It’s already May. In just another month we will have already finished the first half of 2021. I am kind of happy that time is moving so fast now, because this whole COVID situation just doesn’t seem to end.
But COVID or not, the world doesn’t stop turning and one of the most exciting investment frontiers is gaining more traction. As I wrote last year about investing in space, today I’d like to share the updated infographic from one of the most devoted space investment specialists: Seraphim.
Not all of these companies are publicly listed. Some are even still simple startups. But this smart overview can give you more ideas how vastly diversified this sector already is, and what opportunities lie ahead of investors who are willing now to take the first steps.
By the way, for those who don’t want to research too much but are eager to invest in space, there is an ETF available on the US market. It’s called Procure Space ETF and the trading shortcut is pretty spot on: UFO. Another option is the ARK Space Exploration & Innovation ETF (Shortcut: ARKX).
April is coming to an end, which means that a third of the year has already passed. In as little as two more months we will be through the first half of the year. What started out more on the optimistic side is now back to where we were almost a year ago. At least here in Thailand.
But you wouldn’t know that if you would pay attention only to the stock market. Most company shares have recovered, and even grown beyond their pre-pandemic levels.
The explanation for this is multi-faceted, but given what I can see from my own company and competitors, it’s a mixture of pre-mature optimism, and the now all-too popular FOMO. Fear Of Missing Out.
Most investors I know are optimists. Most tend to be a little greedy. And, unfortunately, many are trying to time the market. When the crisis started and markets fell by 30% or more, many saw a great buying opportunity. Myself included. The expectation was that a pandemic can’t last that long. Many of us didn’t actually believe it to be real. Or at least not ‘that’ bad.
Plenty of us tried to estimate the lowest possible market point, and then started to get back on the train. The more people started buying, the quicker shares started to stabilize, until demand overtook supply, and prices started to rise. Then FOMO kicked in. People noted the turning trend, and scared of missing out joined in the purchase frenzy. This is how we got here.
So far, this optimism has served us well, but the long-term success will depend on how things play out in the next 2-3 months. The US, Europe, and leading economies of Asia need to show that they can control the situation without sacrificing their economies. Otherwise optimism might turn into disappointment, and drag the market down once again.
What’s the plan?
For the young investor who is not in any financial distress, the simple strategy is to just hold your ground. It’s impossible to predict what and how it will happen, but for the long-term focused investor it doesn’t really matter that much. Stay your ground. When shares go up, enjoy. When they go down again, look out for the next buying opportunity.
For those who might have cash issues, this may be the time to trim some positions for shares which reached their all-time highs. Put some cash aside, re-fill your emergency fund, and be patient. You will sleep better at night.
I often get questions from friends and colleagues about investments in cryptocurrencies, mainly BitCoin. Given the daily amount of news and reports about the BitCoin craze, it’s understandable. It’s almost impossible to not hear about BitCoin these days.
To give it right away: I am not invested in BitCoin, or any other cryptocurrency for that matter. I also don’t speculate with any other currencies on the FOREX market.
The blockchain technology is a very interesting development that will find, and in some instances already found its way in some form into business and into our society. BitCoin is only one of the first products to put that technology to use. But very few people who invest in BitCoin actually really understand what it’s about. Most investors today are simply following the upward trend, and speculate that it will continue to grow for some more time to come.
Looking at the chart, it’s hard to deny that investing in BitCoin so far has been a great way to multiply your money. The big question for investors is of course whether this trend will continue, or not.
Investing in BitCoin is easy. Now.
One reason why BitCoin has moved up significantly in just such a short amount of time is the recently developed ease of access to it. It’s easy to look at the chart and to say: Why didn’t I invest in BitCoin much earlier? Well, it’s really simple. Investing in BitCoin was previously not an easy thing to do.
I was looking into investing in BitCoin some 5 years ago. My journey to invest in BitCoin started like this:
First I needed to find a trustworthy digital wallet. Then I needed to transfer money to that digital wallet. In the final step, I needed to purchase BitCoin through that digital wallet.
