Seeking Alpha by Adding Beta

World has started celebrating end of 2020 and start of new year 2021. While 2020 was an interesting year, I am not going to list down all the aspects of 2020 - you can read my previous blogs for that. Let's look at 2020 report card on my predictions and recommendation I made in " 2020! " and make new ones for 2021. 2020 Report Card: Macro Predictions: All the macro predictions were thrown out of the window since start of COVID pandemic in March. Interest rates are close to zero after multiple cuts by Fed, economy went into shortest recession, unemployment is near 7%. Despite all of these, S&P managed to beat my prediction of 3450 by nearly 10%. And Biden not only became nominee but also won well deserved US Presidency. Stock Recommendations: When it came to stock recommendations, I would say I must have gotten lucky since even I did not expect the way sone of the stocks like NIO, ZS, ROKU and even bigger ones like AMZN, APPL, NFLX, MSFT performed. If one had invested

Last month fo 2020 started with Paradox of highs! Here is why I consider it as Paradox: COVID: US daily COVID infections are at all time highs (above 225,000) US daily COVID related death rates are all time high (above 2500) US hospitalizations is over 100,000 - in some regions ICU capacity reaching 85% Many regions are announcing "shelter-at-home" (aka lockdowns) phase Europe is also seeing high number of infections and deaths Asian nations which handled virus quite well (South Korea, Japan) are also seeing increased infections In summary - third wave seems to be lot worse than first two waves and going to get worse before it gets better due to winter and holiday gatherings Markets: All 4 indexes (DOW, S&P, Nasdaq and Russell 2000) reached all time highs on Friday - last time it happened was in 2018 Markets across the world are making new highs  Bitcoin reached all time high; Gold is very close to all time high Even 10 year treasury yield reached 1% (pandemic high) US Ho

As we are approaching holiday season and end of 2020, markets seem to have already moved into 2021 and as incorporating likely outcomes in 2021 with continued upward movement. Markets are trading close to all time highs (even after discounting last few days of sideway moments). Let's look at the 5 "V" Factors which are at play. Virus: COVID-19 virus would continue to dominate our lives well into 2021. We are into 3rd wave and this wave is even stronger than first two waves. Daily infections in US are over 150,000 and hospitalizations are also increasing at alarming rate. Various states and local governments are going back to curfews and partial lockdowns. Restaurants which saw some signs of life are being shut again. Even Thanksgiving holiday would be different this time with limited attendance at dinners and "no rush" Black Friday to start the most important holiday shopping season. Lack of coherent policy and fatigue of staying at home is causing this surge.

Congratulations to President-Elect Joe Biden and Vice-President-Elect Kamala Harris for winning the historic 2020 elections with highest vote count (~75 million). Congrats to American voters for participating with highest turnout (% of eligible voters) since 1900. This is what makes democracy and nation stronger. President Trump - despite his style got over 70 million voters (second highest of any candidate received ever). There was no blue wave as predicted by pollsters losing their credibility once more. Democrats lost few seats in house and did not flip senate yet. Georgia is new battleground with 2 runoff senate races on Jan 5 which would decide control of senate. That could become $300 million election. Georgians have the power to decide the course of nation for this decade. Joe Biden's VICTORY can also be his agenda for next 4 years! Let's break it down the VICTORY agenda V irus Control: COVID-19 Pandemic changed the world, narrative of the election and American Preside

As history has taught us, empires rise and fall. We had seen this with Roman empire, British Empire, Ottoman empire and many more. Same can be said for companies. But even fallen empires or companies can rise if they can learn from their falls and innovate to prosper the new changing world. Apple had proven this when it came back from its almost bankrupt status in 1997. Let's look at some of companies which have been under decline for years for many reasons - some of which were their own mistakes (GE and Boeing), changing industry (Oil to green), disruptive new industries and behaviors (streaming, online advertisements) and some of them were just unlucky due to COVID which no one was prepared for. Now that companies and populations have learned to live with COVID and 2020 is 2 months away from ending, let's look at some of the companies (old empires) and see how they may perform in months ahead. Basic filter I used to define "empire" is that company must be at least 5

