Portfolio year-end evaluation

As the year is coming to an end, it’s time for a portfolio re-evaluation. I do this every year in order to determine what I did good, bad, or just wrong, and what I can and should do better in the next year.

Keeping a cool head

I wrote it many times. When it comes to investments, you need to keep a cool head and take emotions out of the equation. You need to stick to your thesis and know that you’re in for the long run no matter what. But this is easier said than done.

When your shares are moving up for a while and you see your profits surging by 20%, 30%, or even 50%, you might feel the urge to sell your shares just to make sure that you can actually keep that profit. I call this phenomenon “negative greed”. It’s greed because you want to keep the profits, and you want to make sure that your account gets credited before anything happens to it (like another downturn in the market). But it’s “negative” because once the shares are sold, you have obviously no more shares that could grow even further from there. You secure profits, but you lose chances for more profits.

Similarly, when your shares are moving down, it’s hard to stay cool while watching your account going negative into the double digits. When a recession hits and all you can see is a screen with red numbers on it, thoughts will crawl into your head. Thoughts, that question your decisions, making you wonder whether that whole thing is just a big scam that you fell for, and that you should have better listened to all your non-invested friends who think you’re nuts for being an investor.

On both counts, I did quite well in 2020. While I experienced all the emotions and drags as described above, ultimately I kept a cool head. The only shares I sold were those of Apple (AAPL) after the stock-split. They soared by over 150% and I sold some to be able to buy a few new shares of other companies which I considered to be good opportunities. What did I buy?

New investments

  • Wereldhave – A dutch shopping mall operator who suffered dramatic losses in its share price in recent months and who is due for recovery once this whole Covid drama is over
  • Starbucks – The company is showing over and over again that it’s one of the best in the market. The pandemic didn’t hit it as hard as one would have thought, and it will come out stronger in the aftermath
  • Veolia – After watching a documentary on Netflix about drinking water (the show is called “Explained”, highly recommendable) I decided to start focusing more on water-related investments

I also started a savings plan into an ETF. It’s called “Xtrackers MSCI World Information Technology UCITS ETF 1C” and it’s focused on tech-investments world-wide. 100 Euros a month that have started to flow into this ETF, completely paid by the dividends I receive each month.

One more word about Wereldhave. I had this company in my portfolio in the past, and I sold it at a loss when they cut the dividend and when the covid crisis hit. But I kept it on my watchlist and observed the stock movements on a weekly basis. When I noticed that the stock stopped moving further down (after dropping more than another 50% since the time when I sold them) and the company announced a new management team as well as a full restructuring of their business model, I got back in. The shares are now up 40% since I bought them.

Dividend growth

In terms of dividends, Starbucks and Veolia will contribute to my annual income in 2021 as they both pay stable and each year growing dividends. Wereldhave used to pay a strong dividend until the crisis hit. They canceled all dividends in 2020, and I don’t think the company will be able to pay out any dividends in 2021. I expect them though to start paying dividends again sometime around 2022.

My dividend income shrank in 2020 compared with 2019. This was mainly due to my largest and also most disappointing investment: A company called Aurelius (AULRF). It’s a business development company (BDC) which I purchased back in 2018. It was showing not only superior growth opportunities but also had an amazing dividend yield, and since 2018 it developed into my single largest holding position.

Unfortunately, it also became my most disappointing investment. The share price dropped by almost 70% and the dividend was cut down to zero in 2020. However, in the last couple of weeks recovery started to kick in. My losses are now at -56% and given the recent business reviews, I am quite confident that shares will continue to tick up. Also, the dividend should recover in 2021. But I admit, this one is my single largest nail-biter.

Overall it looks like my dividends year on year will reduce by some 11,60%, and this despite the growth of my total invested cash by 8,99%.

Monthly passive income

The total decline of dividend payments by 11,60% is obviously not great, but overall, my monthly passive income remained largely stable. My total dividend yield on investment came down to 3,22% from 3,97% in the year before. For 2021 I expect it to move back up into the 3,5% to 3,9% range.

