Investment Influencers on the Current Market Condition, Investment Thesis and Industries They Are Looking At
We are hearing differing views on the market. Some call this a crisis, while the rest calls it an investment opportunity.
To cut to the chase, we reached out to investment influencers to share their perspective on the current market situation. Some of these investment influencers have experienced a few financial crises such as the one in 2008, and we believe there are some takeaways from them.
Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. Readers should always do their own due diligence and consider their financial goals before investing in any stock.
We Asked Investment Influencers three questions on the current market situation
We decide to pick on the brains of:
- Geoff Howie, SGX Market Strategist
- David Kuo, The Smart Investor
- Financial Horse
- Sudhan, Seedly
- Irving Soh, Dr Wealth
- Dawn, SG Budget Babe
- Adam Wong, The Fifth Person
- Stanley, Value Invest Asia
- James Yeo, SmallCapAsia
- Kelvin Seetoh, Kelvestor
- Chong Ser Jing, The Good Investors
- Interesting Community Questions
Here’s the list of questions:
- What is your view of the current market condition?
- How has your investment thesis changed?
- What industries are you looking to invest in currently for your own portfolio?
Geoff Howie, SGX Market Strategist
What Is Your View of the Current Market Condition?
The current bout of STI volatility currently matches what we saw in 2011 amidst the EU debt concerns.
From January 2011 through to October 2011, the STI declined 23% from high to low and then recovered 37% from low to high. All up over the past 20 years, we have seen six such occasions of big STI moves on global volatility, which includes the global financial crisis. These six swings averaged a 37% decline from the preceding STI high to its low, then 55% recoveries from that low to the recovery peak. Amidst the big swings this week, there has been some level of orderliness – for instance, Boeing led the 28% decline in the Dow Jones from the 12 Feb close to the 12 March close, and following moves in the US, the STI has seen three-fifths of those declines, and the SPDR Gold ETF traded on SGX has added to its early 2020 gains, with a 13% YTD gain on triple the turnover observed in 2019.
How Has Your Investment Thesis Changed?
Looking at the institutional flows into Singapore stocks in the earlier part of this week, we potentially saw familiar themes of averaging down into some of the better performers of the past three years, rebalancing into recent laggards and portfolio revisions following the recent earnings reports. Looking back into the bigger swings of the past, the more shorter-term, experienced investors would be actively selling and buying amidst the volatility rather than holding. Meanwhile, longer-term, more passive investors would be assessing yields, valuations and of course the risk outlook, before deciding to add to or trim positions.
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
Ten-year yields are currently at all-time lows, and volatility is expected to continue as the world embraces structural initiatives to contain COVID-19. Monetary and Fiscal stimulus helps, but structural initiatives matter most, and of course carry economic impacts.
From January, we have seen investors take positions in the rubber glove manufacturers, which has seen Catalist-list UG Healthcare and secondary-listed Top Glove Corporation Bhd amongst ASEAN’s strongest Healthcare stocks in the 2020 YTD.
David Kuo, The Smart Investor
What Is Your View of the Current Market Condition?
The market hates uncertainty. And the coronavirus outbreak has created an almost unprecedented level of uncertainty that has aroused fear and panic in global markets.
In the beginning, there was a hope that the epidemic could be contained within China. But that has not been possible. The epidemic has spread to every continent in the world apart from Antarctica. So, everyone could be affected.
So far, the outbreak has been largely a medical problem. But it could quickly turn into a global economic problem unless governments act quickly. Many central banks have already stepped in with cuts in interest rates. Unfortunately, while rate cuts are useful in solving demand problems, they are of limited use in resolving supply issues, especially supply-chain problems.
This is the time when governments need to dig deep into their reserves to bring forward public sector investments to drive economic growth. Many countries in the world have a surfeit of schools, hospitals, roads and other infrastructure that include railways, roads, ports and airports.
It is a time for humanity to show their compassion for others, rather than care only for themselves. The coronavirus outbreak is a global problem that requires a concerted global effort. This could be humanity’s finest hours if handled properly.
How Has Your Investment Thesis Changed?
As an investor, I buy shares for the very long term. So, a short-term setback, such as the coronavirus outbreak, is not going to change the way that I invest.
As an income investor specifically, every dollar that I use to buy shares today is designed to generate a stream of income for many years into the future.
When stock markets are expensive, I buy fewer shares. But when stock markets are cheap I buy more.
