Dear Financial Voice Reader,

Tuesday 17th March 2020 15:44 EDT

I don’t think I’ve been busier with more questions than I get presently about investing the markets. Let me share some of the things I’ve made public through my daily commentary on my Telegram channel which is free – :

Santander only expects a 5% hit to earnings due to virus. That's why I think banks will rebound sharply. BUT, whilst I've bought some, I'm waiting now. US bad news will hit in 3 weeks sadly. And cause more panic - sadly. Buying feels patriotic! But at the right time.

Penny shares are high risk. I’ve bought these - Byotrol. Not my usual strategy. But we are in unusual times. The field the company is (hand gels) in and that its share price is rising is key factor.

CROCI - is what Goldman Sachs use. At a lunch with the Chairman of Goldman Sachs Asset Management some years ago they gave an explanation of why it works well for them. I will explain more on what I am looking for on CROCI and debt on the private channel and the opportunities. CROCI is cash return on capital invested and closer to the Warren Buffet way than the crude P/E ratios for forecasting company share prices and those with efficiency built in to be able to rebound.

Apprentices making big returns on and the markets - please be mindful people's jobs are at risk. It's never good to be emotional in trading, whether making money or not.

Shares are valued in future cash-flows and projected earnings (profits). So yes we see falls with mass revaluation. BUT, optimism we will soon be out of this remains (rightly or wrongly) so a bounce should be sharp. However, mass psychology may change and that's when my opinions will. As the CEO says in the movie Margin Call about the financial collapse, my job is to know when the music will stop. That's it.

I am starting to look at Casinos as possible purchases for a 100 percent return. Risks. 1. Takes two years. 2. Company could fail. Reward: 100 percent return.

Burberry: China domestic purchases back slowly to normality and pent up demand resuming in non perishable luxuries. Of course rich are poorer but can afford Burberry. If it returns to recent levels then fifty percent return. Even two years to get there is a good 25 percent pa.

An apprentice asked me about UK Company Cineworld - cinemas. Obvisouly it's taken a hit. Market falls are a time machine. We are now in 2012 territory. It's a 7 rating. If it returns to highs of 2019 then that's a 300% return. Even if it took 3 years, thats 100% pa. But short term, could fall more. So it's not risk free. Don't forget airlines are failing. It has to survive first.

The coordinated rate cut between major banks sadly will not help the financial markets in the near term. It has done this to try set the tone for Monday. Like with the UK Leaving ERM in the 1990, hedge funds will see this as central bank capitulation not financial market capitulation. Ie we are not at a bottom. After all we don’t know when people will spend and how many companies will go bust. I would buy either 1. What I like for long term but is cheaper by at least 30percent - just like when I go to the Xmas sales. 2. I’ll buy survivors I would not normally buy if I can make 100 percent when they recover to this years highs. Eg Lloyd’s Bank. Even if they take three years I don’t mind. I’ll post others.

All trading and investing is risky. Use risk capital only. Think long term and saving and investing only, seek advice. Do not gamble.

By Alpesh B Patel

comments powered by Disqus

to the free, weekly Asian Voice email newsletter