Friday File: From Weed to Shining Sea
by Travis Johnson, Stock Gumshoe | May 15, 2020 5:56 pm
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Source URL: https://www.stockgumshoe.com/2020/05/friday-draft-5/
OT – That very first quote didn’t resonate with me either! š
I read an article this morning that 7 states(so far) are introducing bills to force commercial property insurance companies to cover Covid-19 losses no matter what exclusions their polices have. If passed I would imagine many insurance companies would be forced into bankruptcy.
https://www.natlawreview.com/article/covid-19-states-attempt-to-shift-economic-burden-to-insurance-industry-new
Yes, that would lead to massive losses for all P&C insurers, and would presumably make it to the Supreme Court pretty quickly. One thing all insurance companies are doing is preparing for dramatic increases to their legal budget.
I expect the insurance biz to not be destroyed by legislators looking for a bailout solution, but beating on insurance companies is always popular and sometimes some of them deserve it.
Nothing can ever be certain and things could absolutely work out worse than I expect ā like investing, insurance is a business of probabilities, we all have to make our own risk assessments with the best information we have.
I like!
Hey Travis, great read as always. It seems like that Tencent sell has cut deep for you. The way I confront my mistakes is I think back and analize if I had good solid reasons for doing what I did. Sometimes I realize that my decision was reasonable given the information I had at the time and would do it again, so I forgive myself and let it go. Other times I realize I made a mistake with the information I had and should’ve known better, and I would do it differently even without additional information, so I try to learn from it and remember so I don’t make the same mistake again. Don’t be too hard on yourself!
I have an unrelated question and hope it’s okay if I post it here. I’ve been building my gold mining portfolio (SAND, RGLD, BTG, EGO, KGC, NEM and the ETF NUGT because I like to take some risks, I am a professional gambler after all, so my question is: if the market drops again, do you think these gold stocks will fall alongside it like in the coronacrash? Because I see gold appreciating most everyday and would think those stocks would hold up pretty well even with another drip, but I don’t know that much about the behaviour of gold. Thank you!
Thanks, I appreciate the thoughts. I make plenty of mistakes, some just linger as more impactful š
For gold, in my experience gold itself holds up ok in market crashes, but often the gold stocks crash along with everything else when there are āsell everything!ā Moments. They typically lead the recovery if there is any lingering concern about disaster or currency values, as I expect there will be after this recession.
Doesnāt mean it will happen exactly that way, but Iām guessing gold stocks will rise for a couple years after this coronavirus bear market ends ā maybe that starts now, maybe after another big drop. Pull up a chart of the 2006-2012 market for GDX, GLD and SPY, which essentially moved like that, maybe it will be different this time but thatās my basic expectation
Thank you for the response! That was very helpful
Great write up as per usual Travis.
I listen to a number of financial podcasts as well and also like invest like the best as well as rule breakers which put me onto sea limited a few weeks back. One of my favourite podcasts that has been playing on my mind though is from a couple of investors called ā we study billionairesā . Iām sure youāve heard of it , they have great interviews with people like Mohnish Pabrai and are generally looking for value plays but one topic they Keep coming back to is their thesis that Bitcoin is going to rocket within the next year due to the massive fiscal stimulus. They believe that anybody not hedging some of their investments (even just 1%) into blockchain is going to be missing out on massive gains and wealth protection and many of their guests agree. They most recently discussed it against gold in the link below.
Iāve never held bitcoin or any other blockchain but now feel like I should, even just a small amount particularly as I think the push to a cashless society will see people trying to keep wealth from the governments prying eyes. I know you owned some a couple of years ago (bitcoin and ethereum I believe) but have never been particularly keen mainly I seem to remember mainly due to regulatory concerns and the fact that there are so many of them . Have your thoughts changed at all recently? What do you (Or anyone else) think to their predictions?
https://podcasts.apple.com/gb/podcast/we-study-billionaires-the-investors-podcast-network/id928933489?i=1000472655985
Their predictions will likely be wrong, like most peopleāsā, but I do like their interviews. My opinion hasnāt changed, I do have a teensy investment in crypto currencies but I donāt find them particularly compelling ā they seem to
Me, on the whole, to be mostly a magnified representation of speculative sentiment.
