Top 50 Microcap Investor List: Michael J. Liu
For this week’s Top-50 Micro-cap Investor feature we present Michael J. Liu from Pennington, NJ. Michael graduated from Rutgers University with a Bachelor’s degree in accounting and began working for Intelligent Fanatics Capital Management in November of 2018 as an analyst.
Download our feature on Michael Liu here
Uncertainty is Our Friend
On February 6, 2020, entrepreneur and venture capitalist Marc Andreessen Tweeted a Public Service Announcement about how coronaviruses spread. This happened around the same time that his venture capital firm was asking visitors not to shake hands, and at a time when the global confirmed cases of the virus that has affected our lives over the last two years had just surpassed 20,000.
The S&P 500 began 2020 around 3,230 and at the time of the above it traded around 3,345. The virus was beginning to make headlines, and some people, such as Andreessen, were becoming concerned. And yet the market was still up on the year and wasn’t yet worried. That would change drastically over the next several weeks, with the market reaching a 2020 low of about 2,237 on March 23, 2020.
We reached the 2-year anniversary of that low this past week. If you would have been one of those concerned about the virus in January or early February of 2020, and if you had predicted much of the world would shut down as the virus spread far and wide, you probably couldn’t have been blamed for moving your investment portfolio to cash, and you would have looked like a genius around that low on March 23rd. But if you would have stayed in cash, you’d have been making a big investment mistake in hindsight. Over the last 2 years, the S&P 500 has rallied over 100% from that low. And even in 2020, it rallied from those lows to end the year in positive territory at 3,756.
One of the few things that may be more unpredictable that a virus is a war. Viruses evolve, often in random and unpredictable ways. But wars involve humans—those messy creatures that tend to surprise and shock even the most well-informed of their fellow species.
We don’t know how the current conflict will play out and tend to think that no one really does. There will be moments of despair, and moments of hope. And there is plenty of uncertainty, which may make some investors want to sell their holdings and move to cash until things are clearer. But sometimes—like in March of 2020, for example—uncertainty can be an investor’s friend, as it produces prices that more than compensate one for that uncertainly. As Warren Buffett has said in the past:
An argument is made that there are just too many question marks about the near future; wouldn’t it be better to wait until things clear up a bit? You know the prose: “Maintain buying reserves until current uncertainties are resolved,” etc. Before reaching for that crutch, face up to two unpleasant facts: The future is never clear and you pay a very high price for a cheery consensus. Uncertainty actually is the friend of the buyer of long-term values.
There is a difference between risk and uncertainty. And price is often the key ingredient in separating uncertainty from investment risk.
Tweets of the Week
In Case You Missed It…
Fresh Vine Wine Enters the Convenience Store Channel
Acquisition & product launch from DrivenIQ
The Pendulum in International Affairs - by Howard Marks
Inside the bubble - by Seth Godin
Planet MicroCap Podcast: Trading in Crisis with Alex Gurevich
Investing by the Books Podcast: Eric Jorgenson: The Almanack of Naval Ravikant
If you have not already upgraded your membership…
Avenel Financial Group, a merchant banking and advisory firm located in Charlotte, NC, launched a new business venture called the Co/Investor Club. The Co/Investor Club is a community of value-oriented investors that collaborate on investment opportunities and ideas. You are receiving this newsletter because you are a Free or Premium Member of the Co/Investor Club!
Chat with Mike
Whether you’re an executive with investment opportunities or a college student looking to network, we would love to chat with you!
Email our Founder, Mike Pruitt, at mp@coinvestorclub.com with questions and ideas or schedule a meeting.
Don’t forget to follow us on social media too!
Twitter:
LinkedIn:
For our disclaimer, please visit our website
Have friends that want to join? The Co/Report is public, so feel free to share!
Thank you for reading. Co/Report grows through word of mouth. Please consider sharing this post with someone who might appreciate it.