The challenges that came with it were however pretty significant: I needed to make sure to safely store (and not to loose) the wallet number, which was a complicated compilation of numbers, letters, and individual characters. That digital wallet number was not retrievable in case of loss.
I also needed to make sure to have a bullet-proof password to it, AND that I don’t forget or loose that password either, because it would also be not retrievable in case of loss.
I needed to somehow try to verify that the digital wallet I decided to use was actually a trustworthy, real offering. That was pretty hard, because there were a lot of scam companies out there and no serious verification system that one could have relied upon.
So there was a real risk to BitCoin before the actual buying process, and even beyond after the purchase, due to the limitations on the quality and trust into the digital wallet. I remember that I did open an account with a digital wallet provider, but the amount of disinformation and misleading data on the internet, the lack of reviews and guarantees, it just made it really hard to believe that my money would be in any way protected if I transfer it to any of the accounts out there. This reason alone was the main reason for me to not invest in BitCoin at that time.
This hurdles have been overcome by now. Access and purchasing have been simplified, there is more trust in the process. But that was not the case 5 years ago.
We can’t really do any analysis on the fundamentals, because there are none. It’s not a company, there is no product or management team behind it. It’s simply a scarce resource that is currently of interest.
Similar with other currencies, its value hinges on people believing in it. And to be fair, there are plenty of people believing in BitCoin. Right now. The easier access allowed more people to get invested. The media is pushing it. And many even prominent skeptics have changed their opinion in recent years, as cryptocurrencies gained more and more drive and appeal among investors.
An argument that I heard very often is that all the millionaires and billionaires in the world are invested in BitCoin, so it must be a reasonable place to park your cash.
To the “rich people” argument, let me say that most of those millionaires and billionaires didn’t get rich with BitCoin. Most of them got rich with their own companies, or with stock investments. They invested in BitCoin after they were already rich, and had therefore much less worries whether their investment would go well or not. They were willing to accept a high risk factor, because they didn’t care that much to loose a couple of thousand Dollars or Euros. Most small investors cannot afford such a high risk-reward ratio.
The risks of an investment in crypto-currencies are still very real. Here just a few arguments to make:
The value of the currency depends on people believing in it. This believe might be weakened or even disappear when another, better and/or smarter cryptocurrency enters the market.
The most rigorous believers in BitCoin assume that it will at some point become a viable world-currency, free of government regulation and in tight control due to its scarcity. There is however valid reason to believe that most governments will regulate BitCoin at some point and introduce their own versions of digital currencies. No government in the world can afford to loose the power to monitor and control their cash flow and supply.
BitCoin prides itself in its anonymity, but the blockchain ledger is in fact an open-source controlled system, and not anonymous at all. Admittedly, it would require a significant amount of time to track BitCoin owners through the ledger, but it’s certainly possible, and with our ever-expanding computing power, it’s just a matter of time for systems to be developed that will be able to track owners throughout the chain.
The ever-rising price is not positively contributing for BitCoin to become a real alternative payment method. Why would anyone use BitCoin to buy any product, if the value of the BitCoin keeps increasing day by day?
BitCoin is an electronic system, and those can be cracked or infiltrated. We might need to get into quantum computing to get the computing power necessary to pull this off, but we are almost there. Slipping in a virus or a bug into the system could crack its security, expose owners, or allow BitCoin to get stolen. Of course, every bug or virus can also be corrected or eliminated, but a major event similar with a “bank robbery” could quickly undermine the trust in the entire BitCoin system and put pressure on it.
There is a great list of arguments and counter-arguments to be found here: https://safehodl.github.io/failure/ I would encourage everyone interested in BitCoin to go through the comments and to form your own opinion on whether you believe in the upside or downside of it.
Should you invest in BitCoin?
