid 19: 1. WFH will be here to stay. Those sectors that pay workers by work will move to WFH. Employees, contractors will subsidise the employers' real estate and utility costs. I believe there will be several waves of infect...

I'm blessed with many friends. From my job, I've met many people who brought me under their wings to guide me, support me. Some became lifelong friends and my most ardent supporters.  Unfortunately, I've had a small number of people who choose to disrespect me, or do not respect my time and do not reciprocate my efforts of help. I chose to not respond most of the time. Negative comments do affect me somewhat, but not as much as they did in the past. I'm a lot more centred, focus on my purposes and goals in life.  Over time, I've learned to let go of things that don't benefit me. I've focused on making myself a better and more effective person. People either accept me for who I am, cheer me on, or slowly exit my life. It will happen more often in the next five years as I prepare for my next phase. 

You need the following qualities as an investor: 1. Unemotional. The best investment decisions are usually made when the news is the worst. It is probably the most uncomfortable decision you can make. Very few people will agree with your decisions. Fear is everywhere.  2. Able to accept great uncertainty. Similar point to 1. On top of that, the time to sell is often when it feels the best. Most people are busiest buying an asset. News media is usually extremely positive. You will feel like a fool selling but that is the best time to sell. According to Warren Buffett, "investing is like sex, it feels the best just before it ends." 3. Patience. After investing in a stock, it sometimes falls in price. But if you cut loss too early, you will miss the biggest upside. It is not a misnomer when research says that you should stay invested, because missing out just 10 of the best performing days could reduce your performance by up to 3 to 4 percentage points per year. ...