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Useful Vids

Shitcoin Stocks https://www.youtube.com/watch?v=MfkP3HCU2c0
Covid Inflation https://www.youtube.com/watch?v=lUM5uN5XsFU
ETH Valuation https://www.youtube.com/watch?v=R5VEDVj0oJw

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– TIMESTAMPS –
0:00 Intro
2:06 What is a Zombie?
5:10 Covid Zombies
7:30 Post Lockdown Blues
10:05 Mass Bankruptcies?
12:11 Economic Impacts
13:54 Impacts on YOUR Portfolio
16:03 How I am Investing
19:11 Final Thoughts

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Helpful Links & Sources

► Zombie Firm Definition: https://www.investopedia.com/terms/z/zombies.asp
► America Zombie Apocolypse: https://www.bloomberg.com/news/articles/2020-11-17/america-s-zombie-companies-have-racked-up-1-4-trillion-of-debt
► Zombies with Covid: https://www.economist.com/finance-and-economics/2020/09/26/why-covid-19-will-make-killing-zombie-firms-off-harder
► Coming Bankruptcies: https://www.axios.com/bankruptcies-zombie-companies-coronavirus-6ad46882-6cfd-4c9b-ab32-817f49ca1961.html
► Japan Lost Decade: https://www.nber.org/system/files/working_papers/w12142/w12142.pdf
► Covid Made Killing Zombies Hard: https://www.economist.com/finance-and-economics/2020/09/26/why-covid-19-will-make-killing-zombie-firms-off-harder

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What is a Zombie Company?

it is a company that earns just enough operating income in order to service its debt.

Given that these companies are just scraping by and meeting their operating and debt expenses, they have no money left over in order to fund further growth

This means that the company does not really have any chance of paying off the outstanding debt let alone dividends

The term has been around for some time and was originally popularized in Japan’s “lost decade”. Zombie companies generally tend to occur in those industries that have had major disruptions in their earning power.

However, they can also happen in situations when a company has a massive disruption in its earnings potential such as a pandemic

Covid & Zombies

Covid has caused massive disruptions to earning potential in a number of sectors. These include the following:

– Retail
– Hospitality
– Travel
– Tourism

In order to survive that period, many of them took on loans. Some companies were lucky enough to have gotten government funded low interest loans and other forms of support

You also have the actions of the Fed which has meant that interest rates are near record lows.

Vaccine Helps?

There are vaccines on the way but it will only be some time before they can really have an impact on the economy. It will only really start to go back to normal in the summer of 2021

So, for many of these Zombie companies, it could be quite a while until they are earning anything close to those pre-pandemic revenues. So, these companies are likely to have to continue borrowing in order to keep afloat

This will mean that they will still have a lot of expensive debt to service which is going to impact on their bottom line. It will take some time before they have the same amount of revenues

Bankruptcies Incoming

Eventually the governments are going to have to pull their support of these companies. It will mean that many of these zombie companies will have to declare bankruptcy. If this does happen, these bankruptcies could severely impact on the economy

They are going to lead to job losses and lack of investment which could sap that economic growth. Many of these companies could be held in your stock portfolio. If there is lackluster economic performance then it means many companies are likely to struggle to cover debt

Where I am Stashing Wealth

Cryptocurrencies have unique characteristics that make it an ideal investment for me. These include the limited supply argument of Bitcoin. I also hold Ethereum as it can be used as one large decentralized supercomputer that is likely to power the new web.

Cryptocurrency is also easy to move and store. It is hard to seize and makes it the ultimate safe haven asset. There are also a number of things that are in the pipes for both Bitcoin and Ethereum.

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Disclaimer

The information contained herein is for informational purposes only. Nothing herein shall be construed to be financial legal or tax advice. The content of this video is solely the opinions of the speaker who is not a licensed financial advisor or registered investment advisor. Trading Forex, cryptocurrencies and CFDs poses considerable risk of loss. The speaker does not guarantee any particular outcome.

#Bankruptcy #Zombie #Bitcoin #Trading #inflation #crypto #ethereum

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