Coronavirus Stock Buying Experiment 3 Month Update

Things are finally turning around for the stock market

Three months ago, right at the beginning of the stock market meltdown, I embarked on a stock buying experiment.

February had been an absolutely stellar month for me on Medium, my royalties had been the highest I’d ever experienced (I still haven’t managed to match it), and I was suddenly flush with cash.

So what do you do after an unexpectedly large cash injection when you’re about to be furloughed and run a publication about being financially responsible? You blow it all on risky shares of course!

At the time, shares were just beginning to plunge, and I was interested in buying low, waiting for a year, then selling high. I had no interest in doing it alone, so I wrote the experiment as a series here on Money Clip.

The experiment was exciting to embark on, and somewhat exciting to read (I’ve been told). Results were very fast, and within a week I’d lost a lot of the money I’d invested. Unfortunately for me though, I didn’t choose the moment quite right and bought in before shares truly cratered.

Never mind I reasoned, I’m in this for the long haul. Regardless of short term losses; in a year or two, I’m going to come out ahead.

As great as profit is, it only formed a part of why this experiment was so exciting. Buying into a handful of New Zealand companies allowed me an insight into the changing business landscape.

It also allowed me to take part in some unprecedented moments in the New Zealand economy. One such moment was Auckland Airport’s desperate fund-raising effort and subsequent flooding of the market with sharply discounted shares.

As exciting as it was to take the risk, at the end of the day, I was hoping to put my hard-earned Medium royalties to work and generate more cash. I was also hoping to inspire some readers to think more about the stock market as a viable option.

Time went by..

It’s now been two months since the last update, which means it’s high time we check the share prices and see how everything has moved since last time.

I’m happy to say that I think you’re going to be pleasantly surprised by the results.

Here is how everything looked two months ago:

South Port New Zealand; down 9.82%: $27.98 lost

Synlait Milk; down 13.86%: $39.50 lost

Port of Tauranga; down 22.24%: $63.39 lost

Freightways; down 31.16%: $88.80 lost

Westpac NZ; down 34.77%: $99.10 lost

ANZ Bank; down 35.67%: $101.65 lost

Air New Zealand; down 70.38%, $246.33 lost.

Total money lost, $666.

Air New Zealand which had started out strong had fallen to the bottom of the pile with a staggering 70% loss. That wasn’t even the worst of it though, with losses peaking at almost 90% at one point.

With so much money gone, it’s almost shocking that the airline never went under, thank god for the cargo shipping deal that saved them before things fell past the point of no return.

Ok. let’s see how things are today, two months later.

Today’s Numbers

Freightways; down 5.17%: $14.46 lost

Westpac NZ; down 24.25%: $69.10 lost

ANZ Bank; down 25.25%: $71.95 lost

Air New Zealand; down 36.61%, $128.14 lost

South Port New Zealand; up 5.21%: $14.85 gained

Port of Tauranga; up 10.97%: $31.28 gained

Synlait Milk; up 25.87%: $73.73 gained

Firstly, I was flabbergasted to see that some of the companies are actually profitable again. We’re finally seeing signs that there’s a light at the end of this crappy tunnel.

I’m proud to say that losses are now at a total of $163.79, which is a glorious number when compared to how bad things got.

Unbelievably, it was Synlait Milk that came out ahead first. This milk company was losing money like crazy in early 2020, which is what had originally caught my eye.

I’ve seen their products in Shanghai, so I knew they had international appeal. I figured that their low share price was probably the result of a short-term mishap rather than a sign of the company crashing, and I’m so glad I believed in them.

They have recovered wonderfully and were the first to re-enter the black.

Both of the ports (Port of Tauranga and South Port) eventually followed Synlait Milk onto the path of profitability after international trade opened back up and they were allowed to get back to work.

As soon as the virus struck, I knew ports were going to suffer, but they were sure to bounce back.

People were selling their shares in ports left and right, but why? It’s not like we’re going to stop needing products shipped, I certainly can’t imagine a world where New Zealand is going to start making their own products in bulk.

The virus was the perfect time to buy port shares, and that’s being proven now that they’re making money and are profitable again.

A month ago was the right time to buy ports, but now is the right time to buy airlines. I’ll speak carefully because I’m not in a legal position to give financial advice, but airline shares are almost worthless right now, but they won’t be forever.

I predict that before Christmas arrives, travel will be an option again and people will celebrate the holidays anywhere but in their homes.

People will travel as much as they can as soon as they have the option to do so, and airlines will be there to help them.

Cruise lines will return in a big way too.

Rich customers have big wallets and short memories, I’m confident that those predicting the end of cruise travel will be proven wrong.

Even though air travel will come back big, luxury travel has almost entirely been phased out. This is because large, luxurious planes have been sold-off and first-class cabins decommissioned to keep airlines afloat.

So for the first time since the ’70s, air travel will become affordable again. I’m somewhat wary of US-based airlines, but I’m confident that non-US regional airlines will bounce back in a big way.

I believe that reckless spending and aggressive share buy-back schemes put US airlines in a horrible position before the crisis hit. They treated their customers horribly, and have leant on the government hard to keep themselves afloat. I don’t think this crisis has taught them any lessons at all, and they’ll be back to their rotten practices again before long. So I won’t be spending a dime buying shares with them.

If you’ve got any questions about the stocks that I own as part of the stock buying experiment or otherwise, please let me know.

I’ll post an update in a month or so to let you know how things have progressed further with the experiment.

Important Disclaimer: Please do not make any financial decisions without first consulting a professional financial planner. (Fiduciary). Nothing in this article constitutes financial advice. This is my account of what I have done with my money, nothing more.