Considering the scale of the covid crisis, I see my thesis of investing and putting money to work in the stock market confirmed. And 2021 is almost guaranteed to produce similar or better results, with most stocks set to soar once the vaccine distribution starts kicking in.

Putting the Business Roundtable to THE test

Capitalism. The most successful economic system in human history. With all its flaws, no other system has generated more wealth and elevated more people from poverty to riches. But like every other system, it’s designed and managed by humans, so obviously it will be full of flaws. And there is no better place on earth to observe these flaws than the United States of America.

The richest country on earth, with huge conglomerates and companies that are homes to the richest people on the planet. But after just a month of shutting down their business, these capital behemoths are already asking their government for bailouts.

adventure backlit dawn dusk

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The importance of emergency funds

Financial advisors usually teach their clients about the importance of emergency funds. Rule of thumb is to have 3-6 months of expenses allocated in an easily accessible deposit account. Whether it’s cash or short term, high-yield savings accounts. Whatever. Point is, that if you lose your job or if there is any other reason for why your cash-flow will get suspended, you should have a quick and easy way to access that cash. So even if your life does get disrupted, you can take the time to fully focus on getting back on your feet.

It’s obvious now that such lessons would be also critical for companies, especially the larger ones. As doors are being shut and balance sheets shattered, mass-unemployment is on the rise and demands for government support is increasing. Again, we are only a month into lockdowns, which may easily extend by another month or two.

Should governments bailout companies?

Governments around the world have responded quickly with stimulus packages, low-interest loans, grants and even direct cash payouts to citizens. I honestly don’t know and can’t think of any other solution for now. But it’s ironic, and funny enough, that even a country like the US, which is currently being led by the republican party, jumps in with help so quickly.

The republicans. Everything they are doing now is against every core principle of how capitalism should look like in a country that devoted itself to that system. Why should the government bailout unsuccessful businesses? A company that fails within as little as a month of trouble certainly can’t be called “successful” or “sustainable”.

Keeping an unsuccessful company alive just to preserve some jobs makes no sense. Wouldn’t it be better to restructure the company or to let it go bankrupt so new, smarter and better competitors get the opportunity to fill the void?

The only way I could imagine this to make any sense is if the government would see opportunities in the business for itself. Then it shouldn’t give any grants either, but rather take a stake in it.

By taking a stake in a company, the government can ensure the operations can continue and support a larger restructuring to put it back on feet. It can also keep better oversight to make sure the money goes to where it’s supposed to go to. Does anyone really believe that stock buybacks and CEO bonuses won’t happen in 2020, while employees are being laid-off, or staff salaries and benefits cut?

I am not alone with this this idea. It has been also supported by Mark Cuban and other prominent voices, who by the way might come up as an independent candidate for the presidential election in November.

The real strength

I think I heard the quote from Howard Shultz:

“It’s very easy to lead when things are going great. It gets really hard when you get headwinds, disappointments, and people are telling you that you’re in the wrong way.”

As of now, the headwinds are really strong for all of us. But it’s also an interesting and exciting time, becasue as investors, right now we can observe easily which companies are on the right track, which can endure hardships, and which have sound business strategies designed to go beyond their quarterly reports and dividend distributions.

We can (and should) also observe which companies have the strength not only to navigate through this crisis but to do so by simultaneously supporting their stakeholders. Keeping employees is just one part. Business partners are another piece of the puzzle. And yes, asking for taxpayers money is also a factor.

Being financially strong means, in my humble opinion, to not need to rely on anyone coming to rescue. Not only that but also to make a point that even if one would be eligible to get benefits, grants or subsidies, this money should be rather distributed to those who really are in need of it.

Putting them to the test

Less than a year ago the Business Roundtable declared the end of shareholder primacy and a stronger focus on stakeholders. There won’t be a better time but now to see who of those who signed the paper really meant it.

The best statement on paper is only worth as much as our actions tell. In good times, and in bad times. The world will be watching.

