If our inflationary state is somewhere between near zero and deflation, there is no long term penalty for holding S&P 500 short. While I wouldn't hold SH for 20 years, it seems like an excellent fit to leverage a cash buffer in current market conditions. As of this morning, I currently hold no calls, PSQ, or SH. IOW, I'm in a positive position. I don't feel positive about the market, though. It appears we are in for a pretty big dip this summer.
It's becoming clear there is going to be an ultra-low speed train wreck in the REIT sector. I don't know how deep the impact will be but we can see it coming 2 to 6 months out. Anyone interested in getting into REITs should be on notice. Even our hospital REIT is affected. I'm surprised at how many municipalities and governments are in arrears.
After 6 weeks without a case, Wuhan has 3 new cases. Their response is to commit to test every resident of Wuhan, all 11m people, in the next 10 days.
Testing is nice but it will not stop the pandemic, in Belgium we have a population of 11.5 million and we have +9000 deaths. We are opening businesses and schools partially since this week and we have to wait for one more week to see the results but we know that only 6% of our population have resistance .... Positive is that our healthcare has proved that they have more than sufficient capacity. No Italian or New-York situations in Belgium.
At this point, our portfolio is down a bit from it's two peaks. I see nothing but negative macro factors for the next two or three years. It's difficult to believe we could pull out of this situation without tremendous negative economic impact. So, we are sitting on our cash, DRIPs off, with a heavy majority of our net worth in a market that is heading downward. This is when you find out how much you believe in your investment strategy. It turns out, I believe in ours a whole lot. Everyone is talking about a massive gdp hit, tremendous business loss, big unemployment that is unlikely to return to previous levels (perhaps ever), and a strong economy that will bounce back. I think some of these discussions are seeds for self aggrandizement down the road. No matter what happens, they will say they predicted it. Even the straight shooting, market dominating, Cathie Wood is doing this. I'm going to continue to do what I always do in the face of uncertainty: nothing. I've made a few short term plays to add quite a bit of cash and we've had three rounds of dividends from our monthlys and one quarterly payment, since our last major stock purchase at the start of March. I'm sharing this because I value objectivity above all else. At the moment, I do not have a clear view of what is going to happen. This happens to everyone but almost nobody will admit it. So, I'm hanging onto companies I believe are strong and will survive this crisis while all re-investment is halted. The thought process is identical to when we originally purchased these companies: What will these companies look like in 10 years? The thought process on the cash side is: Super low rates, all clear investment opportunities have been exploited to our risk tolerance, so the only choice is to let the cash just sit there.
The governments worldwide created an enormous amount of money to deal with this crisis, so it is fair to accept that the value of money will decrease and consequently we will need more money to purchase the same items ..... That is the reason i am still fully invested.
At the start of this year, we had 7 distributing companies in our portfolio. Three of them were high yield toys, distributing little because of our small holdings. Those three cut their dividends in March. One of our mid level holdings cut it's dividend in April. This morning, the last of our mid level distributors, a financial, cut it's dividend. It was responsible for 12% of our monthly income. We are left with our two core holdings, which are by far our largest, still distributing strongly. Of these last two, I'm not confident either will continue distributing unabated. At some point, we will likely be exposed to further impact because both had poor Q1. We will see. Very few companies cut their dividends in the 2008/2009 GFC. Now, there aren't a lot left.
I have 21 American distributing companies in my portfolio's, these companies count for about 20% of my investments. 60% of my investments are British trusts and all of them have substantial reserves and are able to pay dividends at least for one or two years, all of these are down about 15-20% since begin this year. Rest of my stocks (about 20%) are European, Asian, Canadian an Russian stocks. That 's for today but each one who cut it's dividend go out over time because i believe that companies must have sufficient reserves for bad times.
I'm not sure why I didn't get to this earlier, and I assure you I'm not trying to insult anyone's intelligence, but... Any instrument between you and the companies you want to own is an inefficiency. For example, buying an energy ETF is not the same as buying a basket of ETF stocks. Look at the company managing that ETF. How do they pay for that large office building full of people? Money comes from companies that provide a product or a service. Every financial vehicle is a parasite, on some level. There is justification, in a couple of cases, for having a middle man. For example, Vanguard S&P 500 index fund. It does not track the S&P 500 with perfect accuracy. It can't. They have bills to pay. Tracking error is always a loss for the unit holders. Bond funds are not the same as holding bonds. They cannot be, unless they are administered for free.
