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We entered bear market territory on 11 March 2020.
We exited the bear market territory, and into the bull market territory, on 23 March 2020 or 18 August 2020 (depending on what "bull market" definition you use).
With the US Fed set to keep rates low until 2023, expect the banks to not perform exceptionally well in 2021.
Furthermore, given that the banks had been fairly aggressive in lending money out to businesses in 2020, and Govt support for businesses is set to stop in 2021, we expect a rise in default rates, and hence a hit to the banks' earnings.
And what happens when 40% of the index doesn't do well?
The index doesn't do well (might be a little far-fetch but considering we don't have an SG-Financials ETF, this is as close as one we can get).
Unless, of course, the other 60% meteorically rise to some historical highs.
3. Air Travel Will Recover
As the vaccines roll out, as countries need tourism to boost its economic recovery, as people start to feel so dry that they need to travel and drink overseas water, tourism will pick up.
Most likely, people are still going to be travelling by air.
We'll see more visitors visiting various airports around the world this year.
PS: Ya, we know, this is kind of a no-brainer kind of prediction 🤷♂️
If we could invest in airports (like an airport REIT or something), I might actually invest in that just to capture the potential that's coming up in 2021.
But because there isn't, I invested in the next closest thing equivalent to that: SATS.
I do think it's kind of like a monopoly where airlines don't really have other choices besides using SATS in Singapore for its food services.
But that's my view, and I bought when prices were low.
My prediction?
SATS will reach $5 by end of the year 2021.
Disclaimer:
I bought SATS during the midst of the COVID crisis.
I think SATS will do well this year as air travel recovers, and as more tourists visit Singapore.
Do your own research, your own analysis and groundwork.
Although I think air travel will recovery, airlines not so much.
I have a negative bias towards airlines - I find them to be lousy businesses to invest in.
Why? Because Warren Buffett said so.
Or more specifically, it is expensive for airlines to scale and grow fast, whereas all it takes for Facebook to add another customer is to add just 1 more server to its server racks.
Are airlines important business: Yes
Are airlines great investment: No
Of course, if you bought at a low enough price; like $3 during the whole COVID19 pandemic, that would make it look like a genius investment.
But generally, I prefer investments that have a competitive advantage and scales fast.
Airlines just don't make the cut.
That said, airlines face serious issues.
1. You can fly, but not at maximum capacity.
Airlines are in a competitive business and getting almost maximum capacity sold is the key to profitability.
Even as travel restrictions ease, maximum capacity is not going to happen this year.
So, it's going to be a long way from getting back to profitability.
2. Less business/first class travellers
Business and first-class travellers make up the majority of airlines' revenue.
These are usually business travellers, executives travelling overseas for some business deals etc.
With COVID, we have now learnt that the same can be done over MS Teams, Skype, Zoom, or whatever other tools you like - it's a lot cheaper than air travel and it still gets the job done.
So why would businesses still want to let executives fly around when there's a cheaper alternative?
Don't take it from me only, even Bill Gates agree with this.
If you have a money related story about you or your relatives' that you want to share, let us know in the comments below or email us at investmentstab@gmail.com. Alternative, you could fill in the form below for us to contact you. Story Form
Dear Reader! As we progress towards the next phase of our journey, we would like to find out what would make you like us even more. We hope you could help us fill in a short survey of 8 questions (4 of them are MCQs) so that we can help tailor our content to you. Survey
Remember to offer your opinions. If you don't put your two cents in, how can you expect to get change? Have feedback? Tell us now! Follow us on Facebookand Instagram for more timely updates about finance-related articles and memes! 😁 Subscribe to our newsletter too in case social media platforms decide to stop showing you our content.
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