My Stock Buying Experiment: 1st Week Update
Everything is on fire
Hello everyone, and welcome back to the madhouse.
Is it just me, or has this week has felt like an eternity? All around us the global share markets have been crumbling like a house on fire.
Tuesday felt like the end of the world as reporters tracked the plunging share market and compared it to the 2008 financial crisis. However, Tuesday had to quickly move over and make room for Thursday, a day so bad that it was compared to the Black Monday crash of 1987.
In response to the devastating depth of the crash, The Federal Reserve Bank of New York injected the US stock market with $1.5 trillion to try and mitigate losses.
The Guardian published a section of a statement made by the Federal Reserve that reads as follows:
“Today, March 12, 2020, the Desk will offer $500 billion in a three-month repo operation at 1:30 pm ET that will settle on March 13, 2020. Tomorrow, the Desk will further offer $500 billion in a three-month repo operation and $500 billion in a one-month repo operation for same-day settlement. Three-month and one-month repo operations for $500 billion will be offered on a weekly basis for the remainder of the monthly schedule. The Desk will continue to offer at least $175 billion in daily overnight repo operations and at least $45 billion in two-week term repo operations twice per week over this period.”
To sum it up, times are really bad, and absolutely no companies are safe.
Life is a Casino Now
The depth of this reality has turned my already risky bet into a straight-up game of blackjack. It’s me vs the house at this point.
So what did I do?
A week ago, I sunk $2,060 into what was at the time a depressed stock market. I believed, and still believe that most companies will come out of this crisis on top.
I gave each company an even amount of $285 with the exception of Air New Zealand who I gave $350.
I believe that most money invested during these times will turn a profit once the virus has been brought under control and life resumes as normal. In the meantime, the stock market will continue to burn, and prices will keep on plummeting.
If you want to know more about my crisis stock buying experiment, I’m running a series right here on Medium.
Crunch the Numbers
I promised the truth, and here it is. I started with $2,060 a week ago, and this is what’s happened… South Port New Zealand; down 0.80% $2.28 lost; $282.72 remaining Port of Tauranga: down 11.22%; $31.98 lost; $253.02 remaining Freightways; down 15.29% $43.58 lost; $241.42 remaining Synlait Milk: down 17.38%; $49.52 lost; $235.48 remaining Westpac Bank: down 24.82%; $70.74 lost; $214.26 remaining ANZ Bank; down 24.95% $71.10 lost; $213.90 remaining Air New Zealand; down 42.99% $89.63 lost; $260.34 remaining
Since buying the shares at market open on Monday, I’ve lost $358.83. That means my original pool of $2,060 has been reduced to $1,701.17.
It’s not over yet, though, I’ve got a strong feeling that I have a lot more yet to lose before this is done.
Even Safe Companies Aren’t Safe Anymore
Air New Zealand (my biggest investment) has lost nearly half its value, which feels absolutely unbelievable. I mentioned in a previous post that flagship airlines that are branded with country names were the safest transportation bets during a crisis; but I’ve been proven wrong by Korean Air, who is barely holding onto their business. If Korean Air goes under, I’ll definitely begin to sweat.
With the exception of Air New Zealand, my other bets aren’t doing as badly as I thought they’d do.
South Port New Zealand is in a surprising lead with only $2.28 lost, which is pretty impressive. They must have found a way to make up for their lost business after the Chinese ports were locked down.
Port of Tauranga is coming second with $31.98 lost, so they’re doing comparatively well, but they’ve clearly not been as resourceful as South Port.
Synlait Milk was coming last during my last update, but have pulled themselves up to 4th place, not a bad effort.
Both banks are hanging near the back and would be coming last if I weren't carrying the dead weight of a dying airline.
My biggest hope now is that Air New Zealand can turn it all around before going the way of Hainan Airlines who filed for bankruptcy with the Chinese government weeks ago.
In Conclusion
This brings me to the end of my Week 1 update. Join me again next week after market close on Friday, and I’ll supply you with another update on what’s happened with my chosen seven companies.
Do you have any predictions? Let me know if you’ve taken a glance at any crystal balls lately. And everyone else, if you’ve got to fly anywhere, choose Air New Zealand. They’re not paying me for advertising, I’m just really hoping they survive this, for my sake.
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. Once again, this is not financial advice, and I do not recommend that you repeat my experiment.