If you follow the link above you will find plenty of smart arguments from both side of the aisle, that can help you making an informed decision.
Personally I don’t intend to invest in BitCoin because it doesn’t fit into my investing strategy. I buy great companies at a fair price, and enjoy benefitting from real-life products and real-life profits in the form of dividends that I receive. BitCoin doesn’t produce anything and doesn’t offer any service that I would consider useful (for now) to see it as a viable investment. This may change over time of course, but for now this is where I stand.
What I would however explore instead (and I will) is to dive deeper into the blockchain technology, and to invest in an ETF that would focus on companies that utilize blockchain for their products and services. This is because I am not as much interested in BitCoin, as I am interested in the technology behind it.
The blockchain technology has certainly more aspects to it, and in the long-run investing in companies that can utilize this technology will offer a better risk-reward ratio, than a hyped digital-currency.
Green investments are gaining traction, and while not as exciting as some online start-ups, there are lots of opportunities in this growing market. Also in Thailand. One crucial company for Thailands future success on the environmental front is BGC.BK. What does the company do? Let’s take a look at an excerpt from the “About us” part of their website:
“BGC or BG Container Glass Co., Ltd., a subsidiary of Bangkok Glass Public Company Limited, operates in glass packaging business. The plant was established in 1974 and started its production in 1980 in Pathumthani with the production capacity of 150 tons per day. Currently, BGC has 5 glass packaging plants with the largest number of production capacity in Thailand.
From just one furnace, today, BGC has grown steadily. The company was incorporated into BG Container Glass Company Limited in the year 2016 and was registered as Public Company Limited in the year 2018 The company is built on a foundation of innovation, advanced production technology and effective performance that can be recognized internationally. Moreover, the products meet the standards and cover all needs of diverse customers.
With a commitment to innovation and new products, quality control and environmentally friendly for remaining the leader of Thailand integrated glass packaging market.“
So there you go. It’s all about glass.
Commitment to reduce plastic usage will drive future business growth
Living in Asia one can’t help to notice the ridiculous amounts of plastic that is being used here for almost everything. Plastic bags, bottles, jars, food containers. And beyond those items critical for daily consumption, it goes even further. It’s very common to see households with plastic furniture, dishes and cutlery, even decorations. As a European arriving first time in Thailand, I was honestly shocked. But change is coming, slowly but steady, and glass solutions will play a crucial role on that front.
BGC.BK is a key player in this market, providing standardized solutions for jars, bottles, bottle closures, and caps. They have a wide range of products adjusted to international standards, and with the government pushing slowly towards plastic reduction in the market, they are poised to grow further.
Reading this I admit that while I am trying hard to make this sound like an exciting opportunity, it’s really not. It’s a pretty boring business with lots of old-school elements to it. Factories, chain-supplies, standard distribution. All basic industry 101. But that doesn’t change the fact that it’s an already profitable company in a growing market, with almost no local competition, and an experienced team.
Solid dividend four times a year
Another key point for me to invest in BGC is the dividend policy. BGC has an annual dividend yield of above 4% and pays out 4 times a year. Last year the company paid a dividend in May, June, September and December. This year should be the same. Anyone interested in a passive-income strategy should therefore have this stock on a watchlist. Or in a stock account.
Disclosure: I am managing a portfolio that has purchased BGC.BK since 2020, and I am adding shares of BGC to this portfolio on a regular basis.
I somehow managed not to write an article for a whole month. No excuses, but I was busy. I got occupied with my wife’s smoothie business, I had to make a 1-week business trip to Krabi and Koh Samui, and my head office in Bangkok had plenty of requests for me to work on. My daughter required a little more attention, my dog had his final moments and sadly passed away after almost 18 years of companionship. March was a little overwhelming.
