Wow, what an absolutely crazy 2 months. That’s the only word I can use to describe the current situation in both the world and the financial markets. Prior to the crash which began in late February, I had already heard ripplings and rumours of how bad the coronavirus was going to be for the market. Certain individuals had told me about China shutting down, supply shortages, people dying, the spread. I also listened to a podcast by the Investors podcast link below about how crazy this was going to be for the market.
Despite listening to all of this, well… looking back I definitely should have done more. My portfolio was the following:
1. 60% Cash
2. 10% Gold (ASX: GOLD)
3. 30% Stocks (AD8, PAR, BTH, PPH, EML, CG1)
So not too crazy and not overally exposed to the market. What I did leading up to the market was move to approximately 20% GOLD from my cash portfolio. As the crash occurred, and I started bleeding money, I sold out of all my stocks in the 2nd week (thank god). Except for EML (which I should have).
So why am I talking about all this and what’s the point? Well from this absolutely crazy experience, I’m going to talk about what my plans are moving forwards and what I’ve learnt from this whole experience.
1. Panic Early and if you smell something wrong, dont be afraid to sell.
Simply put here, I should have sold earlier and heeded the advice from the experts rather than hoping I could make a 5% gain on a stock. Thank God, I sold in the 2nd week though.
2. When the market drops a shit load in one day (-20%) – don’t be afraid to buy the dip and sell the peak the next day.
3. Always have value at the back of your mind. I recently bought Afterpay at $8 after a massive drop, but sold the peak at $9.50 the next day. Afterpay is now at well…$20. And from my previous intrinsic calculation APT is actually worth around $17 (even though I haven’t updated it for a while, but they have definitely outperformed my estimates). GIven that they will now lose about 1 year of growth, $8 is still a SIGNIFICANT DISCOUNT
My Approach and thoughts moving forwards:
This is not the bottom in my opinion. The market has rallied in the last three days, due to the TRILLION DOLLAR STIMULUS. But overall we need to see a flattening of the coronavirus curve, before we can confirm that this is over. Will we get there? Yes… how bad will it be? No Idea. Is it possible to pick the bottom? Not really, that’s why my approach here is on the next dip where the SPX hits the range between 2000 – 2300 I will be buying for long term.
What will I buy? You can pretty much buy anything and it will go up… but my picks are:
1. AD8 – great company onto something huge. (~$2 entry)
2. APT – given I can get in at a good price. (~ $7 – $8 entry)
3. NAN – great biotech company ($3 entry)
4. MSFT – Not much to be said ($120)
5. CBA – Biggest bank out there ($40 -$50)
6. PNV – As per my past recommendations ( $1)
7. EML – Sub $1
I will hopefully if I have time do some DCF intrinsic valuations on these companies. But I will be looking to invest big in these. Now is the time for massive gains to be made. This kind of opportunity only comes once in a blue moon and must be capitalised on.
Please take care out there and it’s a crazy world. I hope we flatten this curve and beat this virus ASAP.