Short market comment

This is basically the same text I used as an answer to a comment on a previous post:

In short: Stocks are currently (March 16, 3pm Central European Time) down by 33% from February 20, 2020. My base case if the corona situation develops in a benign and controlled fashion is another -33% (to a total of -55%). That should take most stocks to fair value, not cheap, and enable fundamentally based investments.

If things turn ugly we could see a third -33% (to a total of -70%), and given the adverse effects on the economy that would still not be cheap, just fair. Worst case scenario is a fourth -33% (for a total drop of 80%) on top of the first 3.

I expect maximum quarantine/lockdowns in most of Europe by end April and maximum US by end of May (with perhaps 50m US citizens infected). Maybe stocks will bottom by then, since everything about this crash is faster, bigger, more frequent than usual. But the recession and financial crises that follow will probably take markets to a lower low further down the line. In any case we should see a bottom for stocks within 12 months from now, as long as we don’t get a second virus attack of a different strain (unlikely but could happen).

as long as we don’t get a second virus attack

Volatility will be much higher than anybody expects, except Hussman. We could see rallies and drops by 20% on single days (circuit breakers prevent more than -20% and close the market for the rest of the day).

If central planners manage to lift markets with a quadrillion in helicopter money, gold will rise even more than stocks. I would take every opportunity to load up on gold and Bitcoin now that they are falling with the rest of the market due to margin calls. I don’t think gold will fall below 1250. And I think it’s an extremely good buying opportunity here at 1475.

And 6 months from now silver might bottom at ridiculous levels and provide the real buying opportunity of the century – or at least the decade. Maybe silver will rise by 1000% from 7 or 10 to around 100 in the coming years. And gold could go to 5 000 or 10 000 USD/oz after the current little correction.

NB, NO recommendations given here. Do your own research. I hold no licences and I never give recommendations to buy or sell financial instruments or anything else.

A giant leap for happiness

My book is almost finished. Actually it is finished, and I’m just touching it up, pruning and clarifying certain ideas. Here’s a short excerpt, just one single sentence from the book, to get a taste:

Small, consistent steps, taken with awareness, celebration, feedback, analysis and course correcting, will always get you further than occasional and mindless spurts, not to mention being more enjoyable than a single marathon for some pie in the sky moonshot you might never complete, and might not even want if you ever get there.

That’s the excerpt. Here’s the interpretation:

Today I was interviewed on the topic of saving for retirement: when to start, how much to put away, when to start reducing risk, what to forego in terms of consumption, what to plan for etc. Saving and investing money is much like investing in your own life. It comes down to getting the small things right – and the earlier the better.

But small and early, the wu wei concept, isn’t enough. What you do small and early is utterly crucial. Hence you need to pay close attention to who you are, what you truly like, and what effect your chosen small steps actually have, as opposed to what you meant them to cause. That’s what I mean by taking your steps with awareness.

Celebrate your successes. Better yet, celebrate your learning experiences, good or bad. Then reinforce your habits or course correct. Every completed small step is reason to reflect about what you did, why you did it, what effect it had. It’s an opportunity to celebrate the fact that you did something, that you had an experience, that you learned something, and that you’re still around to improve on your decision making process. Analyze what happened, and feed your conclusions back into your habits, targets and life direction.

Do it continuously. Acknowledge that the process is a success in and of itself. Sticking to a good habit is more of a success than actually reaching a long term goal. Sure, keep tweaking and updating your desired direction, and possibly ultimate endgame, with the outcome of your taken small steps. But avoid staking years of toil and effort on long term goals and potentially empty hopes of grand celebrations at the finish line. You’re most likely somebody else when you get there. In addition, with the goal behind you, you have nothing, not even a process. In effect when you reach your long term goal you have nothing to celebrate. The risk is you establish another, equally arbitrary and long term goal just to fill the void.

Striving for a million dollars or a 200 lbs bench press are such useless goals, with nothing but emptiness waiting for you. Using your body every day, or managing your savings a little better every day, are processes you can be happy about every day.

Life and finances work much the same way, and should be considered in context of each other. You can’t predict, but you can prepare. Establish good habits that resonance with your personality and every day will be reason to celebrate sticking to and improving on your habits and best practices. The inevitable setbacks will be nothing more than temporary and largely inconsequential stumbles.

You don’t need to finish the marathon under 3 hours, there’s no defeat in falling and missing the magic number. The joy lies in every step along the way. If marathon runners were only in it for winning or beating a certain time, there would be very few marathon runners around. No, it’s the small steps, the habits, the joy of the process that drive them. The same idea applies to your life and your finances.

Trying to spurt will only make you miserable. Aiming for the moon might or might not get you there; and maybe, just maybe you’ll get to celebrate once. And then what?

Becoming strong, fast, rich, accomplished or successful isn’t about reaching a final goal, it’s about the becoming in itself, i.e., enjoying and celebrating the process. If you save, invest, socialize and exercise in a way that’s sound, ever improving, and not least enjoyable – taking small steps in full awareness and with an effective feedback process – chances are you’ll appreciate your life so much more, than even if you did succeed in a one in a billion moonshot effort to become rich, famous or achieve some other form of externally validated status.

Robert Sapolsky says that your subjective status is at least as important as your objective status, and after a certain threshold level of living standards, what group you choose to compare yourself to is the main deciding factor of how good you feel about yourself. I choose to rank myself in the serenity and happiness group, and there I come out on top, which also means I actually come out on top in therms of how I feel. Win-win-win.

More excerpts are coming up. The question, however, is whether I should include these long winded clarifications in the book or not. What do you think?

Koks i lasten räcker inte

Ett fartyg som ägs av en JP Morgan-fond avslöjades nyligen med kokain för 1,3 miljarder dollar i lasten. Finns det en koppling mellan vakenpulvret och den höga aktiekursen, vilken ligger knappt fem procent från sitt all time high trots en i övrigt svag amerikansk banksektor?

Vad är det egentligen marknaden har sniffat sig till inför tisdagens rapport från JPM? Blir rapporten så bra, och vad betyder det för banker i till exempel Norden, för att inte tala om resten av aktiemarknaden?

I Sverige motsvaras JPM närmast av SEB. Den svenska affärsbanken släppte en överraskande stark rapport i fredags och aktiekursen ligger inte så långt från sin rekordnivå. Det står i kontrast till aktiekurserna för resten av de Sverigerelaterade bankerna, i synnerhet Swedbank, som har ett tungt halvår bakom sig. Har SEB också tillgång till trollpulver?

Med kvadrupeltoppar i OMX-index och JPM, samt ett halvår med svaga bankindex, skulle jag hålla mig så långt det går från såväl bank som verkstad och teknik. Men ​om​ jag skulle köpa något så är det en redan utbombad “billig” bankaktie som är systemkritisk och har potential att hjälpa sig själv med interna besparingsprogram.

Japp, Nordea, jag pratar om dig. Du är sämst i klassen, men just det betyder att det finns mycket mer att göra i dig än i dina strömlinjeformade likar.

P.S. Se upp för felaktiga direktavkastningsberäkningar nu när bankerna ser över sin utdelningspolitik

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