The current situation in the markets is really something else. The world went last week into a correction mode and trillions of euros in value have been erased from existence. My own portfolios suffered immensely. My speculative portfolio lost almost all unrealized gains from this year. My dividend income portfolio was up to 16,47% in the red zone. Now it recovered slightly and is at around -12%.
So the big question is of course whether that was already it and whether it’s time to load up new shares?
Greed and patience are a tough combo
The smartest investor of our lifetime, Mr. Warren Buffett, teaches us to be greedy when others are fearful. But he also teaches us to be patient. Those two attributes are hard to combine and it’s even more difficult to give any recommendations at this point. So let me just tell you what I am doing.
I look at shares that have been beaten down to their lowest point within the last 5-10 years, but which I still expect to be around for a long time to come. And this is now mainly the travel industry.
Airlines, hotels, REITs with a focus on hospitality-related venues. These have been early identified as potential victims of the spread of the coronavirus, and thus were first to suffer the largest losses. Personally, I intend to buy today some shares of the German airline Lufthansa (DLAKF) and for my account in Thailand shares of the Hotel conglomerate Minor International (MNILF). But it will be only small purchases.
We had a correction. Not a crash.
I am not buying larger stakes of anything yet, because this last week just didn’t crash strong enough. This was a smaller correction, not a crash. Therefore, I consider these small purchases pretty speculative. There is a good chance that the worst is yet to come.
To sum it all up, personally, I think that it’s too early to get really greedy. Of course, it’s just an educated guess. The virus just started spreading across the globe, we can’t trust the numbers that we get from China, and the potential damage to supply chains, travel restrictions, etc. are yet to be revealed. All of this will have an impact on markets and worldwide cash-flows, revenues, and ultimately profits.
So even for those who do not want to lose out on potential opportunities that may have arisen during the last week and who decided to put some cash to work, it’s probably the smarter move not to go all-in at this point.
Disclosure: I intend to purchase stocks of the companies mentioned in this article during the next 24 hours.