The 2020 Investment Protocol: A Crisis Management Case Study
Date: March/April 2020 Context: Global Market Volatility & Economic Lockdown Objective: To document a disciplined investment thesis centered on a 10-year horizon during a period of extreme uncertainty.
I. Introduction: Establishing Rationality in Crisis
In March 2020, financial markets experienced historic volatility. The document “2020 Let’s Go - Investing” was created on “Day 12” of the lockdown as a mechanism to structure thought processes and avoid emotional decision-making. The primary objective was to transition from short-term market noise to a long-term value accumulation strategy.
The foundational premise was defined clearly:
“I am not a trader, so my focus is on companies I believe in and I believe will grow in their stock value over the next 5 to 10 years. In short: they will be worth more in 10 years as they are on the day I buy them.”
This document serves as a retrospective analysis of that strategy, the specific assets selected, and the rationale deployed at the height of the crisis.
II. Core Investment Philosophy
The strategy relied on simplifying complex market data into actionable insights, focusing on visual historical performance and tangible product value.
1. The “Visual Health” Indicator
Rather than relying solely on complex technical indicators, the strategy prioritized the long-term historical trajectory of an asset.
“First I look at their graph for the past 3, 5, and 10 years. If the graph goes up constantly with a few bumps, I believe that this company will also handle the current Corona crash…”
2. The “Corona-Discount” Thesis
Market red was interpreted as a liquidity event rather than a fundamental business failure for top-tier companies. The strategy assumed a mean reversion.
“As all stocks crash more than 10-15% over the past month, the minimum return I hope to get is getting back that 10-15 % over the next few years.”
3. “Skin in the Game” as an Educational Tool
The strategy utilized capital allocation not just for returns, but as a forcing function for research.
“The moment you are financially invested into something, your interest rises… You will automatically stick to it, and sticking to it will make you more confident and knowledgeable.”
III. Portfolio Allocation & Strategic Rationale
The portfolio constructed during this period can be categorized into four distinct strategic pillars: Digital Infrastructure, Value & Stability, Contrarian/Deep Value, and Venture/Seed Capital.
A. Digital Infrastructure & Payments
The thesis here was the inevitability of digitization, accelerated by the pandemic.
- Visa & Mastercard
- Rationale: A hedge against cryptocurrency and a bet on the permanent decline of cash.
“I believe digital payments will grow unstoppable over the next ten years - or forever… Mastercard and Visa can be found and included everywhere, they definitely have a bright future and a strong market position.”
- Amazon & Adobe
- Rationale: Dominance in essential infrastructure (cloud/commerce) and creative workflows.
“Amazon is just crazy… with servers and software they sell and provide. They are growing and growing.”
“Adobe has such robust standing that it is very unlikely that they will disappear within the next ten years - or ever.”
- TSMC (Taiwan Semiconductor)
- Rationale: The “pick and shovel” play for the tech industry with strong financials.
“Past development is important for me… I’m also not happy with companies who only have a profit margin of 1-4%.”
B. Value, Hardware & Healthcare
Investments driven by personal product validation and insider insights (“scuttlebutt investing”).
- Lenovo
- Rationale: Discrepancy between stock price and perceived product quality.
“I own a Thinkpad Laptop and a Motorola phone and both of them are great… For me, it doesn’t make sense why their stock price declines all the time.”
- Getinge (Med-Tech)
- Rationale: Direct qualitative data from an employee (family member) regarding production ramp-up.
“Most important for my decision was a conversation with my brother… who told me that he’s happy and that the company is going to ramp up production because of the corona.”
- Pfizer & Bayer
- Rationale: Undervalued essential services. Bayer was specifically selected despite reputational risks (Monsanto) due to long-term trust in German corporate governance.
“The chance that they will grow due to high demand in healthcare just ‘makes sense’ for me.”
C. Contrarian & Infrastructure Plays
This category involved companies facing significant headwinds or ethical complexities, purchased for their systemic importance.
- Rheinmetall & Airbus
- Rationale: “Too big to fail” infrastructure and defense pillars.
“It is extremely unlikely that the government won’t catch Airbus if they fall… Airbus is a great bet that it will come back to old strength.”
“I wanted to invest into an infrastructure, big player, based in Germany… It is nearly impossible to stay out of the swamp if you start looking into high profitable businesses.”
D. Alternative Assets & Venture Capital
High-risk allocations targeting non-correlated returns and early-stage growth.
- Bitcoin
- Rationale: The “Halving” event thesis and digital scarcity.
“I’m buying 0.1 Bitcoin every day now… I believe this year could become huge for Bitcoin because of the Bitcoin halving.”
- Gold
- Rationale: Currency devaluation hedge.
“The Euro will just lose value over time. Gold is the most commonly known asset that has been stable for decades… I plan to invest at least 10% of my Euro cash assets into Gold.”
- Seed Investments (Crowdfunding)
- Xolo OU: Validated by personal usage.
- Mevo: A 10-year bet on the live-streaming sector.
- Koawach: A bet on alternative food products in the DACH region.
IV. Evolution of Process: The “Day 22” Checklist
By April 9th, the strategy evolved from qualitative intuition to quantitative rigor. To mitigate the psychological “addiction” of buying, a strict due diligence checklist was established.
The Selection Criteria:
- Profitability: A minimum profit margin of >20% was established to filter out unstable business models.
- Solvency: A Debt-to-Equity ratio of <60% was preferred to ensure financial health.
- Growth Metrics: Requirement for consistent revenue and earnings growth over a 5-year period.
- Valuation: Utilization of P/E (Price-to-Earnings) and P/B (Price-to-Book) ratios to identify undervalued assets relative to future cash flow.
- Competitive Landscape: Mandatory analysis of competitors to assess market share durability.
V. Strategic Conclusion
The “2020 Let’s Go” document serves as a case study in managing investor psychology. By accepting the possibility of further market declines (“30-40 or even 50%”), the strategy removed the paralysis often associated with crashes.
The approach combined the purchasing of “compounders” (Visa, Amazon) with asymmetric bets (Bitcoin, Seed Investments) and defensive hedges (Gold), resulting in a diversified portfolio constructed not on prediction, but on structural conviction.
Post created via email from emin@nuri.com