More market turmoil

I see the FT2350 is down a massive 2.45% as of writing. I was doing really well in 2020, too, but everything is unravelling, basically.

It’s a mess, but remember, we faced a similar mess in Sep 2019 and early 2018. There were two big falls in 2016, too. So, nothing too unusual. I go along with Paul Scott’s opinion that the market had gotten ahead of itself in 2020 and was looking for an excuse to fall. Coronavirus was just such an excuse.

Airlines are continuing to take a hammering. It seems reasonable to suppose that they will post some dire numbers. the question is whether they will be better or worse than the market is implying. I hold IAG (Int’l Cons Airlines). I am, of course, receiving a thrashing at the moment. It is on an EV/EBITDA of 3.77, which is astoundingly cheap. I dare say it’s going to get cheaper, and will publish some nasty numbers.

I suspect that IAG is one to watch. Don’t pull the trigger yet, but bide your time.

I tend to think of markets as providing “tiers” of opportunities. For example, the safest tier is on a country basis. The next one is a sector basis. The last one is individual companies. Timing is important.

I don’t think we’re there with China. I’m basing my judgement on CAPE. It’s OK, but not compelling. I want to see more pessimism before investing. That pessimism may never come, but I don’t yet see China as compelling.

So, barring countries, sectors are a place to look for opportunities. Airlines are an obvious to place to look. The whole sector is being dumped. When that happens, the odds start to weigh more decisively in one’s favour. The good news is that you don’t even have to be particularly discriminate in what you buy. Buy something half-decent, and you’ll do well.

My portfolio is down 3.6% today, significantly underperforming markets. It had held up fairly well against the rest of the market earlier this year, but it is succumbing to the inevitable.

Travel and leisure generally is one to watch out for. CCL (Carnival) and TUI are obvious picks. Note that I am not saying to buy now, but wait on the sidelines on those two.

My Magic Hat Portfolio is taking a similar drubbing to my personal portfolio. CGS (Casting) is actually up on the day! How about that, then? Airline DTG (Dart), in which I do not have a personal investment is down, of course.

Suddenly, my decision to sell DTG at 1509p doesn’t look so daft, considering its share price is 1222p. At the time, I noticed with chagrin that its share price kept rising after I sold it.

The market is fond of delivering cruel blows and unexpected twist. There was no way for me to know that there would be the virus that would send the shares tumbling. This is why you should always size your risks! Just ask Neil Woodford. As I have said before, investing is a game of probabilities, not certainties. I don’t believe you can play it on the basis that you know what is going to happen. In that respect, I am very much unlike Warren Buffett.

I am fully invested at the moment, although obviously I have cash aside to pay bills, and suchlike.

Stay safe out there!



About mcturra2000

Computer programmer living in Scotland.
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