The 2nd surge of COVID infections is gaining momentum across many countries with US continuing to lead in number of cases and deaths. President Trump's COVID and outbreak at white house in last two weeks demonstrated that even highest and most secure facility in world could not prevent COVID penetration..the blame goes to administration for not taking precautions (the way they would take against terrorist threats). It feels that our own personal house is more safer than White house.  Markets had their best week since July when similar summer surge was happening and it continued to make highs till end of Aug. It a way markets are delinking from COVID story. We are at similar juncture and 4 factors would matter most for future direction. Economy: Q3 economy should show ~25% growth compared to Q2 (when it went down by 30+ % due to sudden lockdowns in March). That would be highest growth ever recorded for US economy. Over weekend, I visited St. Pedro's Square in San Jose Downtown f

In American political jargon, an  October surprise  is a news event deliberately created or timed or sometimes occurring spontaneously to influence the outcome of an election, particularly one for the U.S. presidency (Source: Wikipedia). Well... it started last week due to unfortunate timing of death of Supreme Court Justice Ruth Bader Ginsberg. President Trump and GOP senate members wasted no time in starting the process of nominating conservative judge Amy Coney Barrett. This by far could become most important election issue and hence can be qualified as October Surprise. Once justice Barrett is confirmed, Supreme Court would be 6-3 with conservative majority (first time in 100 years) and could have long term implications on many key decisions. This is one of the most important policy power Presidents and Senate members have and hence winning these elections matter so much. President Trump is the only president in recent history who got to nominate three Supreme Court judges in his f

As mentioned in previous blog, Sept started with its reputation and markets did had some volatility with Nasdaq near correction territory (10% down from peak). In a way its healthy so that some froth is out from market and newbie day-traders can get the lesson that markets do go down also! Apple is back below historic 2 trillion market cap and Tesla is back to pre-split "reasonable" valuation. More on this later... Sept also means start of football (American football...not to confuse with Soccer) season. Normally fall weekends are filled with college football on Saturday and NFL on Sunday. Unfortunately most of the college football is shut down (for legit reasons... no in-person classes..so it doesn't make sense to have in-person games). NFL is taking lessons from NBA bubble season and starting games with almost no crowd. Let's see how it plays out. At least there would be something to watch on Sunday afternoons and Monday/Thursday nights and follow the teams. This ye

Congratulations Joe Biden and Kamala Harris for Democratic Nomination for President and Vice-President and Best of Luck for winning the elections! Exactly six months earlier S&P reached all time high - that happened in BC (Before COVID). World changed with record unemployment across most of the countries, many folks who have jobs are working from home and close to 800,000 people died due to novel virus COVID-19. But markets don't seem to care...it took 3-4 weeks to lose 34% from Feb 19 to Mar 23 and since then it has not looked back. If you want to see what V-shaped market recovery looks like, just look at S&P chart. It has recovered all the losses and some more and reached all time high last week. And it all can be attributed to select few companies - many of them happened to be in Bay Area. Paradoxically instead of celebrating these with dot.com type excitement, we are all holed up in our houses and packing our bags in case we have to evacuate due to fires burning across

Almost every article you may have read regarding current COVID pandemic, you would see references to  Spanish Flu Pandemic of 1918-1919. But I was surprised to read that just 11 years back, we had similarly wide-spread Swine Flu pandemic in 2009. The CDC site gives very detailed information and timeline about this pandemic.   Let's look at some of the comparisons and timelines and learn/predict the course of COVID pandemic H1N1 Pandemic 2009: First case detected in USA on Apr 15. CDC reported to WHO 3 days later 2 weeks later, WHO declared that Pandemic alert The distribution of tests started by CDC in May Jun 11: WHO officially declared it as Pandemic (less than 2 months after first case) Jun 25: Infections reached 1 million July: Reached peak of first wave and Vaccine trials begin Oct: Vaccine approved and second wave started Some school closures but not wide-spread Nov/Dec: 5 vaccines approved and CDC put orders of 100 million doses Aug 11, 2010: WHO officially declared end of H