Most of the little free-time that I had left I spent at the gym. Turning 41 must have triggered a tiny midlife crisis in me, because recently I not only started visiting the gym more regularly. I even started applying face cream. Yes, I know. I might be late to the party but previously, I never actually considered doing that. Instead, I enjoyed getting to look older for the last 5 years or so. I don’t know, but all these small wrinkles, I always felt like they would add more character to the picture. This changed last month.
Anyway. That was some thoughtful introduction. Now back to finance.
With all my portfolios back in the greens, I call the market crash over. Done. Finished. History has once again proven reliable, and the stock market showed a pattern that experienced investors appreciate for many decades now. There is always a crash. And there is always a recovery. Once again those who trusted in the market and kept steady or even invested during the crash are now coming out stronger, and wealthier than before.
Don’t blame yourself if you missed out on the action. It might have been just the first round for you, but it surely won’t be the last. We don’t know when the next crash will come and it’s impossible to time the market. But history is teaching us over and over again, that there is no bad time to start investing. In the long-run markets tend to go up more frequently, and stronger if compared with the downturns. So when stocks do go down, it’s usually a good time to be looking out for great companies at fair or even at cheap prices. In the meantime, you can keep investing anyway.
The market was rising strongly for a few weeks now, and it’s very likely that it will continue to rise. Unless of course we get another pandemic, a war, or any other kind tragedy that would put the world in turmoil.
I am rather optimistic, by nature, mostly because the US has a reasonable person back at the top. President Biden is more predictable, communicates smarter, and pays attention to the world as a whole, in stark contrast to his predecessor. At the same time he is tackling massive investments in his countries future, which should push the entire world into a competitive streak of investments that will benefit a wide range of corporations globally. Investments create cashflows, revenues, salaries. These in return curb consumption, spending. That’s how the world works, and that’s why investors keep winning.
So if you are already invested: Enjoy the change of winds and watch your portfolio recovering or growing. If you are not invested yet, now is as good as ever. You might have missed the speedy recovery, but the opportunities are endless.
In the world of finance, we have many strategies, many different financial instruments, and thousands of advisors who will be telling you to have a unique way of making a fortune. Some of them might happen to be the right people. Some will present just the right tools. Other times, either the tools or the people handling those tools turn out to be wrong.
Especially when it comes to the people, some might be even known to be flawed in one way or another, presenting methods and strategies that turn out to be a pure gamble when it comes down to the test. Some are honest. Some are not.
Some investors have the opportunity to try out all these different ideas, tools, and strategies. Those with sufficient funds to play around and who are willing to take on all kinds of risk can experiment to find the tool and the strategy that will produce the best possible results for them. But most of us are not in this category. Those who earn a regular wage and have only the option to save and invest 10-20% of their income don’t have the resources to play around. For those I have a simple advice on how to become an investor. A successful one. It’s surprisingly simple, and it’s something that most investors know by heart, as they heard it over and over again from no one else but the worlds most famous value investor, Warren Buffett:
“It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
While the context of this quote was referring to the topic of value investing, it includes a simple message: When you invest, you should focus on buying great companies at a fair price.
This simple formula established the foundation for Buffett’s success. There are of course no guarantees that this will make you a billionaire. It doesn’t guarantee that you will become another super-rich person. But by following this simple rule you will significantly improve your odds to do financially better.
So when I advise friends or colleagues on investing, I am not promising anyone that he or she will become rich. Instead, I am promising to increase their odds. By a large margin.
What are the odds
Increasing your financial well-being without investments puts you below the odds of a lottery ticket. That’s 1 in 13,983,816 (according to Google). Maybe you will find the perfect job, that will not burn you out, that you will love to wake-up for every single day, and that will pay you so well that you can comfortably retire without a single worry on the back of your mind. Maybe you will inherit some surprise fortune from your parents. Maybe you will happen to be at the right place, at the right time, to receive an opportunity of a life-time that will set you up financially for the rest of your life.
I got a suggestion. Let’s remove the word “maybe”, and replace it with a plan. Because the odds for “maybe” are not even 50:50. They are somewhere around the odds of that lottery ticket that I wrote about.
