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09-04-2020, 01:29 PM
(This post was last modified: 09-04-2020, 01:30 PM by weijian.)
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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09-04-2020, 09:36 PM
(This post was last modified: 09-04-2020, 09:37 PM by soros.)
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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(09-04-2020, 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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@BlueKelah,
If we use the simple "Price / Earnings" ratio model, Gold has no earnings and so the only factor is purely about price. For Gold's price, it is really about discerning the macro economics correctly. Generally, i am not good at discerning macro economics and so probably i give it a pass. That said, from asset allocation perspective, Gold might make sense for diversification purpose to provide balance, rather than been the offensive portion in the portfolio (imagine a soccer team).
Using the same "Price / Earnings" ratio model, again, both macro economics can determine the "Price" and "Earnings". Since I have no idea on macro economics, then the question is "What are the other factors that impact "Price and "Earnings", and are easier to figure out?". Personally, i subscribe to the notion that "low prices itself is a cure for low prices" and this probably takes are of the "Price" numerator. As for the denominator "Earnings", rather than look at what will change in future (which itself is a lot of projections and predictions about the future), i try to invert the question and ask "What will NOT change based on history and human behavior?". With low prices and trying to understand what business models will NOT change after Covid-19, this is how I m trying to navigate through this crisis.
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Ray Dalio: "If You Don't Own Gold, You Know Neither History Nor Economics"
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(10-04-2020, 04:03 PM)holymage Wrote: Ray Dalio: "If You Don't Own Gold, You Know Neither History Nor Economics"
To be honest, i am past the phase of relying on cute one-liners from gurus/experts. But it is true that i don't know much economics as i professed in my earlier post.
That said, I do think Gold is a good storer of wealth and is a good consideration from asset allocation perspective. I am relatively young and building wealth, and so probably Gold's out for now (at least in this crisis, or this stage of my life).
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10-04-2020, 05:38 PM
(This post was last modified: 10-04-2020, 05:38 PM by weijian.)
The playbook of the authorities seemed to be focused on resolving the liquidity crises of most companies while standing ready to support a solvency crisis by those mostly affected (services). With money going into everyone's hands, one can also consider this is some kind of stimulus spending once the crisis is over. Before the crisis is over, it remains to be seen how many of those who have a liquidity problem will spiral into a solvency crisis. Someone has to be footing the bill somewhere.
US fed launches US$2.3t financing to support economy
[WASHINGTON] The Federal Reserve on Thursday announced another series of financing facilities to provide US$2.3 trillion to support the US economy amid the coronavirus pandemic.
The aim is to help businesses, households and state and local governments facing a cash crunch as large parts of the economy have been shut down.
"The Fed's role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible," Federal Reserve Chair Jerome Powell said in a statement.
https://www.businesstimes.com.sg/governm...rt-economy
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The latest figures of deaths due to virus posted on scmp website on 11 April (8 April ) (5 April )( 2 Apr 2020 ) ( 29 Mar ) (26 March ) ( 24 Mar 2020 ) are :
Italy : 18,279 (17,127 ) (15,362 )( 13,155 )(10,023 )(7,503 ) (6077)
Spain : 16,071 (14,040 ) (11,947) (10,003 ) (6,528 )(4,089 ) (2696 )
Iran : 4,232 (3,872 ) ( 3,452 ) ( 3160 ) (2,640 )(2,234) (1934)
France : 13,215 (10,328 ) (7,574 ) ( 4,032) (2,317)(1,331 ) ( 860 )
USA : 18,637 (12,857) (8496 ) (5,115 ) (2,488 )( 857 ) ( 525 )
UK : 8,974 (6159 ) ( 4,320 ) ( 2,921) (1,021 ) (422 ) (335 )
All above figures are still rising. death toll from 6 days ago ( April 5) are up : USA 119% , UK 107%, France 80%, Spain 34%, Italy 18% and Iran 22%.
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12-04-2020, 07:54 PM
(This post was last modified: 12-04-2020, 08:09 PM by Behappyalways.)
港大：新型肺炎的肺部病毒量比沙士多3倍 較遲產生免疫 - 20200411 - 香港新聞 - 有線新聞 CABLE News
https://www.youtube.com/watch?v=LC0qdJlxh30
Coronavirus that causes Covid-19 can produce more than three times as many pathogens than Sars strain, HKU study reveals
https://www.scmp.com/news/hong-kong/heal...oduce-more
2020.04.11【文茜世界周報】新加坡爆移工群聚感染 社區傳播失控
https://www.youtube.com/watch?v=WA1qxOPN...AU&index=3
2020.04.11【文茜世界周報】佛系防疫徹底失效 巴西四月新冠疫情大爆發
https://www.youtube.com/watch?v=XYYclWtD...AU&index=2
2020.04.11【文茜世界周報】女王電視演說安定人心 英國防疫無人領軍
https://www.youtube.com/watch?v=uZ1hnFgU...AU&index=1
Coronavirus: The children struggling to survive India's lockdown
https://www.bbc.com/news/world-asia-india-52210888
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