Admittedly, the capital value of my portfolio can go down as well as up. But my investment thesis is premised on achieving rising income over time. So, a good time to buy more income is when shares are cheap, which is now.
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
Not every share in my portfolio has been knocked back as a result of the fall in global stock markets.
For instance, my rubber-glove maker is now in great demand! But it is the exception rather than the rule.
Consequently, there are lots of sectors within my portfolio that I would like to add money to.
Perhaps the most interesting, from an income investor’s perspective is banks. Many banks are offering yields that are comparable to REITs. And one of the best times to buy bank shares is when economies are depressed. So, they are my main focus of attention at the moment. Most banks have strengthened their balance sheets after the Great Financial Crisis. So, they should be able to tolerate even a protracted period of economic hardship.
Financial Horse
What Is Your View of the Current Market Condition?
As shared on Financial Horse, my current base-case scenario assumes a global recession in 2020. I think that the EU will enter a recession, China will slow down, the US will slow down significantly (undecided on recession), and Japan will enter a recession.
I think there is a possibility that this spirals into something more serious.
Two areas that I have my eye on very closely are:
- The massive downgrading of US BBB corporate debt
- Eurozone bank contagion.
I think that if either of the two events plays out in an uncontrolled way without drastic intervention from regulators, this crisis can get a lot worse than a normal recession.
How Has Your Investment Thesis Changed?
In early March, once it became clear that COVID-19 was getting out of control in the world (ex-China), I started reducing equity exposure and taking profit on many hospitality / cyclical based equity positions.
My current portfolio is also heavily allocated into cash, gold and bonds – I started making the rotation in early 2019 as we gradually approached the end of this short-term debt cycle.
But despite all this, the hit from the current equities decline really surprised me because of the speed and ferocity at which it played out. I expected some fiscal or monetary-based stimulus rally on the way down, but so far those have been really short, no more than one or two days at a stretch. I still think we’ll get a selling opportunity in the coming days or weeks though.
For now, I think that we are at the end of this short term debt cycle (that started in 2008). But whether this is the end of the longer-term debt cycle (that started in the 1970s), I’m undecided for now.
If COVID-19 ends very quickly, and there is massive fiscal and monetary stimulus, we could prolong the long term debt cycle maybe a year or two. We’ll need to see how things play out over the next one or two months.
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
I’m watching the macroclimate very very closely because things are changing on a daily basis. For now, none of the signs indicates that we are out of the woods yet, so I’m holding off making any investments.
I’m really worried about anything that is hospitality, tourism, or airline related in 2020, as well as the energy markets. I’ve exited most of those positions, but if they fall to depressed valuations, I’ll look to pick up those with a strong balance sheet and resilient business model.
I’m super worried about Eurozone banks. A decade of low-interest rates has decimated their balance sheets, and further rate cuts will hit their net interest income (NII). That’s even before we account for the uptick in non-performing loans from COVID-19. Just think about the impact from Italy shutting its entire economy. And these are global systemically important Financial Institutions (ie. Too big to fail). I think Eurozone banks will need big bailouts from the Eurozone governments in the coming months.
I really like real estate and technology plays, so I’ll buy those once the macroclimate looks more favourable.
Doesn’t look like the time is right yet though. But we’ll see.
Sudhan, Seedly
What Is Your View of the Current Market Condition?
I think the market fall that we are seeing now is something that’s been long overdue.
I mean the US market was hitting brand new highs every now and then before this, and its valuation was getting overstretched. Hyman Minsky once said, “stability is destabilising”, and that’s what we are seeing right now.
Many were talking about the US-China trade war, but it took a black swan event like the Covid-19 outbreak to bring the US market’s bull run to a halt.
We should also note that stocks are inherently volatile. However, in the long run, as history has shown, stock markets do recover. So, this too shall pass.
How Has Your Investment Thesis Changed?
My investment thesis has not changed.
I still look for companies with durable competitive advantages and strong balance sheets to invest in. Such companies also take a hit during market conditions such as now, but they usually bounce back quickly when things clear up.
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
I’m not looking at specific industries to invest in to take advantage of the Covid-19 situation. I’ll just continue investing in companies that I like with a long-term view.
Irving Soh, Dr Wealth
What Is Your View of the Current Market Condition?
COVID-19: I’ve no real edge guessing where the markets will go so I’ll stick to the facts.