Early Aug of 1720, stock price of South Sea company reached 1000 pounds (from 100 pounds at start of year).  The year was marked with many companies with lunatic, dubious and fraudulent business plans were formed and their stock prices increased many-fold. One company's plan was " For carrying-on an undertaking of great advantage but no-one to know what it is”...sounds very similar to 2020's SPAC IPOs which are coming to market. By 1720 year end, many of these companies stock were worthless. Even South Sea stock returned to gravity and ended year with price close to 100 pounds. Many aristocrats,  parliamentarians and even King George I lost money. Talking about gravity, even Newton could not resist the temptation of quick money and invested in the South Sea company and lost significant amount of his fortune. So why is this relevant today? First of all, its 300 year anniversary of that historic bubble! Second, humans don't change/learn even after multiple such bubble

Changing of the Guard  refers to a ceremony during which soldiers  or other officials guarding a major  government   building  or  state   residence , especially  Buckingham Place  in England, are replaced by a new  shift . It also means a group of individuals or organizations is replaced with another individuals or group. (source Wikipedia). Last few weeks of market action has demonstrated that similar trend of "Changing  of the Guard" is gaining momentum in valuations of sectors and groups of companies. The trend is always there but gets momentum when major shift happens (like in dot.com era and recently has been expedited due to COVID pandemic).  "Sector" Changing of The Guard: Looking at two market bottoms - March 2009 and March 2020 illustrate on how S&P sector weightage has  changed just in 11 years. Mar 2009: Information Technology: 18% Healthcare: 15.1% Energy: 13% Consumer Staples: 12.8% Financials: 10.8% Mar 2020: Information Techno

The " Irrational Exuberance " which markets were showing got taken out little bit during usual " June Swoon" . Now what? It all depends on if Economy is going back to "Quarantine" mode or continuing its path to "Rebound". Let's look at some factors which would decide this. Trajectory of COVID-19: Various states (Texas, Florida, California, Arizona etc) have shown increase in infections and positive test ratios. Part of it is due to increased testing,  relaxed norms as well as opening of bars, restaurants and public places. Many nations especially in Asia (India) and Latin America (Brazil) have shown significant pickup in infections. Even China had shown outbreaks in some clusters. Hospitalizations and Death Rates: While infections have increased, rate of hospitalizations is lower than infections and mortality rates have also improved due to increased understanding on how to treat COVID patients. Hospitals and health care system is much

Last week would be marked as one of the historic week in America. The brutal murder of George Floyd by Minneapolis Police in plain-sight brought centuries of racism in US to the fore-front. The peaceful protests were just and warranted to bring attention to this ongoing pandemic in US society (and many other countries). Some of the protests turned into riots due to opportunistic looting by some criminal elements. It's time for US to root out the silent racism and reform the police departments across the nation! And looking at Amy Cooper's infamous racist video, we all must internalize and root out whatever un-conscious or silent racism which we may have! Exactly in same week, markets were ignoring all of these events and almost partying like it's late 1990s-2000. That reminds me of the famous speech by former US Fed chairman Alan Greenspan's about " Irrational exuberance " in Dec 1996. As Yale Prof Shiller wrote in his 2000 book (source: Wikipedia) Irra

In US last Monday of May is  observed as Memorial Day to remember the soldiers who had fallen while serving in US Military. Its somber day to remember the men and women who gave their lives to protect the freedom and security of Americans and all the people of free world. This year world is fighting a new war against invisible enemy. So in addition to fallen soldiers, let's also remember the new warriors! People who lost their lives prematurely due to COVID-19 infections Healthcare professionals who are fighting the war against the COVID-19 virus Economists and policy makers who are working non-stop to limit the economic damage caused by lockdowns Small businessmen who are fighting for survival of their small businesses while protecting employees who work for them Teachers who adopted to remote teaching to make sure that their students continue to get educated  Class of 2020: The seniors who are graduating this year are missing one of their biggest celebrations in life of