Hello, Hello! It’s the last day of February for year 2022.
Thanks for reading my Memo.
WAR DESTROYS EVERYTHING
I born in the mid 80’s and fortunately I’m not born in the era of war. Even not born in the era of war, I personally can feel the physical and psychological tension and pain of war.
Last week, Russian President Vladimir Putin announced a special military operation in Ukraine’s eastern Donbas region. Short video clips showing troops and tanker in Ukraine were spreading like wild fire in social media. Civilians flee Kyiv. World leader of the West condemned this move and pressured to impose sanctions against Russia.
The west treated this move as an invasion of Ukraine. Price of Oil, Wheat and Gold surged and, without a doubt, stock market dropped substantially. Russia’s MOEX Stock index even dropped 45% after Putin ordered military action in Ukraine.
The physical and psychological terror of war are unimaginable. On economy aspect, the consequences are devastating. We all know that war destroys everything.
OPPOTUNITY OF CRISIS?
During time like this, I always like to seek some wisdom from books or experienced investors. Lucky to me, there’s one classic book called COMMON STOCKS AND UNCOMMON PROFITS by Phillip Fisher, may provide some guidance to me. I particularly like what he said in this book, which I quote as follows:-
“Do stocks actually become more valuable in war time, or is it just money which declines in value? That depends on circumstances. By the grace of God, our country has never been defeated in any war in which it has engaged. In war, particularly modern war, the money of the defeated side is likely to become completely or almost worthless, any common stocks would lose most of their value. Certainly, if the United States were to be defeated by Communist Russia, both our money and our stocks would become valueless. It would then make little difference what investors might have done.On the other hand, if a war is won or stalemated, what happens to the real value of stocks will vary with the individual war and the individual stock. In World War I, when the enormous prewar savings of England and France were pouring into this country, most stocks probably increased their real worth even more than might have been the case if the same years had been a period of peace. This, however, was a one-time condition that will not be repeated. Expressed in constant dollars – that is, in real value – American stocks in both World War II and the Korean period undoubtedly did fare less well than if the same period had been one of peace. Aside from the crushing taxes, there was too great a diversion of effort from the more profitable peace-time lines to abnormally narrow-margin defense work. If the magnificent research effort spent on these narrow-margin defense projects could have been channelled to normal peace-time lines, stockholders’ profits would have been far greater – assuming, of course, that there would still have been a free america in which any profits could have been enjoyed at all. The reason for buying stocks on war or fear of war is not that war, in itself, is ever again likely to be profitable to American stockholders. It is just that money becomes even less desirable, so that stock prices, which are expressed in units of money, always go up. ”
(emphasis added)
MY MOVE
Last week, I have disposed off my stakes in $ISRG (Intuitive Surgical Inc) (with slight gain) and $2318.HK (Ping An Insurance) (with a loss) not because I think they are no longer fundamentally sound. The main reason of the disposal is I need more cash to increase my stakes in $TSM (Taiwan Semiconductor Manufacturing Co Ltd - ADR) and $GOOG (Alphabet).
The massive drop in the stock market due to the special military operation in Ukraine has caused some opportunity for me to increase my position in TSMC and ALPHABET (GOOGLE).
PERFORMANCE
As of today, this month our portfolio is down 5.37%.
Stay safe.
MNMLH
TAKE NOTICE
that the above memo is by no means a recommendation or a solicitation or expression of
views to influence you to buy or sell any stocks. The above memo is just my
sharing on what I am doing with my portfolio and my thoughts along my
investment journey since May 2020 for my future records and reflection usage.
