Friday, February 7, 2020

This too shall pass...


82 more days to go!!!

While I'd like it to be known I definitely derive zero satisfaction from making financial gain from the current pandemic situation and I'm sure it's very much borderline/not optimal on the karma front, this week I decided to make some new purchases to the diversified dividends for life portfolio while I felt the market was acting irrationally.

This portfolio (when I finally get off my lazy a$$ to publish the thing) does what it says on the tin. Providing yours truly with dividends for the rest of my existence while I'm alive and kicking occupying human form on this planet of ours all the while trying to be as diverse as humanly possible so that any dividend payout anomalies are restricted by sector or global geography.

Having nursed myself back to health after the dreaded 3 week cold that's working it's way around the globe I can't even begin to imagine what coronovirus is like let alone it being the very virus that transports me from my current form over to a spirit. Apologies for the digress but it did also get me started in thinking back to our time in SE Asia as Dividend Nomad.

That part of the world is very much Chinese visitor dominated perhaps more so than anywhere else on this earth. So much so that particularly Thailand and Vietnam have made the decision to alienate from their western resident revenue source via restrictive draconian visa policies to focus purely on China. While I do understand that these countries are picking a side while trying to look after their longer term financial interests with investment money projects like Silk Road, I can't help feeling this reverse income diversification is more than a little short-sighted and needs to reverse before it's too late.

It also begs the question exactly how far beholden to China will the SE Asia countries become longer term?

Will they be pressured by China to continue accepting any and all future virally-infected visitors en-mass putting their own population at risk based on potentially dubious mortality data? Or simply have no choice but to accept since the visitors will become the only source of revenue after all the Brits and Americans have taken the hint and moved to the Philippines?

Anyone choosing to stick it out longer term in SE Asia from here forward has to be aware of the high risk but if like me you work to the rule that life is short and you just want to enjoy the freedom of existence then there really should be no issue. Keep fit with a strong immune system and don't be embarrassed about physically avoiding obviously infected people at the gym or on public transport with an audible tut and an eye roll.

Failing that simply move to Indonesia who seemed to respond rapidly to the threat to it's populous in the same no nonsense way it interacted with a certain troubled US aircraft manufacturer. Respect.

To be clear I don't fear death, as they say I just don't want to be there when it happens and when a country responds favorably to defend it's citizens then to me it goes a long way.

Anyways I digress...back to business.

This week oil giant Chevron (CVX) took a nosedive so I leaped in head first at $106 and continued my build-out of the portfolio position which I kicked off back in 2016. The company took an 11 billion dollar write down coupled with already lower oil prices which presented this opportunity. Still a quality company though with strong cashflow and a 4.7% yield but at the mercy of commodity prices it exists in a cyclical industry, same issue as Exxon (XOM) and all the other oil majors.

As with every cyclical industry though "this too shall pass" is always the DD4L mantra. The price of oil will ebb and flow, this is life as is the growth of the electric car. If you can't handle volatility or don't think we'll be reliant on oil for the foreseeable then obviously steer well clear.

On the same commodity downcycle I also added to my nearly complete position in US and UK-based global chemical giant LyondellBasell (LYB) again cashflow is good and this too shall pass while being paid a 5% yield....keep calm and carry on investing for life.

Finally I made a small addition to the Imperial Brands (IMBBY) position at $24 which is one that I'm building out nice, slow and easy. This is another global player in the cigarette and vape space affected by the vaping clampdown based on misleading data and specific agenda which resulted in cancelling their profit forecast. Yikes! But again this too shall pass....eventually. In the meantime it carries a somewhat lofty 11% yield that is at risk of a cut at some point but I'd still own even if it got halved so I don't mind.

On a separate note New Residential (NRZ) blasted the doors off the quarter and demonstrated it is still an income machine monster with the threat of more positive quarterly's to come.

As is always the case in investing it's all a matter of personal risk appetite, my investments here could plunge dramatically further in valuation which could induce a sweaty top lip or worse rapid expulsion of bodily matter in most people but I just accept and volatility as part and parcel of life.

It's all about personal perspective and length of investing horizon, your risk aversion may not be the same as my risk.

Happy investing and love to all.

DD4L

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