Top Reads this Week (2 Feb)

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Rounding up top reads from around the web, including articles shared by fellow investors in the Financial Horse Facebook Group.

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Wuhan virus infects Asia stocks with exposure to China, Singapore index closes down 1.8% (Straits Times)

Asian markets fell on Tuesday (Jan 28) on rising concern about the impact of global travel bans associated with China’s deadly coronavirus even as some stocks involved in preventative health spiked.

Shares of airlines and travel agents were sharply lower amid freezes on travel into and out of the world’s second largest economy, while companies with an indirect exposure to Chinese consumer spending abroad, such as casinos and luxury retailers, also tumbled.


Nearly a third of Nasdaq 100 stocks are in a correction, but two names look like a buy (CNBC)

The Nasdaq roared back from its two-day sell-off, but a handful of its biggest names are showing signs of strain.

AmazonNetflixeBayCisco and Starbucks are among those stocks in the Nasdaq 100 in or about to enter a correction — a drop of 10% or more from 52-week highs. Nearly one-third of the Nasdaq 100 is in a correction or worse.


These stocks are getting hit by coronavirus fears (CNN)

Individual sectors and companies with heavy exposure to China also remain vulnerable.
 
UBS analyst Zuzanna Pusz said in a note to clients Tuesday that the bank is “more cautious in the near term” about luxury goods sellers such as Swatch (SWGAF), Richemont and Prada (PRDSY), noting that these companies benefit from global tourism and healthy spending in China.
 
Pusz cautioned against comparisons to the SARS outbreak in 2003. Back then, Chinese consumers accounted for less than 10% of luxury goods sales. Now, they account for one third.
Also exposed: Apple suppliers face concerns that the outbreak could affect the tech company’s plans to make up to 80 million iPhones in the first half of the year, according to a Nikkei report.
On the other hand: Companies that produce cleaning products rallied Monday. Clorox (CLX), Procter & Gamble (PG) and Kimberly-Clark (KMB) all rose.

Johnson & Johnson (JNJ) Stock Is Rising as Company Is Going to Create Coronavirus Vaccine (Coinspeaker)

Despite experiencing some tough times because of product liability lawsuits, Johnson & Johnson stock is considered reliable and secure. The company offers a 2.6% dividend yield and remains a top player in the healthcare sector. In mid-December, its shares traded at $140s. Currently, Johnson & Johnson shares trade at $149.22.

As for other companies in the industry, Vir Biotechnology has enjoyed an over 20% growth amid the coronavirus. Besides, the company believes it has the ‘potential to treat and prevent Wuhan coronavirus’. Another company to benefit is a biotech company Inovio Pharmaceuticals. Its shares have skyrocketed 24%, bringing its weekly gain to 60%.

Procter & Gamble, Pfizer and Walmart are also gaining.

China became the center of coronavirus, therefore many companies with exposure to this country have suffered losses. In particular, those involved in the travel industries came off the worst. For instance, Wynn Resorts shares are down nearly 7.5%. Gambling and hotel stocks Las Vegas Sands and MGM Resorts are down about 7% and 4% accordingly. Further, American Airlines lost 5.5%, while United is down 4.8% and Delta is down 4.2%. Royal Caribbean has seen a 6.9% drop.

Notably, consumer companies with big business in China are also out on a limb. For example, Nike is down 1.9%, while Estee Lauder is down 5.2%. Even Apple has fallen 3%.


The prime culprit is lifestyle “creep.” A fatter paycheck makes people feel richer, so they feel empowered to buy that fancy car or bigger house, said Steve Wendel, head of behavioral science at Morningstar. But as their expenses grow, they risk falling behind on retirement savings if they stick to saving the same proportion of their income.


I tried ‘Kakeibo’: The Japanese art of saving money—and it completely changed how I spend my money (CNBC)

Kakeibo, pronounced “kah-keh-boh,” translates as “household financial ledger.” Invented in 1904 by a woman named Hani Motoko (notable for being Japan’s first female journalist), kakeibo is a simple, no-frills approach to managing your finances.

What sets kakeibo apart, however, is that it doesn’t involve any budgeting software, apps or Excel sheets. Similar to bullet journaling, it emphasizes the importance of physically writing things down — as a meditative way to process and observe your spending habits.

According to the kakeibo method, you must ask yourself the following questions before purchasing any non-essential items — or the things you buy on impulse, but might not necessarily need:

  • Can I live without this item?
  • Based on my financial situation, can I afford it?
  • Will I actually use it?
  • Do I have the space for it?
  • How did I come across it in the first place? (Did I see it in a magazine? Did I come across it after wandering into a gift shop out of boredom?)
  • What is my emotional state in general today? (Calm? Stressed? Celebratory? Feeling bad about myself?)
  • How do I feel about buying it? (Happy? Excited? Indifferent? And how long will this feeling last?)

This simple formula tells you how long it will take for your money to double—while you sit back and relax (CNBC)

“Rule of 72” as of one of three essential personal finance topics to understand (the other two being compound interest and the time value of money). “The Rule of 72 can give you an idea of how many doubles you’ll get in your lifetime. With more time, a lower interest rate may give you enough to nail your goals. With less time, you may need a higher interest rate.”

The formula is simple: 72 / interest rate = years to double


As ETFs continue to take over investing, this is what everyone is talking about (CNBC)

  • One-third of the investors already allocate 25% to 50% of their portfolio to ETFs.
  • Active ETFs and ESG ETFs are both poised to see inflows most investors this year, according to a survey from Brown Brothers Herriman and ETF.com.
  • Disruptive technology is a major theme for ETF investors.

Why the Hot Hand of Investing Never Lasts (Investment U)

Why can’t the market’s top hedge fund managers stay on top for very long?

“Funds don’t have track records, but fund managers do.”

– Alexander Green

“There’s no such thing as the goose that lays the golden egg forever.”

– Jim Simons, manager of Renaissance Technologies hedge fund

Berkshire Hathaway vs S&P 500


The Biggest ESG Funds Are Beating the Market (Bloomberg)

Bloomberg’s fourth-annual ranking of the largest environmental, social and governance funds with five-year track records, shows sustainable investing isn’t just for do-gooders. It’s a money-making opportunity that’s gaining popularity. Assets managed by the 75 retail funds in the survey climbed more than 34% to $101 billion last year as socially conscious money managers bet sustainable investing will help them find new growth opportunities.

“It turns out companies that generate strong business results by helping their customers with energy efficiency, solve some of our biggest sustainability challenges, and companies that are productivity leaders by reducing their resource consumption are performing well,” Funk said.


Kobe Bryant said he wanted to be remembered more for investing than basketball (CNBC)

  • Kobe Bryant told CNBC in 2016 he wanted to be remembered more for investing in 20 years than he did basketball. 
  • Bryant started a venture capital firm Bryant Stibel in 2013 with Jeff Stibel, officially launching the firm by ringing the New York Stock Exchange bell in 2016.
  • Bryant had expressed interest in eventually owning an NBA team, similar to his idol Michael Jordan.

Looking for a comprehensive guide to investing? Check out the FH Complete Guide to Investing for Singapore investors.

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