Is this THE opportunity for the next decade?

People were talking about the possibility of an economic collapse for a few years now. Over the last two or three years, whenever I visited a bookstore (yes, I do that) I saw countless books from economy professors, advisors, and other professionals talking about the next crash. I read some of them and I agree that there are many valid arguments that could justify a market crash. But I don’t ever recall reading anything about a possible impact of a pandemic on the world economic system.

wood black and white office business

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I should probably have read the “Gates Notes” more often. Bill Gates is obviously a guy you want to follow. He is smart, he is rich, and he likes to share his ideas. And yes, we should always be open to learning from the best, whatever our personal opinion about that person might be.

Bill Gates had a Ted Talk back in 2015 presenting a simulation of a very comparable scenario and urging governments worldwide to invest more into possible preventive measures to fight such a pandemic. His experience due to his work at the Gates Foundation together with his experience in the software industry gives him a unique set of skills that qualifies him to make valid assessments in this field. Additionally, he is well known as one of the richest people on the planet. So if anyone could grab some attention on this kind of topic from governments across the globe, it would be him.

He wasn’t as successful as he hoped for, so the Gates Foundation followed up in 2019 with the support of a simulation of such an event. The target was to highlight the impact of a pandemic event on every possible part of society, economy, politics. For those interested, search online for “Event 201”. It is quite impressive. Most things that were simulated during this event are right now developing “live” pretty much according to that playbook.

While some are already bringing up conspiracy theories, the truth is that this is just what scientists do. This is the power of science. A few smart people, computing power, and big data make it possible to foresee and to predict possible events, impacts, effects, and results. Those who see conspiracies at play here are those who don’t understand science.

So while the President of the United States of America keeps repeating that no one could have seen this coming, the truth is that many people did. They just didn’t have the audience, they didn’t get the government support, and they didn’t have access to the cash required to prepare the world for what we have to get through now. Even for Bill Gates alone, this check would have been too large.

Back to the markets

But enough politics, let’s get back to the markets. My income portfolio is currently down 40%. That hurts. My speculative portfolio is down 34%. My portfolio here in Thailand is down 35%. It’s looking not great. And all of this happened only during the last 4 weeks.

So what am I doing? I am losing lots of sleep. Not because of the losses on paper, but mainly due to the time I am spending now on analyzing where I am going to invest next.

I don’t want to rush into it, especially as I think that this recession (yes, we got into a recession by now) might hold on for a little longer. But, as soon as the virus situation starts clearing up markets will start to recover. And there are lots of companies out there that will get back on their feet.

The big question & the strategy

The big question is of course which companies will get back on their feet faster and stronger than others. And while I am analyzing and working on this almost daily, there is a simpler alternative for everyone who doesn’t have the time and knowledge to do that: Index ETFs.

It’s almost impossible to time the market. I don’t know when the lowest point will be reached. No one does. The recession could hold on longer. It could also end as quickly as it started. History has just no precedence to compare this with.

And this is what makes Index-ETFs so attractive. Instead of picking a company, I trust in the market. I intend to invest half of my available cash in just two ETFs. One ETF focusing on small & medium-sized companies in Germany. And another one focusing on major dividend-payers in Europe. I don’t buy them as a one-time investment. Instead, I set up a savings plan that will stretch over the next 8 months putting in equal amounts of cash into each ETF every first day of each month until the end of this year.

The second half of my available cash will be distributed in US and Thai stocks. I can’t say yet which companies I will choose, but to give a direction, it will be mostly in the technology sector. Software. Digital payments. Digital marketing. Telecommunications. But I am looking also at some companies that offer essential services, like food, water, energy, waste management. If anything became clear during the current crisis is that in any event, these are the companies that will sustain their operations (and cashflows) the longest.

More updates will follow soon. But no matter how the next few months will turn out, I see this as a great opportunity. I might of course also be wrong, but if I am right, then this will give my FIRE goal the kick that comes only once every few years.

