Think For Yourself.
In my unlinked "Investor" account, $ZIM recently became my largest holding, overtaking a DCAing QQQM. Since 2021, I have enjoyed holding ZIM through the volatility (CC's & CSP's) and collecting the generous dividends ($22.35/sh to date; 45.8% yield).

Watching ZIM the past few weeks has been... less fun.
The past month, ZIM is down -20.9% ($SPY = -6.1%). Ouch.

I even thought about selling my remaining shares for a small loss.
...decided to go for a walk instead and think about things.

WHAT HAPPENED??
In the chart below, I have annotated major price action events with possible explanations. I believe a lot of the movement is related to the $17/sh dividend paid in April. It is important to note that I use the term "snatchers" in the most endearing way possible.

The other important timeframe noted on the chart is the historically busy shipping season (June - Oct) prior to the United States holidays. In 2021, a significant share price increase occurred during this time. I expect a similar response in 2022; perhaps more muted due to the reasons discussed below, but still upward.

The event responsible for the most recent price drop is a Freightwaves article released on June 7th: "US import demand is dropping off a cliff".

The article, makes the following points:
  • Imbalanced inventory -> $TGT self-reported inventory issues used as evidence
  • Consumer demand hurt by inflation
  • No evidence (yet) of expected surge of shipments from Shanghai after COVID reopening

On that 3rd point, I thought the data below was interesting as it shows Shanghai booking volumes (red) dip during the lockdown and a corresponding volume increase at Ningbo (yellow; closest alternative port to Shanghai). Instead of waiting in Shanghai and contributing to the "backlog", the shipments were simply re-routed through Ningbo thereby avoiding the surge of shipments upon Shanghai reopening.

From the same article, the data below shows both decreasing container volumes and spot prices for ocean freight (China to United States).
  • Decreasing volume & decreasing prices (= less $$ for ZIM).

Before this last point, I need to emphasize again how amazing 2021 was for ZIM (below).

For me, the buried headline in this bearish article is that the "low" 2022 spot rates above are 73% or 59% HIGHER than 2021's rates (YoY; for West or East coast ports, respectively).

This all seems like an over-reaction to me.
Might be the 1st time the market has done that, right?

Glad I went for that walk.
Still holding ZIM.
Looking forward to the holiday season.
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I had a meeting last week with a senior team from a major Shipping and Logistics company and they are all but certain that shipping rates will never revert to pre-May ‘21 levels. As they put it, Shipping companies have ‘smelled blood in the water’ and they are positioning themselves for higher price bases for the future, consumers and suppliers alike will have to adjust to the new normal. Our cost of shipping from Saudi to the USA increased by 10% last month and since Q4 2019, the shipping price index we use for price escalation purposes has increased by 545%, the majority of those increases happened in the last 12-18 months.
With new shipping fuel rules (IMO 2020) yet to really come into play, this situation is going to continue; as more ships are retired or refitted shipping constraints will be an inevitability.
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A bear case for energy
Oil stocks are going parabolic. Headlines say that oil prices will continue to remain high for a very long time. The things I'm seeing in the transportation sector make me think that the oil rally could end sooner than we realize.

First, US rail traffic remains below 2021 levels. Railroads run on gasoline and natural gas. If there's less demand for gasoline and gas from the railroad industry, then that reduces demand for gasoline.

Second, shipping demand is declining. $ZIM is down nearly 15% today and $MATX is down nearly 12%. Based on the stock chart patterns, the shipping rally could be over.

Third, the decline in e-commerce is reducing the demand for transportation services altogether. $UPS and $FDX rely immensely on e-commerce growth for revenue growth. If other transportation companies see lower demand for their services, then it would mean that even FedEx and UPS should be seeing lower demand for their services too.

This year's busy travel season can be the fuel that provides the last stampede in the oil rally. Airlines, cruises, taxis, and other modes of transportation consume huge amounts of energy. It would be no surprise to be that the busy travel season will be why WTI Crude hits $150/barrel during the summer.

After this year's busy travel season, I wouldn't be surprised if the economy enters a recession shortly after. And with a recession, energy prices will plunge significantly as demand for energy has plunged.
Oil may drop... refined products may not (at least not relationally). Downstream companies should have a very good 2Q and 2nd half of the year.
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90% Investor
My profile claims I am 90% Investor / 10% Trader.
My experience in the 10% is relatively limited but I have enjoyed the ups and downs while documenting lessons learned and understanding the variety of strategies. Thus far, my posts have been devoted to this 10% because it is new & exciting for me... but what about the other 90%??

On this side of things, it's pretty quiet.
Before going majority cash, I bought solid/established/quality names ($MSFT, $JNJ, $TGT, $T) or index/thematic ETFs ($QQQM, $SPY, $BUG) and forgot about them. Boring, right?
I look forward to when the market bottoms and starts to turn the corner to put 90% of my money back to work.

