COVID-19 defeated by Mr. Market in 2021 or so the IMF says.

I blogged about Mr. Market coughing blood from COVID-19 slightly more than a week ago.

On 13 March, the STI Index was at 2,665.

Yesterday, the STI Index was at 2,223.

That's a decline of almost 20%.

Today, it is experiencing a bit of a bounce.

So, what have I been doing in the stock market?

What will I do in the coming days, weeks and months?

So far, I have only been nibbling at stocks.

They are stocks of businesses which I believe will continue to generate meaningful income in spite of the COVID-19 crisis.

Although I am tempted to buy a lot more, I remind myself that the bear market is very much still in its early days.

There could be more shocks in the days, weeks or even months ahead.

Shock waves are hitting the American economy right now:






So, my war chests which are several relatively large Singapore Dollar fixed deposits and my CPF-OA savings, the size of which is public information, remain locked.

Some might ask where is the money I have been using to nibble at stocks coming from?

I do keep a float which is money I can access easily at any time.

This float is money in all my savings accounts and current account.

When am I going to deploy money from my war chests?

I said in the blog about Mr. Market coughing blood:

"There could be some rebounds in stock prices as, in a bear market, prices go down a river of hope.

"However, until I see signs of the downtrend breaking or, better still, a trend reversal, my war chests stay locked."

We have seen this happening.

Prices go down.

Prices rebound.

Prices continue to go down.

Prices rebound.

Prices go down somemore.

This is what is meant by prices going down a river of hope.






Fundamentally, many stocks look really attractively priced right now.

However, the fear of the unknown is crushing prices.

After all, we can only say that these stocks look attractive right now because of past information that we have.

Do we really know everything there is to know about the COVID-19?

There is much talk about the Spanish Flu and how long it lasted.

The Spanish Flu killed millions and it came in three waves.

Just when everyone thought it was over, it hit again and again.

Will COVID-19 be like the Spanish Flu?

Are we only seeing wave one now?

Nobody knows.

That is the truth.

So, what are investors to do?

I cannot tell you what you should do, of course.

I can only share what I am doing or not doing.






There is no doubt that we will survive the COVID-19.

There is no doubt that Mr. Market will survive the COVID-19.

If we don't, the human race will be extinct, anyway.

So, what is the point of having or making money then?

Stiff upper lip and soldier on, as the British would say.

Be brave and ignore the doomsayers.

So, I will buy a lot more at some point.

When is that?

Like I said before, I will wait for the dust to settle.

When that happens, we should see prices trying to find a floor if there is to be a bottoming process.

The bottoming process should see prices break their declining trendlines eventually.

Bottoming doesn't always happen this way, of course.

In case we have a V-shaped recovery, we should see prices breaking their downtrends on high volume.

I might miss plenty of upside in such an instance but I remind myself that money not made is not the same as money lost.

We could also see a double or triple bottom pattern forming.

Prices rebound, hit resistance, retraces to a support band, rebound and if it breaks resistance on high volume, that's a buy signal.






Like I said, it is still early days but these are the things I will look out for.

What about the Momentum Oscillators?

At the moment, all I can say is that the Relative Strength Index (RSI) for many of the stocks I am monitoring has formed higher lows.

What this tells me is that the rate of decline in prices has slowed.

It does not tell me that prices are going to recover in a sustained manner.

Another momentum oscillator which I look at is the Moving Average Convergence Divergence (MACD).

The buy signal here for me would be a positive divergence where the MACD forms higher lows even as share prices form lower lows.






Although I have tried to make this information as accessible as possible, I know this might sound gibberish to some people.

Some might even wonder if this is English.

Well, if you think that way, perhaps it is time to pick up some Technical Analysis (TA).

Yes, I know.

Bad AK! Bad AK!

OK, this might not be perfect but if you have absolutely "no time" to learn TA, just take note of the news and stock prices.

If stock prices stop declining and simply move sideways even as we are bombarded with bad news, possibly, the worst is behind us.

