5-Bullet Sunday- #14

These are very interesting times to live in from an investing point of view. So far they happened only 2 times before in the last 2 decades: .Com bubble and the Great Recession.

What will be the narrative about the current economic crisis 10 years from now? I don’t know exactly, but I do believe it will be in the same sentence as the other 2 preceding crises.

Having said that, stay safe, keep on humming and enjoy the read!

#SavingsRate #Q1EarningsSeason #COVID_19 #InfoGraph #PharmaInnovation #HowToSpend3Bln #Gardening #FixMyLawn

5-Bullet Sunday is a weekly blog post with 5 topics that were on my mind this week related to Financial Independence and Dividend Growth Investing or something that just fed my curiosity. An overview of other earlier posts can be found here

๐ŸŒŸ Savings Rate during a pandemic

This is a very interesting topic and I don’t know how it is for you, but I am currently only spending money on:

  • Mortgage
  • Utilities (gas, electricity, cable internet)
  • Grocery shopping
  • Online shopping for essentials (i.e.: replacing broken trousers from kids)
  • Few small regular bills.

I am not spending anything on:

  • Fuel
  • Public transport
  • Entertainment (i.e. Cinema, Entrance tickets)
  • Vacation
  • Impulse buying in shopping malls

Hence why I reached a savings rate for March close to 70% ๐Ÿ’ช. This is quite unique and you only need to look at the “not spending” category to understand which business are in severe trouble.

While such savings rate is nice for me, I have decided to keep on paying bills from local businesses where I live. As an example, I will continue paying for my kids’ sport although they are not sporting at the moment. I think that this is the least that I can do to support the local community during these times.

๐ŸŒŸ Upcoming Q1 earnings – week of 6 April

Separating wheat from the chaff - YouTube

The first earnings will be coming in and this is where we separate the wheat from the chaff. The following two companies are going to report their earnings for which I’ll be dialling in into their conference call.

Levi Strauss ($LEVI) will report earnings on Tuesday 7 April. It’s not a stock that I would consider owning, but I am very interested to hear from them about the COVID-19 impact. How hard did the mall-closures hit them in the bottom-line? Is online sales offsetting some of it? Will they continue paying their rents or are they asking for delayed payments?

The answer to those questions will give me a first flavor of what I can potentially expect from companies like Nike ($NKE) and Realty Income Corporation ($O).

Delta Airlines ($DAL) will report earnings on Wednesday 8 April. Neither a stock that I would like to own, but I am really wondering how severe their need for cash is and how they are dealing with that need.

I guess that this call will be more interesting for me from a historical perspective, because Delta Airlines is a typical company in the COVID-19 blast zone.

๐ŸŒŸ Covid-19 – fighting the pandemic

I am trying to stick to the science when it comes to forming my opinion regarding the economic impact of the pandemic. What the science tells me is that we will still be living in uncertainty for quite some time until we have a scientific breakthrough.

As an example, Janssen pharmaceuticals is one of those front-running companies who is using the same technology as for their investigational Ebola vaccine. “The clinical trial for Ad26 SARS-CoV-2 is set to begin no later than this coming fall, and could produce a vaccine available for emergency use in the US in early 2021“.

So far things look promising, but it doesn’t mean that we likely have a vaccine or a killer treatment within the next few months or so, so that we can go back to normal again. What I do believe is that we will see more and more point-to-point approved treatments coming in, i.e. to treat the severe pneumonia to lower the death rate by repurposing existing medicine.

The below infograph sums current healthcare innovations to combat COVID-19 pretty well.

Every Vaccine and Treatment in Development for COVID-19, So Far
source: https://www.visualcapitalist.com/every-vaccine-treatment-covid-19-so-far/

Having said that, I truly believe that we will be in uncertain times for at least the remainder of the year, which means to me increased volatility and/or not returning to February highs. I believe that this uncertainty will lead to lower consumer confidence and lower spending and this will become visible in the earnings.

I’m really just wondering: who truly wants to go to the shopping mall with their family or on a holiday in a crowded place knowing that the virus is still around and we can’t protect ourselves to it?

The evidence that it will take some time is pretty well summed-up in the above infograph and those thoughts forms the basis of my crisis investment strategy.

This also means that some companies will keep doing well (i.e. consumer staples, pharma), because we will still need to serve our basic needs. I am adding to those now so that I strengthen the core of my portfolio and will add even more during a panic sell (which I believe we didn’t have yet).

At the same time I am keeping a close eye on the upcoming earnings of typical high quality companies. I expect companies from other sectors to still lose quite some stock price due to poor earnings results (i.e.: Disney, Starbucks, Nike). I’ll be paying very close attention to them, because I would love to add some to my portfolio once they really proof to be at least at a fair value!

๐ŸŒŸ Recommended video for the weekend

It’s a long video, but I found it very interesting. Chamath Palihapitiya explains very well how companies behave during these times when it comes to cost-cutting and therefore which companies are naturally at risk. Do we really need a new Workday implementation at this moment in time?

He also explains in a very interesting manner how he is analyzing the current environment so that he can make investment decisions that are likely to return 10x (i.e. Telecom industry). Not bad when you have 3 billion dollars of a war chest!

๐ŸŒŸ Garden spring preparation

A non-investment topic, but gardening is definitely something that keeps my mind busy. And it’s also so relaxing! This is the time where I most often get my most clearest and focused investment ideas from.

Having said that, we’ve got quite a decent piece of land (incl. garden) which means a lot of work throughout the seasons from March until October.

My plans for this Sunday are to prepare my lawn, because this week we will see a 20 degrees Celsius temperature. That means that now is the ideal time to prepare my lawn. I don’t do this every week so every year I need to self-educate myself a bit again in how to do this best.

To not go on a full research every year, I’m generally subscribed to the following 2 YouTube channels, because they provide very useful snack-bite instruction videos.

  • Tuinmanieren (Dutch) – is always very timely with their videos and is therefore a good-to-go channel all year long.
  • Sylver Cymbal – has a great video on how to fix your lawn

If you love gardening as well, please let me know which bloggers/vloggers you are following. I am very curious to learn more!

How does your savings rate look like? How do you support your local business community? What do you think about the duration of the current crisis? What’s your hobby, also gardening?

So many questions! ๐Ÿ˜‰

Please stay safe everyone! I’m going for 10.000 steps again today by working in the garden ๐Ÿ‘‹

I hope that you enjoyed this weekโ€™s 5-Bullet Sunday. If so, feel free to hit the like button.

For now, have a great remainder of the Sunday!

Yours Truly,

โ€” European Dividend Growth Investor

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Iโ€™m not a certified financial planner/advisor nor a certified financial analyst nor an economist nor a CPA nor an accountant nor a lawyer. Iโ€™m not a finance professional through formal education. Iโ€™m a person who believes and takes pride in a sense of freedom, satisfaction, fulfillment and empowerment that I get from being financially competent and being conscious managing my personal money. The contents on this blog are for informational and entertainment purposes only and does not constitute financial, accounting, or legal advice. I canโ€™t promise that the information shared on my blog is appropriate for you or anyone else. By reading this blog, you agree to hold me harmless from any ramifications, financial or otherwise, that occur to you as a result of acting on information provided on this blog.

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