Unchartered Waters

Things are looking grim. As economies across the globe are setting record after record on rescue-efforts for companies and individuals alike, more people get infected and are dying by the hour. Here where I live in South East Asia, things look currently like this:3580795

But, this is not a medical blog, it’s about personal finance. So let’s talk briefly about the spread of the virus as shown above, and what it means for our personal finances.

Unemployment is on the rise

Two weeks ago, I had one of the most difficult moments of my entire career. I sat down with 25 team members, explained to them what is happening with the tourism industry, and then told them that I have no choice but to let them go. They were not full-time employees with my hotel. They worked for an outsourced supplier on a temporary contract. I worked with them since the hotel opening last year and they proved to be a dedicated and hard-working team that would always do their best.

And yet I had no choice. With the operational losses mounting up day by day, a full hotel closure became a realistic expectation, which would put all of my 60 employees on the street. No matter how many tears I would shed, there was simply nothing else left where I could cut costs to keep the ship afloat.

It was hard. But I also know, I am not the only one. In my area here in Pattaya almost 20 hotels already closed their doors. 20 hotels that I know of. On top of that, bars, restaurants, coffee shops, massage parlors. Empty. Thousands of people are now either unemployed, on leave without pay, or on leave with reduced salaries.

In the USA, last week alone more than 3,2 million people filed for unemployment – within a week! Just imagine that. A country that just celebrated being once again the strongest economy in the world, had a sudden jump in unemployment by the millions.

The same is happening all across the globe. And my industry is being hit the hardest. Hotels, restaurants, and bars employ 1 out of 10 people worldwide. We are the single largest employment industry across the globe. And we are being hit the hardest by people staying at home.

No Money, No Spending, No Income, No Taxes, No Profits

Don’t get me wrong. We need people to stay at home. Because we also can’t afford to get sick. Most of us work on minimum wage. Many of us have limited or no insurance. And many of us have no savings. No financial security to speak about.

This means that once people are sick and unemployed on a large scale, they obviously stop spending money. This leads to other businesses losing income, scaling down and ultimately profits across all industries start to dwindle. If this lasts for as little as even only a few weeks, chances are high that this turns into the beginning of a recession.

No money means no Spending. No spending for some means no income for others. This will result obviously in no taxes paid and cripple public budgets. It also cripples private businesses cash-flows and profits. Investors will therefore start observing a lot of companies losing value. Stocks start to slide and portfolios turn red. Except in China, where the colors for positive and negative are reversed.

Unchartered Waters

We had recessions before and so far, we always found a way out of it. After every recession there was a bull market that would usually rise higher and beyond expectations.

History is a great advisor, but there are no guarantees. There are just so many things that we don’t know. We don’t know how long this pandemic will endure. We don’t know, how a shut-down of the economy on such a large scale will affect our economy in the long-run. We also can’t reliably estimate which sectors will be dragged down together with the most obvious losers.

But there are reasons to be optimistic. Every recession is like a clean-up. Bad and mismanaged companies get quickly in trouble and are either bailed out or forced out of the market. Great companies adapt, adjust, and come out stronger than before. The clean up also creates ample space for new players and new competitors. This is why markets usually come back stronger and better after every crisis.

So let’s stay positive, observe, and get ready to continue investing. Preferably, when some stability comes back to the daily news, and when expectations from all market participants start to become a little less speculative, and more solid instead.

Panic has never been a good adviser

The coronavirus is now officially a pandemic. A serious threat not only to human lives but also to the world economy, to our health system, and yes, even to our financial system.

As the virus spreads further, entire countries are closing borders, schools are closing doors, events get canceled, elections move online. People get scared to go for a beer to their local pub. Even the premiere of the new James Bond movie has been postponed!

So the ultimate outcome, and changes to our lives, possibly to the world, it’s all very uncertain. And nowhere is this uncertainty better reflected than in the stock market. Having crashed almost on a scale comparable to the financial crisis of 2008, we can see the negative sentiment of investors on full display.

