We have been under lockdown for weeks now. The majority of the public are following government guidelines and staying at home. Although we have heard that the government will ease the lockdown in the coming weeks and allow businesses to start trading again, I am sure that we are still a long way from our normal lives.
I am grateful that I am still working full-time and am very busy during the week. However, many of my friends and family have been at home and have asked for my recommendations on how to use time productively. Check out the Other Thoughts section for more details.
The market in the UK has been flat over the past 7 days with the banking industry down -3.1%. However, my portfolios outperformed the market at an average of 0.1%.
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- The biggest news of the week sent a shockwave around the globe when the US oil prices crashed into negative territory for the first time in history, which means the producers are paying the buyers to take the oil off their hands. West Texas Intermediate, the US benchmark, traded as low as -$40.32 a barrel in a day of chaos in the oil markets. The settlement price on Monday was -$37.63, compared to $18.27 on Friday. Although it has recovered since the dip, this volatility is not going anywhere soon. A sharp rise in unemployment means fewer Americans are driving, and the analysts are already predicting dead summer months ahead. So, evidently the months with the highest demand are not going to happen this year.
- Self-proclaimed business champion Trump is under tremendous pressure from all sides. His top enemy is not an outsider, but rather his uncontrollable mouth 🤬. One day he says something ridiculous like: “injecting disinfectant in the body will kill the virus”, the next day he denies having said it. While the US is still importing oil from Saudi Arabia, Trump’s biggest task will be saving the US shale producers and keeping Saudis happy at the same time.
- All eyes are on Germany now, as the German government joined other European governments in relaxing its lockdown rules, allowing businesses to re-open under strict rules. Shops with a retail space of up to 800 square meters will be allowed to re-open to the public, but strict curbs on social contact will remain in place and Germans will be encouraged to wear masks in shops and on public transport.
- Sadly in the UK, the number of coronavirus deaths passed the grim 20,000 milestones on Saturday, and the UK now has the 3rd highest death toll after the US and Italy. The total number of fatalities is likely to be much higher than the current official toll, largely because deaths in care homes are not included in the government’s daily update. Although the numbers of new fatalities have been dropping for a few days, experts said it could be another two weeks until the death rate starts to decline quickly.
- DIY retailer B&Q reopened its 155 stores last week, while housebuilders like Persimmon and Taylor Wimpey will resume business shortly, on 27th April and 5th May respectively. The UK car industry is also planning to reopen plants soon. Vauxhall has unveiled a socially distanced manufacturing plan that it hopes will provide the blueprint for companies to make a safe return to work during the coronavirus lockdown.
- While the European countries are relaxing their lockdown rules, WHO has warned against coronavirus immunity passports, saying that there is no evidence that those who have recovered from the COVID-19, are protected from a second infection. There have been reports, including from China and South Korea, of patients who appeared to have recovered from the disease but are now testing positive again. Unfortunately, it seems like an antibody test won’t be as effective as touted by governments.
- Another piece of news that caught my attention was that the US banks, including JPMorgan, Goldman Sachs, and Bank of America, are pulling back from lending to European companies since the pandemic started. According to FT, JPMorgan walked away from a talk over an additional credit line for the world’s largest chemical company, BASF. Similarly, BoA halved its loan to sportswear giant Adidas, and Goldman Sachs didn’t take any part in the credit facility for its long-standing client Daimler. Is it a sign of another global financial crisis?
- Lastly, Boeing terminated its agreement with Embraer, a Brazilian aircraft maker, on Saturday. The deal would have given Boeing a bigger stake in the market for smaller jets and helped the company develop aeroplanes more cheaply, an area currently dominated by Airbus. Both Boeing and Emirates have accused each other of failing to reach an agreement in separate comments. It seems like the bad days are not over yet for Boeing just yet. I was actually planning to invest in the company, as I am guessing there will be a significant dip on Monday.
My Portfolio Summary
My main portfolio dropped slightly, by 0.2%, while the SIPP portfolio has grown 1.1% week-on-week which helped me perform better than the benchmarks. 🙏🙏🙏
- easyJet (LON:EZJ), Legal & General (LON:LGEN), Meggitt (LON:MGGT), Metro Bank (LON:MTRO), EVRAZ (LON:EVR) – all lost between 10% and 5% in the last week. Wizz Air has started flights between different European cities, and easyJet is also looking ahead when the travel restrictions are eased. As mentioned in my previous post, EasyJet has enough cash while all the flights are grounded. I am optimistic that the share will recover fairly quick when it starts flights again.
- Aerospace engineering group Meggitt has decided to cut 1800 jobs globally. It employs 2,500 people in the UK and around 6,500 in the US, with other global operations in countries such as China, German, France and Brazil. It has a good PE ratio and its short-term assets exceed its short-term liabilities. I don’t think it is in any immediate danger right now.
- Although EVRAZ has an unbelievable 38% dividend yield and I wouldn’t be surprised if it cancelled its dividend, I am not worried about the company just yet. Evraz has £1.2 billion on its balance sheet, even after last month’s £468 million dividend payout, and is on the hook for debt repayments of only £42 million or so this year.
