Wednesday, April 15, 2020

Doomsday Prepping

After falling 32% from its high in mid-February, the S&P posted the best weekly gain in 45 years last Thursday.  Good old Goldman claims the market already reached its bottom, while simultaneously predicting Q2 GDP decline of 11% compared to 2019 Q2 and unemployment north of 15%.  Apparently the market has accurately priced in an economic downturn four times worse than the housing crisis?  Huh?  All I know for sure is I picked a helluva time to start taking a more active role in investing my savings.

Preferably, an intelligent value investor, professional or amateur, would have a shortlist of attractive businesses to invest in for times like these.  Unfortunately, I was unprepared.  Fortunately, I now have a lot of time on my hands.

I am a business analyst, not a stock analyst.  Whether this farce of a market continues to rise or ends up being a dead-cat bounce, I will continue to search for businesses worthy of investment.  Specifically, I'll be looking for:   
  1. a business built to weather and capable of growing in the current climate;
  2. strong - or a good promise of strong - cashflow;
  3. a healthy, liquid balance sheet;
  4. experienced and trustworthy management; and, as always,
  5. a sufficient discount to fair value.
This checklist is almost identical to my normal checklist for security analysis, with a few exceptions: chiefly, circle of competence and small-cap companies.  While I'll continue to look at under-valued micro- and small-cap companies with businesses that I can understand, I'd be a fool not to jump at blue chips trading at a large discount.  

I've already bought into Viacom at $12.50 and Amex at $74.  I recently took a small gamble on Antibe Therapeutics at $0.50 after being convinced by the report here and write-up here, and I've been gradually increasing my position in Avid Bioservices.  Besides that, I've increased my stakes in Hollysys and Coda Octopus (report pending) and took a small loss after selling my stocks in Vestas Wind Systems (bearish on their growth over the next two years due to economic downturn).

I'll be updating this feed on any future buys and sells.  I'll also include any companies I'm watching and I'll post reports on small-caps as I make them.  Once I build out this website I'll include a page that tracks my portfolio, gains, and losses.      

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