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Alpesh Patel on Investing — Covid, Brexit, After Trump

How to invest to make money with Covid, Brexit and Trump news making things complicated?

Whilst markets as a whole rise (see image) the trick is not to have to wait for so long.

Market rises over time
Alpesh Patel on Investing — Questions You Want Answered
Alpesh Patel on Investing — Questions You Want Answered

Introduction

We’re going to start off with, ‘Is COVID a good or bad time to enter the market?’ and if we’re worried about risk what should we do. What are the strategies, what are the insider hedge funds saying, what are the big banks telling their wealthiest clients?

It’s my job to know those things. Why should you trust me? I don’t want you to trust me. I want you to trust the independently verifiable knowledge and the independent website sources I’m going to give you.

Equally you might say, ‘Well surely buying stocks is risky anyway?’ Should we just stick to UK ones or whichever domestic market you’re from? Let me know where you’re from as well and which part of the world you’re all from. You’ll also want to know what should your investment goals be. I’m going to cover that as well and like I said much much more.

Alpesh Patel on Investing — Questions You Want Answered

All those questions I’m going to put up onscreen and you can read them yourself. They are what returns are reasonable, what if you pick a stock and the price goes up, what if it falls, what should you do?

How long should you hold on for, what’s the quickest easiest way to pick stocks that the gurus, the banks, and the hedge funds have already researched for their wealthy clients so you can ride on their coattails?

Alpesh Patel on Investing — More of the Questions You Want Answered

Remember we’re talking about investing so how much do we need for retirement, how long will it take to turn £10k to £100k?

What does statistics and history tell us, or turn £100k into £1m?

And, what the statistics in history tell us, who’s done it before and how can we copy what they’ve done so we’re not reinventing the wheel.

Plus, what if we don’t have time for all of this, how do we reduce the time process?

Finally, What if we’ve already got a fund manager or an IFA, an Independent Financial Advisor, how do we make sure we’re asking them the right questions to keep on their back?

How do we find a good broker? What if we want a bit more risk? You might want to do a CFD or god forbid a spread bet on this.

Well can we do that for the long term for a 12 month holding or 24 month holding, and is that sensible?

What if we want to save tax, how do we do that? All of those things I’m going to cover.

The Markets Always Rise Right?

The issue is not that the markets rise but knowing what to pick to take advantage of it, and ensure when they fall, we are protected. Look at these images:

S&P 500 Daily Returns

S&P 500

Market drawdown

Market Drawdowns

Stock market drawdowns

Alpesh Patel on Investing: What a Typical Portfolio Looks Like

Alpesh Patel on Investing: A Typical Portfolio (Too Complicated)

We’re here because this is what a typical portfolio looks like. One of my students, and I encourage all my students to do this, they sent me in their portfolio. We then put it through some of my filters, and this is just a small example, this is what their portfolio looks like and it’s pretty bad.

They don’t realize it’s bad because they don’t even know what they should be doing. It’s like somebody taking a car into a mechanic but having no idea how to open the hood and how to read what the engine looks like.

That’s my job, it’s to analyze portfolios and educate you so you can do it yourself so you can see what’s green, what’s red, what’s good, what’s bad and do that really quickly. Time is money so we’ve got to save time when we’re doing these things.

Personally, let’s see, I don’t seek to forecast where the FTSE is going to be one way or the other. I want to make sure if it rises, well obviously my stock should rise, if it falls then my stock should protect me from falls. And not fall as much as the rest of the FTSE or the Dow and should recover a lot quicker.

In other words, I want to win no matter what. It’s as simple as that. I do not plan on losing just because the market’s going in one direction. The job is to win whether it goes up or down, it’s as simple as that.

Alpesh on Investing: World Investment Projections

So question number one, so many of you asked me is this COVID thing good or bad timing for investing. Is it good because the markets are depressed or actually the markets are only 10% off their all-time highs in the US so is it a bad time. Should we wait?

Surely the economy is going to get smacked. What are the insiders saying? Let me tell you some of the most important things that I’m seeing across my desk. First thing, this is from the IMF, the International Monetary Fund, this is their projections for 2021.

IMF World Growth Projections

I’m going to give you some good news first. The good news is this is what they project global growth to be next year. Let’s just look at some of these countries. Let’s look at the UK at 4%. The UK has not had 4% GDP growth, of course the IMF could be wrong, but not had 4% GDP growth since I think about the 1950s, my friend. What about the US at 4.7%?

That’s big for America. China, it’s already on its way up there it’s at 9.2%, and they try and target 10%. That’s big. Now you might as well say of course they’re going to have so much growth, they’ve screwed this year up. Yes that’s right, but at least the IMF. And this is one reason why the global market certainly the Chinese and the US markets are near their all-time highs.