With that said, I would like to briefly touch on 2 high conviction holdings that have survived my move to cash.

1) $ZIM (sea-freight shipping/logistics company)

With all the supply chain challenges, shipping rates have soared and ZIM has been a FCF monster. They IPO'd in early 2021 and have been rising ever since. The company recently held their Q1 results announcing a 10% increase in full-year 2022 EBITDA guidance and a $2.85/share dividend. Perhaps most importantly, the company believes this environment will maintain throughout 2022 (and may extend into 2023):

Fairly volatile price action which makes it appealing for buying/selling shares or options (only CSP's or CC's for me!).

2) $ASTS (Satellite 5G direct to smart phones)

This one is more speculative.
In a nutshell: they are launching a large satellite array (named Bluewalker 3 - BW3) soon ("this summer") that will test 5G service from space directly to existing smartphone hardware. I believe the recent price action (current price ~$7.00) is partly due to the expectation that a date was to be announced at their Q1 earnings call (it wasn't).

Following successful BW3 launch and testing, a series of "BlueBird" satellites are planned that will provide service to actual customers.

I may be wrong on this but, for the 1st time, I noticed new names (Scotia Bank & Morgan Stanley) on the Q1 call. Looking into it, Scotia Bank actually released a May 9th report titled "Space Mobile: If Successful, BW3 Could Disrupt Global Tower Industry Within 20weeks". Deutsche Bank is one of the first banks to cover the company and recently adjusted their price target to $31.00 (down from $32.00). I expect Morgan Stanley to initiate coverage in the near future.

Additionally, the company seems to be making good progress on all fronts:
  • Backed by American Tower & Rakuten
  • Allegedly on track to complete their "Site 2" facility this year (designed to manufacture 6 "BlueBird" satellites per month)
  • Granted experimental license by the FCC for BW3 launch / testing
  • MOU's with strategic telecom providers ($TEO, $T, $LILA, $TEF, $AMX, $TIGO, $VOD, $MTN.JO, $ORAN)

Keep Treading!
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Trading Chronicles 27/04/22 - $AA trade
After taking an absolute battering and big drawdowns this month on trades gone wrong on $MP $ZIM $AA $CENX, I thought it was time to take a small trade to find my feet again and build my confidence up.

Saw the $QQQ and $SPY rallying today so took a £8,000 position in $AA hoping it would rally too. It's been pretty battered the last couple of days (tbh weeks) so I thought this could be a nice mean reversion trade off the back of a market rally. Bought in at $69.40 (lololololol) and was looking for a move to $77 in the next couple of days.

Had a tight stop at $68.11 just in case it went badly. Pretty tight stop but it's back to being disciplined and not being a shmuck. I was looking to make about £880 and risking £152.

It did rally initially however, market weakness took over and it ended up hitting my stop. I saw the bearish engulfing candle and sold a bit earlier before it could hit my stop loss so I only took a loss of £-55.

Small loss but this for me is to build up proper discipline. In a declining market period, I need to be comfy taking my losses small and allowing my wins to be big.

Don't think I'll be taking anymore trades today but hope this is a valuable contribution!
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Stage analysis never lies - $ZIM is dead
$ZIM monster move from $11 to $91 in over a year but this looks like it's over now. Quickly
moving into a stage 4 decline, and stage 4 declines can be brutal.

I bought at $72 and sold at $63 and took the loss. In hindsight, looks like a great move now.
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This is my watch list, what is yours?
I recently asked CS content creators to suggest me stocks for me to add to watchlist. Thank to suggestions from fellow creators, I have this watch list. In coming week, I will be diving deep into them and see if I like any of them to invest in them.

Thanks fellow creators for the following:
@strib for $ZIM and $ROKU
@seasnar for $NVDA
@strat for $BBQ and $BOWL
@stonkmetal for $TXN
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sam stribling's avatar
$108m follower assets
Learned Something New $ZIM
$ZIM has been one of my favorite holdings during this volatility as it has great fundamentals and pays a massive dividend. In my research I came to find that Israeli based companies are subject to withholdings on the dividend payments by their government. This is different than what I am used to owning US equities that, can be subject to tax but the responsibility is upon the individual to pay the tax on a yearly basis. Furthermore, the tax for Israelis who own the stock is 40% but since I am a US citizen there is a tax agreement between our governments that only subjects me to a 25% withholding. Considering I pay taxes each year anyway I have to say I kind of like having it just withheld. It’s what most corporate employees are used to when it comes to their income (where your return comes from if you are so lucky).

As I always do, I DRIP my dividends and I must say, getting ~10 shares a quarter on this name is A-OK with me!
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