Now it’s hard to put a number on the odds of becoming rich through investments, but history and statistics put them significantly higher than the 50:50 figure. Every single investment you make stacks the odds a little bit more in your favor to have a better financial future, while at the same time it also reduces the risk of a financial failure. I recommend here a short read to put it a little better into perspective. It’s definitely better than what I could write here right now on a lazy Sunday afternoon 😉
Not all of your investments will be a success. In fact, the Pareto principle also applies to investments: 80 percent of your success will be attributed to only 20 percent of your investment. So if you invest in 10 stocks, only 2 of them will truly outperform (on average) and be responsible for 80% of your final result. Some will succeed, but on a smaller scale. Others might disappoint and underperform. But the point is that investors are actively contributing to setting up themselves for success. Because with every investments their odds increase.
So the message of this post is: When you invest, don’t do it for the promise of becoming rich. The true initial purpose is to increase your odds to improve your financial well-being. Whether it will make you rich, just financially stable or simply more comfortable, that’s another story.
For humans, the world is full of problems and all of these problems require some kind of a solution. The good news is that we as a species already accumulated a vast range of knowledge about most of our every-day problems, and how to solve them.
The bad news is that humans are not only slow learners with inconsistent memory functions. We are also easy to be influenced by others, and unfortunately, these “others” don’t always have our best interests at heart.
Let’s take a look at the concept of investing. As I wrote in my to date most popular article “Nobody wants to get rich slowly“, investing in the stock market is a fairly easy and straightforward process. The modern tools that we have at our disposal, namely easy access to information via the internet, access to the stock market, and to the right products (like ETFs), can help everybody becoming a successful investor.
But of course, everything simple can also be made more complicated. The world of investors today is not only about buying and selling stocks and ETFs, but the financial industry has added countless additional products to the mix. From FOREX trading to CFDs, short-selling, and BitCoins. Things can get pretty complicated.
Keeping things simple
I invest in single stocks and in ETFs only. I don’t trade with foreign currencies, I don’t put bets on the futures market, I don’t purchase digital coins, and I don’t engage in short-selling. Am I losing some opportunities along the way? Possibly. Does it bother me? Not a bit.
I like to keep things simple, and investing per se is a simple process. I do my research and then I purchase shares of a company that I believe has a bright future ahead. If I can’t find enough information about a specific company or can’t focus on one, I will look for an ETF that might cover that specific market group, and I invest in that ETF. That’s it.
It’s pretty rare that I sell any stock unless it made me a significant profit. Even then, I won’t sell the whole position, but probably only some part to free up cash and to buy the next stock or ETF.
My target is to grow my portfolio and to build up my stream of passive income via dividends. Ultimately I want to retire with sufficient passive income to not care about any government money or support from others. I want to be financially free and independent, and I still have plenty of years ahead of me to get there. History taught us that investing in stocks is the single easiest, most reliable process to reach this target.
Impatience and greed
But of course, there are some obstacles along the way, and the biggest ones are our own emotions, namely the feelings of impatience and greed.
Most companies don’t grow overnight, and the perspective of waiting for 2, 3, 5, or even 10 years for a breakthrough and the ultimate success is not easy for everyone. It can feel tempting to try to speed up the process with some CFDs and bets on the future, to hedge against losses with some short-selling options, or to divert some funds into bitcoins with the hope for a quick boost to your net-value.
And yes, there definitely are opportunities that I might be missing out on. But for me, it’s just not worth the headache, mainly because the trading frame is too short and the risk-reward ratio is not appealing enough for me.
I don’t want to trade stocks daily or even weekly. I don’t want to be forced to follow every single news-flash to be able to quickly react in a fast-paced environment. And I don’t believe in every single new trend is being said to become the next Trillion-$ market. So why would I give myself all these troubles, especially while knowing well that the simple investor approach that I am following now is historically also the most reliable one?
