Interesting article
Author presenting various bear markets charts
Conclusion
It doesn’t matter when you buy, only that you buy."
One more interesting article
Author try to show effect of economic slowdown for few months and years on intrinsic value by few tables and try to show that market may be overreacting some time
Thanks
Full of wisdom on the current market and how to navigate through it.
Fantastic interview and much to learn on the asset allocation and stock market perspective. The idea about waiting for the 10% upmove should be heard again and again. This is where long term value investors need discipline.
But investment should not be done based on the optimism that some manufacturing will move away from China to India. Actally that contradicts slightly with his opinion that Asia managed this crisis well. I personally feel America will take this very seriously to move pharma and other critical industries to the USA to a resonable extend. Western Europe may also take a hard look at dependency on China and other Asian countries. So it is too early to say manufacturing will move to India. Also if the world thinks China did a good job with the virus containment (doubtful because they are removing journalists from China), then why should manufacturing move out of China?
It was a good learning about algorithmic trades and how it leaves common investors not time to protect the downside and benefit from the upside. Basically there is no time to act. But the good thing is algorithmic trades cannot catch multibaggers because they ride the uptrend to a pre determined upside of say 20,30,40,50% whatever.
I think Mr. Chokani’s surprise at the USD rallying is a little lost on me. He says because the US Fed is creating more Dollars, the Dollar should fall. This is true of a free market commodity, say tomatoes or crude or copper. But the USD is not a commodity in the strictest send of the word for those who are not US citizens. It is the preferred medium of exchange for settling international trade. The USD is backed by the US government, which is underpinned by the most powerful military and the most powerful and innovative economy, the most competitive companies and the least cronyism in the world. The US is the preferred destination for most freedom loving, prosperity loving middle and affluent class prople of the world (The poor do not care much about liberty, the rich can buy liberty anywhere). It has one of the strongest legal systems. The CHF and Euro and UKP might be powerful but they do not have the depth to settle international trade. The next is Yuan. I don’t think the world trusts the Yuan sufficiently for it to become the reserve currency. It will be so for the next 50 years. The USD becoming the reserve currency is not by accident, it has proven itself to be one over the century. WWI, WWII, 2008 economic crisis, and what not? So does he say the USD should fall? Let it fall to 50 INR. Many people will want to buy more USD.
So I expect after this crisis comes through, the USD will be stronger, the US stock markets over a period of time will be much larger, the US economy will lead everyone else into more innovative solutions. So except for the Japanese YEN almost all Asian currencies will fall against the USD. The world needs more Dollars. The affluent class of China and India needs more USD at cheaper rates to enable them to diversify their assets the the USA. So I see the USD becoming stronger.
How long do you think it will take for the market to recover from its current 33% loss?
But since we know that the “% Gain Needed to Recover 33% loss” is 50%, we can simplify this to:Expected Annual Return = (1.5)^(1/Number of Years to Recover) – 1
So, if you think the market recovery will take:
- 1 year, then your expected annual return = 50%
- 2 years, then your expected annual return = 22%
- 3 years, then your expected annual return = 14%
- 4 years, then your expected annual return = 11%
- 5 years, then your expected annual return = 8%
Even at 5 years for a full recovery, the market would be providing a return roughly in line with its historical average.
A mathematical perspective on when to buy and how much returns to expect. Great read.
The second article is too simplistic. When revenue becomes zero, the earnings would go negative for most of the companies particularly who have any sort of debt, since you pay salaries, interest etc (basically there are lot of fixed costs associated with businesses even if you keep it shut).
Beyond this, lot of companies will default if this gets extended, the scenario of 2 years zero earnings will lead DCF to zero for many companies and they will get shut down. As a equity holder one gets nothing as in the fire sale most proceed will got to debt holders.
Many will not be able to resume operations quickly due to chocking of working capital and lack of liquidity in the system. Due to job losses, demand might not come back as earlier.
So, just pray that this gets out our way soon…no DCF will work if this extends beyond 6-12 months.
This is a really nice video podcast with the team of Tweedy Browne & Tobias Carlisle with a very enriching discussion on different facets of value investing (net nets, GARP, cyclicals, etc.).
Very interesting article by Ben Carlson. Earnings are going to be tricky to predict in next 1-2 years but not forever for stronger businesses. Article is good food for thought on how to assess this uncertainty and evaluate impact in short term earnings volatility to the overall valuation of the business?
A nice presentation from Ashish Kila about how to think about different business models.
A nice presentation on valuations (specially the net net part).
And if you are really interested in net nets and deep value, I will recommend this video from Tobias Carlisle. The short summary of which is mean reversion is more powerful than persistence in growth, that’s why deep value tends to outperform GARP over a long period of time
Nice video about Chennai’s (Madras) history with respect to finance.
@suru27 and I have gathered our thoughts on current situation. Hope this is useful. It also contains detailed analysis of 2008 crash and how it panned out after that in terms of recovery.
An interpretation of Manish Chokhani speeches
Great session by Rajeev Thakkar of PPFAS
This is a wonderful interview of Pierre Lassonde with Kiril Sokoloff (under real vision paywall)
The short summary is about gold as a commodity, taper currency, long term charts of Dow Jones vs gold (specifically its mean reversion characteristic), and owning gold royalty companies (Franco Nevada, ticker: FNV) against gold miners.
Unless RBI directly buy bonds, liquidity push through banks is not going to help for poor guy who need loan to survive!
Good article i found on the net.Can be used to analyze many of the stocks available and how the economy may pan out.
Hopefully things will improve after a while.