Indeed, if stock prices keep moving higher even as we are bombarded with bad news, prices might have truly bottomed.

TA is about probability and not certainty, I always say.

Without looking at charts and just taking note of news and stock prices will make it even more so.

However, it is something everyone can do.

Till the next blog, take courage, stay safe and watch the following video from the IMF ("COVID-19 Economic Outlook Negative, But Rebound in 2021").





Recently published:
Eagle Hospitality Trust: In danger of extinction?

Related posts:
1. Mr. Market is coughing blood...
2. Books on Technical Analysis...

Eagle Hospitality Trust: In danger of extinction?

AK likes buying things on the cheap.

What is cheap?

If we can easily afford something, is it cheap?

Well, it simply means that it is affordable.

It might not be cheap.

Cheap to me means value for money.

Affordability and value for money.

They are not the same thing.

For a refresher, read this blog:
Affordability and Value For Money.

So, AK likes buying things which are value for money.

If I can tell something is definitely value for money, I will buy some and, sometimes, I will buy a lot of it.

This is the same for anything in life whether it is for consumption (especially if it is a need) or for investment.

"Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down." - Warren Buffett

Good old Warren Buffett.

Now, I bolded one word in that quotation.

The word is "quality".





When Eagle Hospitality Trust's unit price crashed last year, many readers as well as some friends of mine thought I would be interested in buying.

After all, many respectable financial bloggers also invested in the Trust then.

Many people thought Mr. Market was overly pessimistic on Eagle Hospitality Trust.

Well, AK is growing older and as he grows older, he grows more timid.

AK wasn't pessimistic about Eagle Hospitality Trust.

AK was afraid, very afraid.

I thought Eagle Hospitality Trust was a risky investment and I didn't feel like taking on more risk in retirement.

What really steered me away from investing in the Trust was the fact that the Trust was imploding as insiders sold at ridiculously low prices, willing to take hefty losses in the process.

This is something that is still happening!





In their latest announcement, the manager of Eagle Hospitality Trust said that "the Security Price meaningfully under-represents the underlying value of EHT’s portfolio."

See recent announcement #4 at the end of this blog.

If that's the case, perhaps, insiders should be buying more or maybe make an offer to take the Trust private.

Why isn't this happening?

Why, indeed, is the opposite, more or less, happening instead?

Why is the manager thinking of an asset sale now?

Wouldn't this be a really bad time to be selling their hotels?

It is basically going to be a fire sale.

In my first blog on Eagle Hospitality Trust, I said:

"Insiders probably know something retail investors or outsiders don't.

"If Eagle Hospitality Trust is a good investment for income, after a huge decline in unit price, insiders should be buying more.

"Even if they don't buy more, they should be holding on to their investments.

"They should not be selling."

It isn't rocket science.

It is common sense.

See related post #1.





My series of blogs on Eagle Hospitality Trust seems to have done something good as a reader who wrote to me late last year just told me that he cut losses after reading my blog in reply to his plight.

See related post #3.

He wrote and told me this after the trading halt in Eagle Hospitality Trust was announced.

He might have lost a big sum of money but in exchange, now, he has peace of mind.

Priceless.

Remember,

"Never risk what we have and need for what we don't have and don't need." - Warren Buffett

Eagle Hospitality Trust looks like it could be going extinct.

If we cannot trust it, we cannot invest in it.

When in doubt, it is better to stay out.

See related posts and recent announcements at the end of this blog to form your own conclusion.

AK is just talking to himself, as usual.





Related posts:
1. Is Eagle Hospitality Trust worth it?
2. Eagle Hospitality Trust: Financial engineering.
3. Eagle Hospitality Trust: His plight.

Some recent announcements:
1. Eagle Hospitality Trust: Resignation of CFO.
2. Eagle Hospitality Trust: Cessation of Substantial Shareholder.
3. Eagle Hospitality Trust: Resignation of Independent Director.
4. Eagle Hospitality Trust: Business Strategic Review and Update.