Coronavirus is pricing in bad earnings for any business that requires physical goods, crowds, and generally, people interacting. Consequently, the sell-off has been broad and heavy across all affected areas. We can’t really tell how long the virus can last and how quickly it can be overcome. To be sure, China is somewhat getting back up on its feet after 3 months of draconian measures including locking people into buildings and building some pretty massive makeshift hospitals. In the US, it is just starting. And the US is not known for draconian measures despite Trump’s full backing. It’s worth noting the virus has hit the EU and the Middle East too.
All told, you can probably expect the markets to keep dropping in anticipation of bad earnings over the full year by the time this all shakes out.
Oil: Oil dropped 31% and it will probably continue to drop as a supply shock (OPEC+ fallout leading to price war) coincides with demand shock (less consumed oil thanks to corvid19). Raising energy prices was the trigger for all five of our most recent recessions.
Is this time the same? No. But lowered oil prices sure wouldn’t hurt an already suffering economy outlook due to COVID-19.
I think this oil situation can last a year or two before someone somewhere says enough is enough and throws in the towel – bad economics can only last up till someone goes bankrupt or gets close to it. I doubt any of the states (Russia especially) will do it to themselves.
Saudi Arabia most certainly won’t be going bankrupt – their revenue from higher oil output actually goes even higher despite a drop in prices. Quantity works here. So the fallout will be seen largely in Russia and the US (which went from being an importer of oil to exporter of oil as the shale industry grew).
Consequently, we’ve seen energy producers in the US go through a broad sell-off where its oil or coal. The whole sector got hit and some companies are trading down almost 30-50% from where they were a week ago. I won’t state an outlook because I don’t believe in one.
But I will state the two outcomes we have right now which are most likely beyond another black swan event:
- COVID-19 is not stopped. Recession happens. We face a one or two-year bear market.
- COVID-19 is stopped. Rebound happens. Uncertain about after.
How Has Your Investment Thesis Changed?
It hasn’t.
An investment thesis is borne on facts, numbers and principles.
If your thesis changes because of an event like this, then you have a flawed investment process. Either your principles were wrong, your facts were wrong, or your numbers were wrong.
I will give an example.
I took a heavy position in shipping companies ($TNK, $STNG, $EURN) during 2019.
Fact: Ship order book was low. Ship tonnage was getting old. IMO2020 regulations were going to restrict supply further and push daily charter rates up through the roof.
Numbers: Most of these companies were trading at below half of the Net Asset Value (total assets-total liabilities).
Principles: The business is a need. Not a want. The world cannot run without oil. It can run with less, sure. But not none. And the tanker companies I chose are the best positioned to deliver most of the oil and take most of the profits. They have the youngest fleets, the biggest fleets, or a strong balance sheet.
During 2019, all three of the companies picked experienced 50-100+% returns as day rates got stronger and stronger each day. $STNG went from $16.98 to $40. $EURN went from $8 to $13. $TNK went from $8 to almost $25. (did an 8 for 1 reverse split) I held on to the names because I saw multi-baggers coming.
And then the virus happened, and almost everyone got dumpsters. But the facts, principles, and numbers did not change. In fact, they’ve gotten better. In October 2019, sanctions of COSCO Dalian shipping tankers took day rates to $100k/day since day rates were already low. Now, even w sanctions lifted, with the OPEC+ oil war roaring full force, everyone’s snapping up shipping supply. The result is near $200k day rates – double that of 2019. And after a killer Q4 earnings, most of the companies are even further de-risked with healthier balance sheets. Yet, share prices are down.
$STNG went from $40 to $17.59. $EURN went from $13 to $9.85. $TNK went from $25 to $17.67. Despite low supply, higher day rates, cleaner balance sheets, share prices are down. So yes – I’m buying more. At current day rates, these companies can probably earn half to the entirety of their market cap in free cash flow within 6-8 months. Yet their share prices are lower than ever. Facts support the thesis.
Are you depending on facts or a narrative?
Numbers support the investment.
Are you buying companies cheap enough or chasing the share price as it climbs?
Principles support the decision.
Are you buying wants or needs? Necessary or unnecessary?
Buy ‘when’, not ‘ifs’
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
Energy and Uranium.
Both are facing transitory problems. Both are necessary for the future. Both are undervalued. I will also be following the hospitality and tourism sectors closely.