There is also the fact that while most of all these other opportunities in the financial industry offer viable options to make profits, they often also offer the possibility to lose your hard-earned money even beyond the originally invested amount.
Last but not least I am also perfectly aware that the main reason for the financial industry to push and empower a fast-paced environment is because they earn more in commissions and trade fees if their customers are more active.
Do your thing, but keep it simple and keep your emotions in check
I am not saying that people shouldn’t try other investments or explore other potential opportunities in the financial market on their own. Everyone can find a different path to success, and some products and concepts will work better for some than for others.
But no matter what you plan to do, learn from others who walked that path successfully, try to keep things as simple as it gets, and keep your emotions in check.
Who would have thought? It’s already February. January didn’t really give us a fresh start into a post-covid era, which some overly optimistic people might have expected, and February doesn’t look any better. Neither does March, but let me write about that next month.
Having said that, the world is adapting to the new conditions. Stock markets are back at all-time highs as investor’s sentiment and perspectives for the future seem to be getting more predictable. So today, let me share with you my opinion on a bright star of the investment world of Thailand. A conservative pick from the world of finance: TISCO.BK
A modern specialist for finance in Thailand
The TISCO Financial Group PCL is a giant in the financial industry of Thailand. The company profile on Reuters says the following:
“TISCO Financial Group Public Company Limited is a Thailand-based holding company engaged in the financial and banking businesses. The Company primarily operates two main activities: commercial banking business and securities business. The Company and its subsidiaries provide banking services, personal loan services, corporate lending services, as well as life and non-life insurance brokerage services. They also offer securities brokerage services, asset management services, cash management services, underwriting services and others.” – Source: Reuters
So there you go, nicely summarised their entire activities. The first time I stumbled upon Tisco in Thailand when I bought my first car, financed with a Tisco loan, and insured with Tisco insurance. I didn’t think much about it at that time as an investment, but I was amazed about the modern and easy way the loan was handled.
I would pay my monthly installments via online banking, at any 7/11 shop, or I could instruct them to withdraw the payments directly from my bank account. I could also make additional payments at any time I wanted, which was great as it helped me to pay off the loan much faster than the 6 years that I originally put in the contract. I paid the car back in half of that time and saved interest on top of it.
Stable growth and solid dividend
When purchasing shares, I prefer buying companies that I trust and that I have a positive experience with. So when I started investing in Thailand some 3 years ago, I naturally took a look at Tisco, and I liked what I saw.
The company has not only solid growth and an excellent share performance to show for, but it also pays annual dividends which are almost constantly growing year on year. In 2019 my yield on cost after tax was 5,84%, in 2020 it grew to 7,65%, and I am now very curious about 2021. The dividend is usually being paid out in May each year.
When COVID hit the markets and the stock dropped to levels below 70 THB, I have added to my position, which pushed my average purchasing cost to a mere 75,96 THB per share. So while I do expect the dividend to be reduced in 2021, I might still reach an excellent yield on cost.
Learning from other markets
Tisco is right now my largest holding in the Thai portfolio I manage, and I am confident that I will add more shares whenever I see the market dipping again or even if it would be just stabilizing further. One of the main reasons why I feel so confident about this company is my experience with another German financial giant: The Allianz AG.
While I never invested in Allianz (yet), it was always one of those stocks for me that I regretted not having had put money in (I still do). As boring as the business sounds in comparison with Apple or Starbucks, it’s one of the most profitable and reliable business models on the planet. It benefits from amazing profit margins and enjoys customer loyalty beyond what most other businesses can present. Not because of having such great products or services, but simply due to necessity.
If you’re investing in Thailand, Tisco should be at least on your watchlist. Do the due diligence, check the numbers, visit their investor relations website and analyze the chart. Read more articles from professional investors and get your facts straight. But I bet you will like what you see and that the stock will find its way into your portfolio.