Where do we go from here?

After three weeks of markets being basically in free-fall, the last Friday showed something of a possible turn around. After the US-President decided to declare a national emergency and at least showed something more of seriousness about the situation, confidence seemed to return to the markets and stocks recovered some of their losses.

But is this enough to start a full-scale recovery? In my humble opinion, it’s still way too early to even think about it. Not only does the response from the White House lack enough credibility to be trusted and to trigger a sustainable recovery. Even more importantly we will need to see some real numbers before the full impact of the crisis can be assessed. What numbers am I talking about?

  • Lost revenues
  • Lost jobs
  • Recovery costs
  • Updated annual forecasts (for everything)
  • Dividend payouts and dividend cuts
  • Repercussions on globalization as a system
  • Political repercussions

That’s a lot of data to digest and I don’t dare to predict how long the evaluation of it may take. And I am not alone there. Markets tend to react quickly to possible opportunities because there are plenty of speculative traders who are willing to take a risk to bet on the direction which they consider more plausible. But more than often these emotional and non-data driven speculations go wrong. It’s a 50:50 bet.

Don’t panic. Analyze. Invest.

Therefore, I wouldn’t be surprised to see some additional bad weeks ahead of us. The short spike-up which we observed on Friday could turn out to have been only a short-sighted flare of hope from some speculative investors betting on a turnaround, ahead of having done the required due-diligence and analyzing some real numbers.

For us private investors it’s a challenging time. First of all, we got to keep a cool head. Panic doesn’t help. As my personal portfolio has lost over 30% in value, I haven’t lost any sleep about it.

First of all, the loss is not real until I actually sell the shares. Until then, it’s only a loss on paper. And do I have any reason to sell my shares? I don’t think so. All the stocks in my portfolio have been bought for a reason. While the dividend payments might get cut or even fully canceled for a year, as long as the business itself doesn’t face an existential threat, I don’t worry.

Secondly, markets go up and down. That’s what they do. We had an 11-year run-up and it might be time for a turn-around. Will this turn-around last forever? Very unlikely. Bull-markets are followed by bear-markets and vice-versa. Do I, or my generation (I am from Gen X), need to worry? Very unlikely. I have still plenty of time ahead of me and will almost certainly see more recessions – and more recoveries.

Lastly, I am an optimist, and what I see is a great opportunity to continue building up my retirement portfolio. Even if we should have now entered a bear market and a possible recession. All I see is companies and businesses, learning to adapt, getting more efficient, improving their resilience and tweaking their operational proficiency, to come out even stronger once this bear market will be over.

So don’t panic. Analyze. Invest.

Is it time to get greedy?

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.

Stocks are crashing. What now?

The last week was the worst week for a few years. Throughout the entire week, there was not a single day that the markets would have gone up. Everything was crashing. Tech, utilities, income. My personal account with dividend/income stocks is down to -16,47%. My speculative portfolio was 40% up just the week before and is now back to a mere profit of only +0,16%.

So what now?

The answer is pretty easy. Nothing. I am not selling anything. I don’t sweat in fear. I don’t panic. The only battle I have right now is in my mind: When to buy the next batch of shares.

I have transferred some additional cash to my stock account and will keep it there for a few days, or maybe even weeks, with the aim to pick up shares of my already purchased companies when they get to a point that I will consider them to be undervalued.

Quality first

JFK famously said, “a rising tide lifts all boats”. Well, this also works the other way round. But while a rising market benefits preferably speculative stocks which rise on hopes and expectations, a falling market will test and distinguish the quality of your picked companies within your portfolio.

While all stocks are likely to fall, the quality ones will fall less dramatically. These are the stocks that you should keep in mind for a re-purchase because after the fear is gone, they are more likely to recover or climb even higher much quicker. Companies of lower quality might fall further and are statistically less likely to recover at the same pace.