Dawn, SG Budget Babe
What Is Your View of the Current Market Condition?
It’s an opportunity as several stocks have been battered.
How Has Your Investment Thesis Changed?
It hasn’t. My thesis of buying only stocks that fall below their intrinsic value still holds, the only thing that has changed is that many of them now fulfil this criteria so I have a new problem of deciding what to buy cos they all came crashing at once 🙂
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
I don’t invest in industries, I invest in companies. A fantastic company in a bad industry will still be on my consideration as long as valuations are compelling enough.
Adam Wong, The Fifth Person
What Is Your View of the Current Market Condition?
The market is obviously very volatile now. While China seems to have contained the coronavirus, it is now impacting the US and Europe, and their response may not be as organized as China’s.
How Has Your Investment Thesis Changed?
It remains the same. We look for high-quality companies to invest in at undervalued prices. The coronavirus crash has brought some great investment opportunities.
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
It is less industry-specific than company-specific. We look at great companies like Google, Amazon, and Visa. If their valuations are attractive, we make a move.
Stanley, Value Invest Asia
What Is Your View of the Current Market Condition?
I feel the market has started to panic. The double shock from the Coronavirus and oil price collapse seem to have spooked the market. But I still see these as short term market worries, not huge enough to bring back the great depression.
How Has Your Investment Thesis Changed?
Nothing has changed.
I am buying more as we speak. I can’t predict the market bottom, but when my time frame is for the next decade, I don’t mind buying and holding.
As long as we don’t use leverage or our short term cash, there is no real need for me to cash out any portion of my portfolio.
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
I still like the technology and consumer sectors.
The long term potential of these two sectors has not changed. I just bought some Microsoft and Alphabet not long ago. And is still looking at companies like Walt Disney and Starbucks.
James Yeo, SmallCapAsia
What Is Your View of the Current Market Condition?
Global markets are now suffering a double whammy of the coronavirus + sharp plunge in oil prices.
But in my opinion, as nations over the world start to take precaution and curb the virus – they can achieve the same result as China. And low oil prices doesn’t benefit Saudi Arabia nor Russia in the long run so I am expecting a truce of some sort maybe before year-end?
However, these 2 major black swan events may have already caused some deeper underlying economic impact – I am seeing O&G industry job cuts and shopping mall outlets closing.
Hence, we cannot really be sure whether or not there will be a prolonged recession.
And there is no point to predict the market anyway – cos no one has a crystal ball.
How Has Your Investment Thesis Changed?
Given the market plunge, I am holding onto some cash and likely to pace my purchases. For example, split my purchases into 2 or 3 tranches instead of going in at one shot.
Strategy wise, I have been sticking to the Singapore markets for a long time now and regretted not getting into the 2 juggernaut economies – US and China where growth is aplenty there. E.g. Chipotle can become so huge and successful simply by focusing their replicable biz model in the US markets.
On the other hand, F&B companies in Singapore have to venture out for “growth” and they often face so much cultural, political and demographic differences overseas.
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
I generally focus on bottom-up approach so I do not really focus on any one industry per se.
I prefer to focus on the long term growth potential for US stocks and income stability for Singapore stocks.
Kelvin Seetoh, Kelvestor
What Is Your View of the Current Market Condition?
The health of our economy and sentiments of investors are two important drivers for stable stock market. Currently, both aspects are uncertain and market hates uncertainty.
The stock market is a forward and highly complex adaptive system. When Trump administration announced fiscal stimulus on last Friday, the market jumped over 9% because market participants felt things would improve.
Could we say the jump was pre-mature? We do not know.
This is a time where even government officials do not have a timeline of the recovery phases.
Locally, Singapore got the situation well controlled. Despite that, our Prime Minister Lee does not rule out a recession.
The situation is moving too quickly for anyone of us to have a real perspective of the current market condition. The current was yesterday. And who knows about the future?
Singapore is a small state. Despite some shortcomings, one would argue that during uncertain times there are very strong social capital and trust in Singapore’s government by her citizens. This made the implementation of control measures extremely easy. The same thing was seen in China. The global stock markets take cues from the USA stock market. Currently, our western counterparts are struggling very badly. Until we see substantial progress in their control measures, I believe daily volatility is going to be the new norm.
Despite the fact I ought to give some form of predictions since I run an investing community in Singapore, I realised the smarter thing to say is I don’t know.
