The Covid has all along been a grey Swan event for a while. Yes, they are spreading globally with over 100k people infected at this point but they are not as deadly. Recovery rate has been pretty decent and there wasn’t as much fear as we all thought out there in the market.
Then came the Saudi event over the weekend.
Over last Friday, Opec+ was supposed to meet and cooperate over the production cut by 1.5m barrels a day. Had the Russian agreed, we probably had a field day today for the O&G sector. What happened next was something that came out surprising.
Not only did the Russian decided not to agree, but it enrages the Saudi’s wrath that the Saudi decides to play the game at the world’s hands.
As we all know, Saudi has the lowest costs per barrel as compared to the other countries out there. This table is appended in 2016 so we are likely seeing even higher average costs for all the other countries except middle East.
This is a Black Swan event.
The market went on a relentless drop in the early morning when market was opened and it exarcebated badly in late afternoon.
STI dropped by a massive – 170 points at the end and this is something remarkable we’ve never seen happened before in the STI, ever!
My portfolio bleeds down by $12k movement today, but I’m sure everyone else is bleeding like I am so it’s not a really big deal.
I managed to do some cleaning by divesting one counter and adding two new companies at such a good valuation that I was pretty happy at the end of the day.
It is not often you get to buy companies at this sort of valuation so why waste a good fall today.
I knew everyone is waiting and probably just waiting for it to go lower and you can be sure it is the hardest ever decision on whether to step in one foot in the fire.
My strategy is more lucid and I am planning to move and rotate around whenever I get the chance to do so. Remember that even in bad months we get rebounds along the way so we are likely to see volatility and opportunities to exit along the way. It is not a one way down in most time.
But yet the most important thing as I look at my current portfolio bleeding, I saw my average price at all the companies I bought and I knew for just as long as I could hold those until this is blown over, this will give me not just decent but very very good return. I could possibly even double my networth if I’m really lucky that this whole thing is blown over which hopefully if not this year then the next.
We’ve done the hard homework prior to the crash, now it’s simply putting in the action where the mouth is.