Itās possible that cryptos will become valuable, but with so many of them representing no ownership of the technology or platform I find it difficult to rely on the value… and I think bitcoin as a āstore of valueā and currency hedge might work if we all edge toward accepting that, but I know that gold has worked in that role for a couple thousand years so I have more confidence in gold. My physical gold holdings are about 10x my cryptocurrency holdings, which probably makes me an old fuddy-duddy, but thatās probably the fairest representation of my current sentiment.
I agree but probably should have some exposure to this wild Crypto market but I do not want to buy them individually so I came across this certificate listed on the SIX Swiss exchange. Hopefully someone could take a look at it or suggest another way.
CH0521604923 (SIX Symbol KRYPTQ) is an open-end tracker certificate.
Swissquote Multi Crypto Index (ISIN CH0521604923) is listed at SIX Swiss Exchange as can be seen in the term sheet.
https://www.swissquote.ch/index/index_quote_e.html?trackPageId=2fgpeuqvmrabeom9pl1doeoiq*5786133754&cookieId=ACM158547207075658718&sessionId=2fgpeuqvmrabeom9pl1doeoiq
I have some money and lost some money in Bitwise. Cryptos are still the wild west. People state electronic store of value but the problem is that its not steady value (would you sell your house to someone offering cryptos?) based on anything plus there are too many pump/dumps and out right theft.
Thanks but 25 large is way more than I would consider just to get some exposure. The KRYPTQ, listed at SIX has no minimum.
Investing in bitcoin/altcoins is different than investing in blockchain. Check out some of the blockchain ETF’s to see what companies they hold. Like BLOK, BLCN, LEGR, etc.
I agree with this. The blockchain technology is here to stay and I believe in it longterm for businesses worldwide. Cryptos, not so much. Maybe after a couple of iterations we will have a good crypto that won’t be as volatile and will actually be used as a currency and not speculation, but right now they are not very compelling. I still do hold some BTC because I kind of have to, but convert to USD every chance I get.
I have been reading Gilder Moonshots reports. He has been continually saying the leading blockchain companies, like Bitcoin, Ethereum, and Eos are “doomed.” Their structure of blockchain is, “costly, slow, vulnerable, and unscalable.” They should continue to have some good runs over the next couple of years, but there are new and better blockchain companies who are doing things right, that will replace these “dinosaurs” (mostly private startups, but several should go public in 2020). I am still trying to get a grasp on Gilder’s reasonings and technology (just became a lifetime subscriber of all his newsletters). He gave as examples, IP and MITK, as companies who use blockchain correctly (not for currency) in their products and services. I have a position in MITK. Gilder explains that the Crypocosm – which is relying on the advancements of blockchain – is the term used to refer to the complete restructuring of the internet and decentralization of security. Everything is about to change, but it’s going to be a slow process.
Damn, I sold 2/3 of my PW as well. Iām with you on this stinger of a sell. Still have a small piece though so I guess thatās the optimistic view. Iād have none if you didnāt bring it to my attention a while back
MKL has a target, depending on which group of analysts of 1000 to 1053 (why 3?) so your 6% uptick in book value is pretty safe at this time…however, it didn’t show any movement on a good day in the market and we need more time to evaluate over another week or more.
I have no idea what will happen in the next few weeks, I expect book value will rise mostly just because their portfolio will have risen since March 31. Iāll probably still own Markel in 10 years, unless the management or culture changes dramatically.
Yet one more beautiful and most useful piece of trading literature, thank you Travis!
I missed acquiring Sea Shares last week in FOBO (Fear Of a Better Opportunity). Do you think the proposed offering of convertible notes (mentioned in this article: https://bwnews.pr/2XbI5tR) may lower, even if for a short while, the price of the equity, Travis?
Sure, it might. Stocks don’t move in a straight line, I assume there will be some very negative days ahead for SE as well, which argues in favor of buying (or selling) such stocks in relatively small tranches instead of trying to bet on the perfect price.
Many thanks for the ever-wise advice and reminder, Travis!