But what is certain from here? Recovery WILL happen – just a matter of time.
I believe the right path for most investors is to purchase high-quality growth companies in tranches.
THIS IS A GENERATIONAL BUYING OPPORTUNITY!
The stock market is filled with irrationality during times of optimism and pessimism.
Prices get pushed to both extremes and both extremes do not represent the actual value of the businesses you’re buying.
Because of that, there are phenomenal companies which are trading at VERY reasonable prices.
We do not need to time the market, if we nibble bits and pieces of our favourite companies, we would end up with a good average price. Instead of feeling upset over temporary losses, see it as an opportunity to add more shares into high-quality growth companies.
Know why and what you are buying, understand the companies’ fundamentals, and be detached away from the daily share price movements. Many months later, you’ll realise you would become a more resilient investor and someone that is rooted in the actual fundamentals of the company.
How Has Your Investment Thesis Changed?
No, it has remained the same.
The impact of COVID-19 on the stock market and the global economies is unprecedented.
Then, how do we navigate this uncertainty?
Professor Nassim Nicholas Taleb used this term called antifragility. It refers to a property of systems that increase in capability to thrive as a result of shocks, failures or volatility.
Even more so, it highlights the importance of investing in antifragile companies.
To put it simply, these are companies which thrive regardless of any environment or macro situation.
Look at e-commerce companies like JD.com or Sea Group. Comparatively speaking, they dropped lesser than the S&P 500.
Why?
While the adoption rate for e-commerce platforms are there, I suspect the recent adoption rates are accelerating because people are forced to learn how to use e-commerce to order for their necessities. The usage and habit of using e-commerce may continue post-Covid-19.
They are becoming the online versions of Costco, Walmart or Yonghui Superstores.
Software companies like Zoom are antifragile too. It continues to gain strength and their solutions became very popular as the world races towards building a robust teleconferencing infrastructure.
I avoid discretionary and cyclical companies too.
Cyclical companies are shipping, automobiles, construction, property, and airlines. Their underlying demand is highly dependent on the health of the economy. No one would purchase a new car when times are uncertain.
Discretionary companies are companies which are selling “good to have” products. Some examples include golf, high-end restaurants, casino, entertainment.
Avoid companies with debt because it adds further stress to the company. Companies with cash are able to exploit this environment to acquire their competitors.
Avoid companies with low-profit margins like F&B. When the revenue starts to taper off and the overheads are the same, many F&B businesses would become loss-making.
We are our own capital allocators and we owe a duty to ourselves to allocate our hard-earned funds into great companies. It is almost like finding a partner, we perform “due diligence” through a dating process before becoming a couple. Likewise, in companies, perform a stricter criterion and choose outstanding companies only.
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
Payments, content, e-commerce and software are industries with huge addressable markets. It would be an absolute mistake not to be in any of these industries. Growth is very important for us to have multi-baggers in our portfolio.
I am looking into software, payments, e-commerce and medical devices companies.
I was looking at Koru Medical Systems and their key products such as FREEDOM 60. There are some individuals who are born with immunoglobulin deficiency which means their bodies do not produce enough white blood cells. FREEDOM 60 allows patients to receive their dosage immunoglobulin at the comfort of their home with self-administered methods.
It’s a sticky product with high recurring incomes that makes the company immune towards economic conditions.
I avoid companies with a market capitalisation of above $5 billion unless they are considered flying elephants. A few “flying elephants” examples are Facebook and Google who are still growing their revenues above 15%. More is always better.
Chong Ser Jing, The Good Investors
What Is Your View of the Current Market Condition?
There are four points we need to remember about the economy and markets.
Recessions are normal
The chart below shows all the recessions (the dark grey bars) in the US since 1871. You can see that recessions in the country – from whatever causes – have been regular occurrences even in relatively modern times. They are par for the course, even for a mighty economy like the US.
The following logarithmic chart shows the performance of the S&P 500 (including dividends) from January 1871 to February 2020. It turns out that US stocks have done exceedingly well over the past 149 years (up 46,459,412% in total including dividends, or 9.2% per year) despite the US economy encountering numerous recessions. If you’re investing for the long run, recessions can hurt over the short-term, but they’re nothing to fear.