- Last week, Metro Bank published its annual financial report, and CMA sent a letter to the bank to repay around £11.4 million in charges to almost 130,000 affected customers. I have stopped following the bank right now, it has too many issues, and I don’t want to lose the rest of my sleep, which is already hampered by the financial market downtime.
- Both Plus500 (LON:PLUS) and Royal Mail (LON:RMG) were up more than 5% in the last week. I have mentioned Plus500 several times in my previous articles and Facebook groups and looks like it is going to become a clear winner in this unstable condition. As a debt-free online business which is not affected by the pandemic, I believe it is a good share to hold; even if the stock already reached an all-time high. According to Simply Wall St website, it is still 49% lower than fair value.
- I made two changes to my SIPP account last week. Firstly, I changed my “Income instructions” from “Held on account” to “Automatically reinvested” at Hargreaves Lansdown. This is cheaper than manually investing – it charges at 1%, minimum £1 and maximum £10, whereas HL would charge £12 for each manual transaction.
- Secondly, I am planning to invest a small amount in the SIPP each month, in addition to all my stock investments and workplace pension. I decided to go for funds rather than stocks for a similar reason. Purchasing stocks on a regular monthly basis, HL will charge £1.50 per transaction, whereas funds are free to invest, although there is a regular handling cost. After some calculation, I found that for small investments, the funds are better than stocks. I am planning to put the minimum amounts in four to five different funds. Once I decide the funds, I will definitely share the details.
Last week my Freetrade loss dropped to 0.74% due to good performance from IBM and US pharmaceutical stocks. Also, Tullow Oil’s (LON:TLW) stock price recovered slightly after the previous week’s dip.
The technology giant announced its quarterly earnings report on Monday. It was a credible result overall, with revenues of US$18b and statutory earnings per share of US$1.31 both in line with analyst estimates, showing that International Business Machines is executing in line with expectations.
My confidence in the top US pharmaceutical stocks including Bristol-Myers, AbbVie and Pfizer, seems to be working well. Bristol-Myers Squibb’s cancer drug Opvido was successful in two clinical trials and was up around 3% last week.
On Friday, we learnt that the Netherlands became the first country to cancel its football season, while in the UK, the authorities are meeting this week to discuss starting the season in a closed stadium. Any hope of a quick William Hill (LON:WMH) recovery might be in jeopardy if the English football governing bodies cancel the season, too. Whatever happens, I still believe that William Hill is good for a long-term investment portfolio. Its success will depend on the entrance to the US sports betting market. It will be difficult, but not impossible to become successful. I topped up my William Hill holding by a tiny position and took a small position in Bank of America last week.
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|Other (ETFs, Trusts & Cash)||0.4%|
I helped three friends opening accounts with Freetrade, as they are new to investing in stocks, and wanted to learn the skill without putting in large amounts. A zero-transaction fee platform, like Freetrade, is ideal for them.
As mentioned at the beginning of the article, I have been thinking about using my time productively and sharing ideas with my friends and colleagues. Here is a list of ways I believe we should use our time to do something useful during the lockdown.
- Start looking at your monthly expenses and savings is a good one to start with. Two weeks ago, I changed one of my PAYG contracts which will save me £5 per month. On the same day, I called Siteground, one of my website hosting companies and asked for a discount. They dropped my quarterly bill by 30%. So start checking your bank statements, I am sure you will find small leakages like these ones. Don’t forget to check out my other money-saving posts.
- I have been using Money Dashboard to see all my bank accounts and credit card bills in the same place. Save money, plan and achieve your goals with this free multi-award-winning money app and budget planner.
- You can also start investing money in stocks, funds and bonds. If you are new to maintaining an investment portfolio, please go easy with small investments. You can use Freetrade, as many of my friends have already done. You can win a free share worth up to £200 by using a referral link. Please leave a comment if you are interested in starting your portfolio.
- In this difficult financial situation, if you have lost your job, and are looking for new opportunities, you should improve your skillset during this lockdown. In this way, you can stay stress-free and have the upper hand when the situation gets better. Udemy offers many professional courses, and many employers would give you credit for having these additional skills on your CV. Currently, Udemy is offering courses up to 50% off – find a topic today from 100,000 online courses.
- Speaking additional languages could be a great skill at your workplace, too. I was talking to a friend yesterday about learning Chinese. Although she is already dealing with Chinese clients, most discussions are in English. I said to her that it might be difficult to learn the language, but it will definitely improve her communication skills with the client. You could also learn to speak in Spanish, French or Abaric using Babbel, which offers a 7-day free trial.
- There are many things you can do right now, and it’s impossible to write them all down. However, one thing is very important – always try to find your passion. A couple of weeks ago, I was talking a kind lady who has been recently furloughed by her employer, so she now has a lot of time to spare. She said that she is spending a lot of time indoors exercising and deadlifting. I thought this could be the start of a successful YouTuber career. We are consuming a lot of rich content now (podcasts, live and recorded videos), and there is no harm trying something new which is already so close to your heart.
Before I started writing this article, I thought I wouldn’t have enough topics to cover. It looks like I was wrong again! I won’t make this article any longer. Please stay safe, stay healthy and look after your family.