I am just realizing, few people can comprehend what a depression is. We could be in a depression, right now. We won't know for a couple of quarters. We are not yet in a recession but there is a 100% chance we will be. A recession as defined by two successive quarters of negative GDP growth. Recession was defined in the 80s to mislead people into thinking we aren't doing as bad as we think. The economy can collapse, and we can have no or micro-growth and yet not be in a depression. In short, the definition is bullshit. I'm not aware of a specific, technical, definition of depression but it is a prolonged period of low economic activity. Here is what the younger folks don't understand. When we are in a real depression, there is no money. If you count on money flowing through the economy to survive, you are now in a period of denial. Whatever you want to do, the answer is no. Projects that seem obvious and desperately needed do not get done. Everything stagnates. I believe we will not see another depression like the 1930s but I do not say this conclusively. The basis for this conclusion is that we have more advanced fiscal and economic policy than they did back then, but this is only partially true. In some ways, we are more barbaric then they were. There is a reasonable chance we are headed into a depression. This is one of the reasons I am holding onto cash.
I agree with you about a depression. BUT.....I am researching good companies to buy in the next year or two. My job is "essential" (for the moment at least) so I'm preparing to live on as little money as possible just so I can go fire-sale my little black heart out the next couple years.
I'm not certain there will be a depression but there is 100% chance of recession. The thing about a depression is, once it's under way, it's too late to put together a bunch of cash to weather it. That's one of the reasons we are letting our cash build. We can still spend perhaps 10~15% of our portfolio value that is currently in cash but we certainly won't be spending it all until it's clear we are not in a depression.
I've share some pretty granular detail on using Yahoo Finance but I don't think I've shared my workflow, before. It's pretty simple. - I keep a list of stocks we follow on Google Sheets. It looks like this. Sorry it's so ugly with the word wrap and bad spacing. In spreadsheet forum, it's nicely organized and columnar. Everything from Yahoo and to the right comes from Yahoo Fiance. Everything left of Yahoo is Google Finance. Category G Symbol Y Symbol Name Own Date Currency Quote Delta 52w Low 52w High Shares Volume PE EPS Beta Yield Yahoo EX-Date Earnings Date Div Frequency FX TSELR DLR.TO Horizon US Dollar Currency ETF FALSE 2020-05-28 CAD $13.94 0.02 $13.09 $14.83 10805913 249848 #N/A #N/A -0.25 #N/A None DLR.U DLR.U Horizon US Dollar Currency ETF FALSE 2020-05-28 USD $10.11 -0.01 $10.10 $10.16 10805913 207345 #N/A #N/A #N/A #N/A None - Periodically (used to be once per day but now it's about once per week or whenever I want a current market evaluation of our portfolio), I cut everything out of the Google Sheet and paste it into a local spreadsheet that holds nothing but market data. - The local spreadsheet does quite a bit of processing on the Google info. This spreadsheet is my gold standard. - My portfolio spreadsheet is seperate from the live market spreadsheet. They were too large to be manageable as one so I split them. I like the idea of separating them. - By having the market data spreadsheet separate, I can substitute values from any month (I archive these spreadsheets monthly) to restore our portfolio to a "point in time". I've found this useful several times. Notes: I wrote an extensive system on an SQL backend with a bunch of C++ code to process SOUP transactions and provide a Qt based front end (in client/server design). It was built on the Yahoo Finance API, back when that was a thing. It was also built on a couple of other APIs that were both short lived. I loved that system, for a while. It seemed like a huge competitive advantage. That system was abandoned due to install complexity. Each time I get a new laptop or when I have to reinstall my PC, I end up having to install and configure a ton of stuff. It took a day, every 18 months. With spreadsheets, I get a new system, install LibreOffice (I have MS Office 365 but vastly prefer LO), restore some folders, and I'm in business. Using this system, I can have a new system up and providing an investment console (and all my other needs) within 30 minutes. What's more, I can take it with me when we travel as there is no server requirement. These days, I keep things simple.
I like that we're setting new highs with our portfolio but with the WBI at 143% and unemployment at 15%, I'm in no rush to go all-in on this market.
Hi Tom, What is happening in the US , do you have a civil war on your hands as our media is writing? What will be the consequences for the stock-market?
It is not a civil war, but there are mass protests going on right now. Apparently futures are flat. Like anything else, the american stock market will continue to be propped up until, at earliest, November 2020. All my opinion of course.