The stock market has regularly seen serious short-term losses while on its way to earning great long-term returns
Between 1928 and 2013, the S&P 500 had, on average, fallen by 10% once every 11 months; 20% every two years; 30% every decade; and 50% two to three times per century. So stocks have declined regularly. But over the same period, the S&P 500 also climbed by 283,282% in all (including dividends), or 9.8% per year. Volatility in stocks is a feature, not a bug.
In fact, stocks have also experienced brutal one-day drops that – with the proper perspective – turn out to be blips.
Some market commentators have labelled 9 March 2020 as Black Monday because the S&P 500 fell by 7.6% that day. But that is nothing compared to the historical Black Monday – on 19 October 1987, the S&P 500 plunged by 20.5%. To make matters worse, the index was already down by 10.1% in the three days preceding 19 October 1987. So in four trading days – from the close on 13 October 1987 to 19 October 1987 – US stocks were down by 28.5% in all.
Black Monday (the historical one) was a harrowing experience for those who lived through it. But here’s the thing: From 13 October 1987 (before Black Monday happened) to 9 March 2020, the S&P 500 was up by 773% in total or 6.9% per year. With dividends, the S&P 500 was up by around 2,100% or 10.0% annually.
One of my favourite finance writers is Morgan Housel. In an April 2019 blog post, he brilliantly articulated a concept that I’ve held in my mind for a long time: Instead of seeing short-term volatility in the stock market as a fine, think of it as a fee for something worthwhile. The stock market has produced good to great returns over the long-term. But it demands an admission fee. And the admission fee is what we’re currently experiencing.
Recessions and market crashes are inevitable
The late Hyman Minsky was an obscure economist when he was alive. But his ideas flourished after the Great Financial Crisis of 2007-09.
That’s because he had a framework for understanding why markets and economies go through inevitable boom-bust cycles. According to Minsky’s then-radical view, stability itself is destabilising. When an economy is stable and growing, people feel safe. And when people feel safe, they take on more risk, such as borrowing more. This leads to the system becoming fragile.
The same goes for stocks. Let’s assume that stocks are guaranteed to grow by 9% per year. The only logical result would be that people would keep paying up for stocks, to the point that stocks become way too expensive to return 9% a year. Or people will take on too much risk, such as taking on debt to buy stocks.
But bad things happen in the real world and they happen often. And when stocks are priced for perfection, bad news will lead to lower stock prices.
There is always something to worry about
Peter Lynch, the legendary manager of the Fidelity Magellan Fund from 1977 to 1990, once said that “there is always something to worry about.” How true. The table below, constructed partially from Morgan Housel’s data, shows that the world had experienced multiple crises in every single year from 1990 to 2019.
But over the same period, US stocks were still up by nearly 800% after factoring in dividends and inflation.
COVID-19 is not the first deadly disease outbreak the world has faced. But global stocks have registered solid long-term gains despite multiple occurrences of epidemics/pandemics in the past. The chart below shows the performance of the MSCI World Index (a benchmark for global stocks) from 1970 to January 2020 against the backdrop of the various epidemics/pandemics we’ve experienced in the past 50 years.
How Has Your Investment Thesis Changed?
COVID-19 or no COVID-19, recession or no recession, I am not changing the way I am investing. Regardless of how COVID-19 or the global economy develops, the stock market is still a place to buy and sell pieces of a business. This also means that a stock will do well eventually if its business does well. So I will continue looking for companies that excel according to my investing framework and investing in their shares for the long run.
My framework consists of 6 criteria:
- Revenues that are small in relation to a large and/or growing market, or revenues that are large in a fast-growing market.
- A strong balance sheet with minimal or a reasonable amount of debt.
- A management team with integrity, capability, and an innovative mindset.
- Revenue streams that are recurring in nature, either through contracts or customer-behaviour.
- A proven ability to grow.
- A high likelihood of generating a strong and growing stream of free cash flow in the future.
What Industries Are You Looking to Invest in Currently for Your Own Portfolio?
As mentioned in Point 2, I am not changing the way I invest. Instead, I will continue to look for companies that meet my investment framework, and these companies can come from many different types of industries.
If you are keen to read up more on this, we have prepared some of the interesting questions found on our community to help expand your knowledge.
Further Reading: Interesting Question and Answers on Seedly Community
The CPVID-19 outbreak has now been called a pandemic by the WHO. For those who are interested in investing and buying stocks, would it be a good time to buy and are there any great deals now?
What would be the impact of COVID-19 on REITs? Is it a good time to buy REITs now?