The long-term investor’s playbook

So the recommended approach now is this:

  • Don’t panic.
  • Don’t sell.
  • Keep it cool and use the opportunity to identify your quality shares.
  • Get some cash ready. Wait for the fear to diminish.
  • Add more of your quality shares at the best possible value.

Happy investing!

To space and beyond!

Investing in the stock market always involves risks. In financial jargon, we have something called a “magic triangle”. It describes and shows the relation of the three cornerstones of any financial investment: Profit, security, and liquidity. You can never have all three maxed out.

The more your investment tends towards one cornerstone, the less the other two will get applied. I.e.: An investment with a high return (profit) will offer less security and fewer options to get to your money if you need it (liquidity). On the other hand, a highly liquid investment with a safety margin will usually offer a significantly lower profit. You get the picture.

Taking a hit

Why am I bringing this up? Because I just took a strong hit and realized a loss of almost 2000 Euros on my investment in the Dutch REIT (Real Estate Investment Trust) Wereldhave (WRDEF) The shares are caught in a downward spiral for a couple of years now and after two dividend cuts and a decline of almost 65%, I have decided to get out of it.

Frankly, I got out way too late. I should have acted sooner but I still had the expectation for a rebound. I was also quite comfortable with the high dividend yield of 10% in the first year, and still 6% after the first dividend cut. But the second dividend cut would bring the yield down to only 4%, with a perspective of even further reductions down the road. It’s just too many negative points that piled up.

Moving on

2000 Euros is a lot of money. But, I had no feelings at all while exiting the position. A key factor to success in investment is emotional control. It also helps that I have enough other stocks to balance this loss. Especially the recent run-up in Apple (AAPL) was of great support on that front. My Apple shares are up 96% and I sold a small chunk to make up for the loss and to spread/diversify my investments a little more.

Also, as some readers might remember, I had another great success story. My investment in Virgin Galactic (SPCE) as recent as only 2 months ago, back in December. While I invested only a tiny amount of 270 USD (250 Euros), the company had a stellar run for the last 2 weeks and is up 242%, meaning that my investment more than tripled, almost quadrupled. I bought in 25 shares at 10,57 USD and sold yesterday 8 shares at 35 USD. Of course, it’s not enough to balance the loss of 2000 Euros, but let’s see where this goes. With the sales of 8 shares, I already got over 100% return on my investment and I still kept 17 shares for whatever happens in the near or distant future. Several analysts see this company already as the Tesla (TSLA) of space.

Exciting times.

Disclosure: As mentioned, I owe all the stocks mentioned in this article except for Wereldhave (WRDEF) which I just sold.

Video Calls are… lame?

In the last 10 years or so, technology was (and still is) one of the main drivers of entire markets. Technology companies rule the stock market and our lives. Anti-capitalists like to point out that the idea of never-ending growth is a failed concept as our resources are limited. But technology is the solely needed proof that there are indeed no limits.

We constantly discover new ideas. We re-define processes, constantly improve efficiencies, and discover new connections and dependencies which allow us to disrupt and re-imagine entire markets. This process will never end, it’s part of who we are and I am a firm believer that our creativity has no limits.

Having said that, there are occasional trends in technology popping up which might be divisive, or, let’s call it interim solutions. One of those current trends: Video calls.

I hate video calls

Yes, I admit it. I do video calls sometimes. They may be useful or even necessary for conference meetings and business purposes. They are great to contact your loved one when they are far away and you really want to see their face.

But turning all calls everywhere into video calls is just super-annoying. It’s almost as annoying as all those Instagram accounts where people are posting filming themselves talking into their phone-cam.

First of all, it’s already annoying to have people in a restaurant, gym or hotel lobby being constantly on a normal phone. Seriously, being on the phone in public places and pushing your voice on everyone in the room is not always a pleasure. When you add a video to it and turn on the speakers of the other person, this annoying factor doubles up.

Secondly, while privacy might be already dead, it doesn’t mean that you and the person you speak to NEED to share all your thoughts, ideas and issues with any stranger who is around. In terms of business, this can even be seriously dangerous.