DISCLOSURE: I have TISCO.BK in a portfolio that is managed by me.
PS: You might notice minor changes to the blogs layout. I have decided not to purchase the WordPress Premium plan this year to reduce my expenses slightly as my dividends dropped by 11% year on year. Therefore, I swapped to a free layout AND you might have to endure some WordPress commercials every now and then. Sorry for that, I will put things back into place next year.
January is already proving to be a challenging month, with COVID still in full expansion mode. This means that we still follow all the protective measures and restrictions which have been put in place to protect the public, including full or partial lockdowns, travel restrictions, mask mandates etc.
Thailand managed the outbreak pretty well so far, but in the last 3 weeks, things also escalated here a little bit with lots of new infections and putting public life once again under pressure.
But every crisis can also be an opportunity, and as promised, I’d like to present one such potential opportunity in the investment world of Thailand on my blog.
The leader in medical services in Thailand
Things need to get worse before they can better, and for investors with some cash on hand, this is a good time to look for undervalued companies that will either recover after the crisis or which might even profit further from it. And one such company is Bangkok Dusit Medical Services(BDMS.BK).
You can find more information and investor relations for BDMS right HERE. The company operates hospitals, clinics, and other medical facilities, including the production of pharmaceuticals. The “About Us” section of BDMS describes the company as follows:
“Bangkok Dusit Medical Services (BDMS) is one of the most prestigious hospital networks in the Asia-Pacific region, with 26 hospitals and/or clinical programs out of a total of 48 hospitals across the BDMS network that have been accredited by the Joint Commission International (JCI). We are ranked in the top five private hospital groups globally in terms of Market Capitalization. BDMS offers world-class medical care and treatment to both local and international patients, complemented by the latest medical technology. Our team of qualified doctors and nurses consists of specialists in every field. These health professionals have received training from top medical schools around the world, and they are passionate about providing only top-tier health services to every patient.“
I can confirm that the company has not just the reputation of being the best in Thailand, they are the best. I am living in Thailand for almost 10 years now, and I can confirm that whenever I get sick, I wouldn’t consider any other hospital than a BDMS operated hospital or clinic. And it’s the same for every single expat here that I know.
They are modern, clean, the staff is professional, the service amazing, and while they are more expensive than other medical facilities in Thailand, the value is still reasonable. Especially if you have insurance.
The stock suffered during the crisis as you can see on the chart, but it’s already on track to recover and I expect it to thrive once the vaccinations across the country begin to take place, probably around March and April this year.
While the hospital will certainly benefit as one of the main distributors for future vaccinations, its business is currently also affected by consumer sentiment, and the lack of medical tourism, which is a very strong contributor to the companies top-line. People from all over the world are coming to Thailand to undergo essential and non-essential treatments, thus the current travel restrictions are a serious drag on the companies revenues. Once the restrictions are lifted, the stock should continue its recovery and get back to a level of around 24 THB, thus implicating a 12% upside on this factor alone.
BDMS is also a dividend payer, with the dividends usually being distributed twice a year in April and in September. In 2020 however, there was only one payment. The last dividend came in at 0,25 THB per share, so the yield was not impressive, and overall the dividend history is not showing any real care for dividend-growth or even small growth consistency.
Stability for your depot and long-term benefits
Overall I regard this stock as a good, but not very exciting opportunity. It’s a solid company with good long-term potential and a boring dividend. But boring is good. Long-term potential sounds great to me. And as it’s slowly making its way back up, for me it definitely is one of those SWAN (sleep well at night) stocks that puts stability and trust in my portfolio.
DISCLOSURE: I am managing a portfolio which owns BDMS.
As the year is coming to an end, it’s time for a portfolio re-evaluation. I do this every year in order to determine what I did good, bad, or just wrong, and what I can and should do better in the next year.
Keeping a cool head
I wrote it many times. When it comes to investments, you need to keep a cool head and take emotions out of the equation. You need to stick to your thesis and know that you’re in for the long run no matter what. But this is easier said than done.
