Firstly, did you lose a lot of money on the stock market yesterday?
‘We invest as a club, so we didn't lose our own money. But it is true that our stock portfolio has been considerably affected. The value of our stocks dropped in a similar way as the market. However we are not devastated by that, as we are certain that they will bounce back. Therefore we are planning on holding them.’
What is your analysis of the current situation on the stock exchange?
‘It's pretty changeable at the moment, let me emphasize that. A possible assumption is that shares were overpriced. For a long time we were in a hossa, a bull market: a positive market in which prices are constantly rising. A kind of correction is now taking place. Due to two external factors, the coronavirus and the extremely low oil price, there is a serious panic on the stock market. The natural reaction of the market is then to sell, which causes the stock price to plummet.’
What about the oil price?
‘Saudi Arabia has opened the oil tap because they are in conflict with Russia, causing the oil price to fall sharply. Lower oil prices means less money in the market and that ensures the recent stock-market plunge. But, and now it becomes interesting, you do not know how long Saudi Arabia will continue this measure. The same actually applies to the coronavirus. When these two external factors are over, I expect a bounce back: a recovery to the old level, or even a higher level.’
A good time to buy shares, then?
‘In certain sectors and companies, yes. Take for example the oil companies. These have plummeted on the stock market, but a recovery to normal is likely. The shares in airlines are also interesting at the moment (however, you need to watch out with companies that have big amounts of accumulated debt). Although there are considerably smaller numbers of passengers because of the coronavirus, at the same time the fuel is much cheaper due to the low oil price. Airlines currently have incredibly low costs. They probably have money left. Although the coronavirus causes a drop in passengers, that influence will be, in my opinion, less significant than we think. But, to be honest, I don't know exactly how the coronavirus will develop - after all, I'm not a microbiologist.’
But you still make some statements about it…
‘Yes, that's the beauty of investing. Actually, we should be as microbiologists, or at least acquire enough knowledge to distinguish what is bullshit and what is not. That is the core of investing: you have to analyze the market and that is only possible with a broad knowledge and interest. Specialist knowledge is very welcome at Duitenberg. You are a journalist? Well, maybe you can tell us about the media industry.’
Do you have another advice?
'Certainly. Technology shares are also extremely interesting at the moment. These companies are the least linked to the production process. At manufacturing companies, employees are stuck at home because of the coronavirus. Employees of, for example, Netflix can continue to work from home. The entire market has plummeted, but these technology stocks are likely to recover well. An example. The SARS outbreak occurred in 2002 and 2003, with a similar panic. In China, people started ordering on the internet en masse, so they wouldn’t have to go out on the streets. E-commerce giant Alibaba then conquered its market. Now it is up to us investors to rediscover such growth diamonds on the market.’
So you don't think it's a structural crisis like in 2008?
‘Then the bubble of the real estate market broke. The safety margins were based on the housing market, which turned out to have a much lower value. The result: everyone started selling. It is different with corona, I think. People are mostly scared, there is uncertainty. In my opinion there is no large-scale overvaluation. It is, in a way, an artificial crisis. But we don't know how the virus will develop, that creates the current uncertainty.’
Interesting times for investors, I presume?
'You can certainly say that. I think this is really a good time to buy. As Duitenberg we even organized a lecture: How to make money of the coronavirus? Every Wednesday evening we organize such a meeting on an interesting theme. Everyone is welcome at these meetings. Duitenberg has a shared pot with which we invest. You have to think of amounts of several thousand euros. It's all bona fide and strictly for the club: as students we don't make any money. But sponsors are always welcome. We don't bring the invested money back to them; the added value for them is that they will get students that might be interested in their companies. However, supposing a university would like to give us some money to invest, which does not take place right now, then I can promise: we will make them rich.’
