CORONA VIRUS ALONE – OR IS THERE MORE?

THE THREE MAIN US-AMERICAN STOCK INDICES HAVE THE MOST TERRIBLE WEEK SINCE THE GREAT RECESSION 1929 FF. MANY PEOPLE THINK IT IS THE CORONA VIRUS THAT PUTS FEARS INTO INVESTORS’ MINDS. BUT IS IT ONLY THE CORONA VIRUS ALONE – OR IS THERE MORE?

NO DOUBT THE CORONA VIRUS PLAYS A BIG ROLE IN THE CRASH THAT HIT US-AMERICAN INDICES IN THIS WEEK. IF YOU LOOK AT INVESTING WEBSITES LIKE INVESTOPEDIA (https://www.investopedia.com/), YOU WILL SEE THAT MANY US-AMERICAN CONPANIES COMPLAIN. OBVIOUSLY, THE CORONA VIRUS INTERRUPTED THE SUPPLY CHAINS FOR PRODUCING THEIR MERCHANDISE AND SERVICES. MANY AMERICAN FIRMS GET THEIR SUPPLIES FROM CHINA AND OTHER EAST-ASIAN COUNTRIES. THEREFORE, IT IS NO MIRACLE THAT THEIR EARNINGS AND PROFIT FORECASTS FOR 2020 GO SOUTHWARD. ONE RESEARCH DEPARTMENT OF A GLOBAL BANK EVEN BELIEVES THAT THERE WON’T BE ANY POSITIVE EARNINGS RESULTS AT ALL IN 2020.

BUT IS IT ONLY THE CORONA VIRUS THAT CONTRIBUTES TO THIS OBVIOUS STOCK MARKET CRASH IN THE UNITED STATES? (BESIDES, OTHER STOCK MARKETS WORLDWIDE ALSO WENT DOWN SIGNIFICANTLY. HERE, OTHER FACTORS BESIDE THE VIRUS CONTRIBUTE TO THE DOWNFALLS. BUT, IN MY OPINION, THEY ARE DIFFERENT THAT IN THE U.S.A. IN THIS ARTICLE, I CONCENTRATE ON THE SITUATION IN THE U.S.A.)

IN MY OPINION, THERE IS AT LEAST ONE MORE OTHER REASON BESIDE THE VIRUS CONTRIBUTING TO THE RECENT DOWNFALL. THE U.S.-AMERICAN STOCKS ARE OFTEN OVERPRICED. SIMPLY, WE SEE THAT, E.G., IN THE FACT THAT SINCE YEARS, WARREN BUFFET’S BERKSHIRE HATHAWAY DID NOT FIND ANY COMPANY TO BUY.

WARREN BUFFET PREFERS TO BUY COMPANIES WITH A HIGHER INTRINSIC VALUE THAN THEIR PRICE. WE DEFINE INTRINSIC VALUE AS:

Intrinsic value is a measure of what an asset is worth. This measure is arrived at by means of an objective calculation or complex financial model, rather than using the currently trading market price of that asset.

In financial analysis this term is used in conjunction with the work of identifying, as nearly as possible, the underlying value of a company and its cash flow. In options pricing it refers to the difference between the strike price of the option and the current price of the underlying asset.

https://www.investopedia.com/terms/i/

FOR BUFFETT, THE INTRINSIC VALUE OF A COMPANY MUST BE HIGHER THAN THE PRICE HE PAYS FOR IT.

AND INVESTORS OVERPRICED THE U.S.-AMERICAN STOCK MARKETS EXTENSIVELY. THESE ARE ESPECIALLY COMPANIES WITH RELATIONS TO THE DIGITAL AGE, THE SO-CALLED GROWTH COMPANIES. WE MUST SEE THIS IN OPPOSITE TO VALUE COMPANIES – COMPANIES BUFFETT WOULD BUY.

MANY COMPANIES ON THE US STOCK MARKETS DON’T EVEN MAKE A PROFIT. THEY GROW AND GROW AND GROW, BUT THEIR DEBTS ALSO GROW AND GROW AND GROW. IN MY EYES, THIS IS NOT HEALTHY. THIS IS ESPECIALLY THE CASE IF PROFIT DEPENDS MOSTLY ON ADVERTISEMENT SALES.