We’re sitting back and we’re thinking we’ve got some reasons to relax, but the issue is should we be getting in now. Because it’s not about going in blindly and saying, ‘Oh well this is fine, Alpesh. Thanks very much I’ll leave you now. I’ll just put a load of money into everything.’ Well into what? No we still want to protect ourselves no matter what under all circumstances.

What Type of Covid Recovery?

What are the specifics? This is the million mile view so what’s the localized view. Put another way, this is what McKinsey, and it’s the job of McKinsey to make these kind of clever diagrams, this is the scenarios for economic impact during COVID-19 according to them.

McKinsey on Covid
Bear Markets

Their view is if the public health response is good like up here, if the public response is better, and if the interventions like tax breaks and government spending are good then we would get a v-shape recovery.

Personally, you know the best description I like is that we’ve got a k-shaped recovery. Now I know it sounds stupid, but let me explain. In other words, there’s about 10% of the economy in companies which are just skyrocketing, and those are the types that I want.

Then there’s the rest which is going to take longer, higher risk, and god knows when it’s going to recover, and those are the ones I want to avoid. That’s where I think we are. What we’re going to focus on in this webinar is what is the upper leg on the K, and which bits are doing that bit.

There are some which are going have this so we’ve got one part of the economy doing that, and we’ve got one part which is doing that.

That’s the way I see it. This is from McKinsey like I said and we want to focus on this webinar naming names on that.

If I’m going to give you some other good news it’s this. The world’s been through these kind of pandemics and epidemics before, nothing as bad as this in living memory, but it has and it’s had shocks and it’s tended to recover.

I could easily argue well this time it’s different, of course it’s different this time, however we’re going to get through it.

We’re going to get through it particularly because every single country in the world is determined to get through it, including the international bodies like the IMF, but that doesn’t tell us which stops we should have in our pension and what our pensions are going to look like. Are we already overvalued?

Are We Overvalued?

Investing and Stock Market Performance
Market Crashes

Well this was interesting when it came across my desk, this is from Morgan Stanley. As a hedge fund manager, I get a lot of data on my desk. My job is to find out the 1% which is interesting and relevant and the 99 which is bullshit. The S&P 500 is pretty much tracking what it did since 2009.

What this suggests is that we will go sideways for a bit and then it should go even higher. I don’t know if it’s going to happen or isn’t it. I don’t know, I honestly don’t know, but one thing that I do know is the stocks that I’m going to show you and name will of course rise when the tide is rising.

Nasdaq Bubble?

That’s the easy bit and any idiot can do that, but if this should be wrong and Morgan Stanley are wrong and they go this way, then at least my stocks will not fall as far as the rest of the market. They will rebound sooner and quicker and I will prove to you why and how that should be the case.

Equally people are asking at the moment, ‘Alpesh, are you insane with COVID talking about investments?’ Look at the NASDAQ my friend, look at the NASDAQ. ‘The NASDAQ is overvalued’ for instance they’re telling me, and I’m saying well let’s have a look at this.

What you can see in white on this image, let me just draw that for you in white, is what we’ve been doing in the NASDAQ at the moment. What you see in blue is what’s happened in the past from 1995 to 2000.

In actual fact, the massive rally that we had in the NASDAQ in the past, before it all crashed of course, was far far far bigger than what we’re talking about at the moment.

Does that mean that the NASDAQ’s not overvalued? Well I’d say some of the companies are so we’re going to avoid those. We’re only going to look at companies which have got, and I’m going to show you the bits that I need them to have, they’re going to have strong earnings, good cash flow, good CROCIs, good Sortinos, and good Alphas.

S&P Bubble?
If you don’t know what Sortino, CROCIs, Alpha, and Altman are I will teach you. They’re the numbers that the hedge fund industry looks at, they’re the numbers Warren Buffett looks at, they’re the numbers George Soros looks at, and Bill Ackman looks at.

If you don’t know what those are you’ll get educated in this and they’ll save you a hell of a lot of time instead of messing around with PE ratios.

Alpesh Patel on Investing — Who Should You Trust?

Alpesh Patel TV Presenter

Why should you trust me? That’s another question and nobody actually asks this obviously, maybe they all too polite, but you should ask why should you trust me. I don’t want you to trust me.

I’m on TV and you shouldn’t trust anybody who’s on TV obviously. I’ve been doing this for 20 odd years — that’s my own show Making Money with Sally and then this is me on her show on the BBC called The Briefing, a nice parallel in life.

And so for over 20 years I’ve been doing this, but that doesn’t mean you should trust me. All it means is I’ve got a track record which is great. Good so TV likes me because they follow my track record, but it doesn’t mean you should trust me. I want you to trust the education I’m going to give you.

Should you trust me? Well I’m going to give you the best bits from all my know-how in my 200 odd columns in the Financial Times.

Alpesh Patel Financial Times Columnist

Should you trust me? Well so there’s education which has been vetted and peer reviewed, and should you trust me? Well these organizations do, and again you might think, ‘I don’t care Alpesh’.