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Covid-19
Yesterday, 01:29 PM. (This post was last modified: Yesterday, 01:30 PM by weijian.)
Post: #111
RE: Covid-19
We live in a tripartite world of Gov, Capital and Labor. As of now, Gov is re-hashing the playbook to provide the necessary help and stimulus to both Capital and Labor.

In this current covid-19 crisis, both Capital and Labor are on the receiving end. There also seems to be a trend towards Capital having to contribute a portion of the bill with regards to the help that Labor is receiving, whether is it pledging not to lay off jobs OR withholding their own dividends payout. At current political climate, it will take a brave soul in Capital to protect themselves by laying people off.

In past crises, Labor generally does not get such support from both Gov and Capital, and is expected to have to endure retrenchments/ restructuring etc that may eventually damage its financial health. From investing perspective, a damaged financial health actually makes it harder for Labor to continue to invest in asset markets (when your job is at risk, it makes it harder for sure).

The supply of money at the sidelines was already somehow at records going into the crisis, and with Labor itself been less fearful of its financial future (job security) due to the help from Gov and Capital, this probably results in a scenario of a continuous supply of "willing" capital that can support asset prices. At the same time, unfortunately Capital has to be footing the bill together with the Gov and this damages the former's balance sheets and earnings. The end result is poorer economics and business models for Capital.

Mashing the above two observations together and what has happened in the past 1.5months, it seems to suggest that moving forward, we have to be prepared for a crowded market of capital really to be deployed, while at the same time, the economics and businesses itself becomes even much less attractive for one to invest in.

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4 hours ago. (This post was last modified: 4 hours ago by soros.)
Post: #112
RE: Covid-19
When businesses are less attractive to invest in, then valuebuddies should follow Berkshire Hathaway and try to copy that company's investment targets.

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3 hours ago.
Post: #113
RE: Covid-19
(Yesterday, 01:29 PM)weijian Wrote: We live in a tripartite world of Gov, Capital and Labor. As of now, Gov is re-hashing the playbook to provide the necessary help and stimulus to both Capital and Labor.

In this current covid-19 crisis, both Capital and Labor are on the receiving end. There also seems to be a trend towards Capital having to contribute a portion of the bill with regards to the help that Labor is receiving, whether is it pledging not to lay off jobs OR withholding their own dividends payout. At current political climate, it will take a brave soul in Capital to protect themselves by laying people off.

In past crises, Labor generally does not get such support from both Gov and Capital, and is expected to have to endure retrenchments/ restructuring etc that may eventually damage its financial health. From investing perspective, a damaged financial health actually makes it harder for Labor to continue to invest in asset markets (when your job is at risk, it makes it harder for sure).

The supply of money at the sidelines was already somehow at records going into the crisis, and with Labor itself been less fearful of its financial future (job security) due to the help from Gov and Capital, this probably results in a scenario of a continuous supply of "willing" capital that can support asset prices. At the same time, unfortunately Capital has to be footing the bill together with the Gov and this damages the former's balance sheets and earnings. The end result is poorer economics and business models for Capital.

Mashing the above two observations together and what has happened in the past 1.5months, it seems to suggest that moving forward, we have to be prepared for a crowded market of capital really to be deployed, while at the same time, the economics and businesses itself becomes even much less attractive for one to invest in.

I expect some sort of hyperinflation to eventuate. Gold is likely to be the next asset bubble once all the smart money realizes that all other assets are not going to provide much yield nor capital gain and flock to gold.
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