When your shares are moving up for a while and you see your profits surging by 20%, 30%, or even 50%, you might feel the urge to sell your shares just to make sure that you can actually keep that profit. I call this phenomenon “negative greed”. It’s greed because you want to keep the profits, and you want to make sure that your account gets credited before anything happens to it (like another downturn in the market). But it’s “negative” because once the shares are sold, you have obviously no more shares that could grow even further from there. You secure profits, but you lose chances for more profits.
Similarly, when your shares are moving down, it’s hard to stay cool while watching your account going negative into the double digits. When a recession hits and all you can see is a screen with red numbers on it, thoughts will crawl into your head. Thoughts, that question your decisions, making you wonder whether that whole thing is just a big scam that you fell for, and that you should have better listened to all your non-invested friends who think you’re nuts for being an investor.
On both counts, I did quite well in 2020. While I experienced all the emotions and drags as described above, ultimately I kept a cool head. The only shares I sold were those of Apple (AAPL) after the stock-split. They soared by over 150% and I sold some to be able to buy a few new shares of other companies which I considered to be good opportunities. What did I buy?
Wereldhave – A dutch shopping mall operator who suffered dramatic losses in its share price in recent months and who is due for recovery once this whole Covid drama is over
Starbucks – The company is showing over and over again that it’s one of the best in the market. The pandemic didn’t hit it as hard as one would have thought, and it will come out stronger in the aftermath
Veolia – After watching a documentary on Netflix about drinking water (the show is called “Explained”, highly recommendable) I decided to start focusing more on water-related investments
I also started a savings plan into an ETF. It’s called “Xtrackers MSCI World Information Technology UCITS ETF 1C” and it’s focused on tech-investments world-wide. 100 Euros a month that have started to flow into this ETF, completely paid by the dividends I receive each month.
One more word about Wereldhave. I had this company in my portfolio in the past, and I sold it at a loss when they cut the dividend and when the covid crisis hit. But I kept it on my watchlist and observed the stock movements on a weekly basis. When I noticed that the stock stopped moving further down (after dropping more than another 50% since the time when I sold them) and the company announced a new management team as well as a full restructuring of their business model, I got back in. The shares are now up 40% since I bought them.
In terms of dividends, Starbucks and Veolia will contribute to my annual income in 2021 as they both pay stable and each year growing dividends. Wereldhave used to pay a strong dividend until the crisis hit. They canceled all dividends in 2020, and I don’t think the company will be able to pay out any dividends in 2021. I expect them though to start paying dividends again sometime around 2022.
My dividend income shrank in 2020 compared with 2019. This was mainly due to my largest and also most disappointing investment: A company called Aurelius (AULRF). It’s a business development company (BDC) which I purchased back in 2018. It was showing not only superior growth opportunities but also had an amazing dividend yield, and since 2018 it developed into my single largest holding position.
Unfortunately, it also became my most disappointing investment. The share price dropped by almost 70% and the dividend was cut down to zero in 2020. However, in the last couple of weeks recovery started to kick in. My losses are now at -56% and given the recent business reviews, I am quite confident that shares will continue to tick up. Also, the dividend should recover in 2021. But I admit, this one is my single largest nail-biter.
Overall it looks like my dividends year on year will reduce by some 11,60%, and this despite the growth of my total invested cash by 8,99%.
Monthly passive income
The total decline of dividend payments by 11,60% is obviously not great, but overall, my monthly passive income remained largely stable. My total dividend yield on investment came down to 3,22% from 3,97% in the year before. For 2021 I expect it to move back up into the 3,5% to 3,9% range.
Considering the scale of the covid crisis, I see my thesis of investing and putting money to work in the stock market confirmed. And 2021 is almost guaranteed to produce similar or better results, with most stocks set to soar once the vaccine distribution starts kicking in.