THEREFORE, I BELIEVE THAT THE AMERICAN STOCK MARKET DOES NOT ONLY SUFFER FROM THE CORONA VIRUS. SURELY, AN ADDITIONAL POINT IS AN ESCESSIVE OVERPRICING OF AMERICAN COMPANIES, NOT BACKED BY ENOUGH ASSETS.

CORONA VIRUS ALONE – OR IS THERE MORE? OBVIOUSLY THERE IS MORE THAN THE EYE CAN SEE.

 

 

IS GHANA TORN BETWEEN GOLD AND OIL?

THE “GOLDSTREET” BUSINESS NEWSPAPER TODAY REPORTS THAT GHANA BENEFITS FROM A SURGE IN THE PRICE OF GOLD. TO READ THE WHOLE ARTICLE, VISIT: https://goldstreetbusiness.com/business/ghana-set-to-benefit-from-gold-price-surge/ BUT ON THE OTHER HAND, OIK PRICES ARE GOING SOUTHWARDS. IS GHANA TORN BETWEEN GOLD AND OIL? Continue reading “IS GHANA TORN BETWEEN GOLD AND OIL?”

WARREN BUFFETT’S INVESTMENT TENETS 2/MANAGEMENT TENETS

The Warren Buffett Way

WARREN BUFFETT’S INVESTMENT TENETS 2/MANAGEMENT TENETS DISCUSSES THE PRINCIPLES UNDER WHICH WARREN BUFFETT VIEWS THE QUALITY OF THE MANAGEMENT. THE MANAGEMENT OF THE COMPANIES HE INTENDS TO INVEST IN MUST HAVE CERTAIN ASPECTS TO CONVINCE BUFFETT. THESE ARE:

— IS THE MANAGEMENT RATIONAL?

— DOES THE MANAGEMENT HAVE A POSITIVE RELATION TO THE SHAREHOLDERS?

— CAN THE MANAGEMENT RESIST THE “INSTITUTIONAL IMPERATIVE”?

AS USUAL, YOU CAN DOWNLOAD “THE WARREN BUFFETT WAY” FROM THE BEGINNING OF THE ARTICLE. ENJOY READING! Continue reading “WARREN BUFFETT’S INVESTMENT TENETS 2/MANAGEMENT TENETS”

GHANA STOCK EXCHANGE – BACK TO THE FUTURE?

SOME TIME AGO, THE GHANA STOCK EXCHANGE WAS ONE OF THE BEST IN AFRICA. LAST YEAR, IT DROPPED, AND DROPPED, AND DROPPED… IN 2020, HAS THE TIME COME NOW WHEN WE CAN SAY “GHANA STOCK EXCHANGE – BACK TO THE FUTURE”? Continue reading “GHANA STOCK EXCHANGE – BACK TO THE FUTURE?”

START SAVING A CERTAIN PERCENTAGE OF YOUR INCOME

START SAVING A CERTAIN PERCENTAGE OF YOUR INCOM

MANY PEOPLE GIVE 10% OF THEIR MONTHLY INCOME TO THE CHURCH – THE SO-CALLED TITHE. BUT APART FROM THE SPIRITUAL WELFARE, THE PHYSICAL WELFARE IS ALSO OF IMPORTANCE. THIS IS ESPECIALLY TRUE FOR SAVING FOR RETIREMENT AND/OR UNFORESEEN EXPENSES LIKE HEALTH ISSUES. SO, HOW MUCH SHOULD YOU SAVE FOR THESE SPECIAL EVENTS IN YOUR LIFE? Continue reading “START SAVING A CERTAIN PERCENTAGE OF YOUR INCOME”

ON WARREN BUFFETT’S INVESTMENT TENETS

Security Analysis

I STARTED AN ARTICLE SERIES ABOUT THE INVESTMENT PRINCIPLES (TENETS) OF WARREN BUFFETT. FOR SOME REASONS, I HAD TO STOP THIS SERIES. I NOW RE-START IT AGAIN WITH THE FIRST ARTICLE ABOUT THE RELEVANCE OF BUSINESS MANAGEMENT FOR INVESTMENT DECISIONS. FURTHER ARTICLES ON THE INVESTMENT PRINCIPLES OF WARREN BUFFETT WILL FOLLOW EVERY WEDNESDAY. Continue reading “ON WARREN BUFFETT’S INVESTMENT TENETS”