Third, respect at least some privacy of other people. As soon as you turn on a camera, you will immediately display locations and faces of all those people around you, and with the current technology and very lax data protection, this information can be easily exploited and utilized by other parties. Facial recognition can already track and allocate names, faces and locations in any stupid Facebook or Instagram pic without you even knowing that you might expose other people to potential harms. From jealous girlfriends tracking their boyfriends (or vice versa) to criminal elements who might want to break into your home while you are on vacation. Yes, as a hotel manager I am always telling my guests to not post pictures until returning home. Why would you inform the entire world that you are on vacation a thousand kilometers away and your home is standing empty and ready for a heist?

The demand for video will grow nevertheless

But still, my voice may not count for much here and I am quite sure that the demand for videos will keep increasing in the future. So how can investors profit from this development?

The most popular company in the world for video calls is Skype, which belongs to Microsoft. Given how Microsoft evolved in recent years, it is certainly not a bad investment and I don’t see anything that could disrupt its business model any soon.

But for those who are willing to take a little more risk into account, there is another emerging competitor: A small company called ZOOM Video Communications (ZOOM). I have it on my watchlist and plan to purchase some shares next month. The easy-to-use software is miles ahead of Skype in terms of picture and sound quality and is becoming increasingly a favorite for start-ups and SMEs to work with.

However, as with every small player, it’s still hard to predict how the company will develop and investors seem to be torn at the moment. The shares are being publicly traded only since April last year, and the share price is bouncing up and down between 60$ and 100$, so it’s nothing for the light-hearted. Personally, I am also expecting the share price to come down a little bit before I will initiate a first small position.

ZOOM doesn’t pay a dividend, but if their concept will prove reliable and profitable enough then it will happen sooner or later. There is also a chance for the company to be taken over by a larger competitor, which could increase the value of the company exponentially. Therefore, I consider an investment in such a stock as a calculated risk and I will usually not put more than 300-500$ into such stock.

If it doesn’t work out, my losses are limited. But if the company turns out to be a winner, the resulting profit can be significantly higher than even 10 years of stable dividend payments from a dividend stock. The risk-reward ratio is worth consideration.

And if it turns out to be a winning stock, then I might reconsider my opinion about video calls. At least I would give them some credit for financing my early retirement.

New Year’s Optimism

The first month of any new year tends to be great. Not only does it feel like a fresh start, but it also helps us to draw a line, to make a clear cut, and it reminds us that it’s never too late to start over. This psychological and ever-repeating pattern also shows on the stock market. Throughout history, January has tended to be a great month for stocks.

2020 is not different and off to a great start. The US markets keep moving up because, despite all the disturbing news across the globe, there are plenty of positive news that people don’t talk about.

Good news vs. bad news

Indeed, regular news channels tend to report only the most shocking and catastrophic events. No matter which news channels you follow, chances are that roughly 95% of whatever is being reported on is something that is meant to upset you, to make you sad, angry or disturbed. Something good or positive will usually get a window of 10-20 seconds by the end of the show. Something to “brighten the day”.

But against all odds, the world as we know it is improving on many factors. For this, you just have to dig a little deeper into the news cycle.

General education levels across the globe are increasing, child mortality is shrinking, poverty is at lowest in human history, we can cure millions of diseases and are living longer than ever.

I am following regular news channels to get my daily portion of negativity in, and an alternative channel to balance this out again. There are several to choose from, and one of them is this one: https://www.goodnewsnetwork.org

Investors sentiment

Why is all this important? Because the stock market is very closely related to human emotions. The sentiment of investors, their emotional connection to the markets, to the companies they invest in, their attitudes, all this has an effect on the stock market.

This is why traditionally, the beginning of a new year is a great time for investors, and why this is the time when one should hold on to his shares as they climb up to new record highs.

So when is a good time to sell? There is no easy and definite answer to that. But there is a quote that gives an indication: “Sell in May and go away…” and of course: “…but remember to come back in September”.