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Investment spy - What's on our mind?

Updated: Apr 11, 2023

The coronavirus has put the world on hold in many ways. More than ever, you’ll need dependable insight into various markets, the economy, and the changing future of global economic landscape. We look to add value to our clients by incorporating the best ideas from studying other research plus performing our own research. In times like these, we focus on the data, earnings, valuations, and many great companies' management teams. Listen, it is okay to be deaf to the media news. Most times, staying the course is the right thing to do. We know that statistically, people are more successful in relying on professional money management advice. No one knows it all, and neither would anyone ever succeed in thinking they know it all. We are here to help.

Here are the highlights of KW Wealth market insights for the month of October 2020.

1. Besides the 2008 recession, 2020 is one of the most chaotic and volatile years within the past 20 years. Economies will continue to lag behind pre-coronavirus trends as shocks to incomes and contagion fears limit demand. Although investing requires to bear risk, the risk can be controlled by constructing diversified portfolios and excluding any investments that offer an inferior return for a given amount of risk. One of the common indicators of expected volatility or implied volatility is to review the Volatility Index (VIX). It is what professional money managers review to form a portfolio hedging or investment stress testing. The chart below shows you that various global and domestic events can cause market corrections. But in the long term, the curve will be eventually be flattened.


Source: Cboe Global Markets, Inc

2. The United States has been hit far harder than any other nation by the COVID-19 pandemic. The US government’s ongoing stimulus approach will cause central bank balance sheets and fiscal budgets somewhat higher-than-target inflation. But what about China? According to Bloomberg News, more than 45% of China's 1.4 billion people traveled during the holiday, which began October 1st. Chinese consumption raise to $69.5 billion ($466.6 billion yuan) during October, according to data from China's Ministry of Culture and Tourism. It is an excellent opportunity to observe the COVID cases reported from China in the coming months. Can they manage the virus spread effectively? What about the opportunity of green development for the economic recovery after COVID-19? Don't we all need to think of these issues before investing globally?


Source: John Hopkins University and WHO as of October 15th, 2020

3. The combined deficit shall place downward pressure on the US Dollar. What does it mean? It is necessary to put an asset protection strategy in place. Our portfolio is positioned to hedge inflation by holding gold, soybean, other commodities, Treasury Inflation Protection Bond (TIP), or various option hedging strategies based on our client’s individual risk profile and preferences.


Source: Variant Perception Investment Research

4. Cold weather during the pandemic will have a more negative effect on dining than regular seasons. Restaurant recovery will mostly happen from the takeout business during the pandemic winter. But don’t just give up on the recovery of this industry. We can reflect on what have learned between nature and human. Renovation of the service-oriented industry is happening right now. We are currently researching investment opportunities in the takeout and fast food franchise business.

Source: Department of Commerce, OpenTable, Goldman Sachs Global Investment Research

5. Did you know that Tencent has almost $700 billion market capitalization, which almost the same as Facebook's valuation? Tencent also has a user base larger than the population of EU and Russian. Despite the Trump Administration's efforts to ban WeChat, a mobile app owned by Tencent, Tencent rebranded the WeChat app to WeCom within 24 hours ahead of the ban. However, look at the top executive managing team members. There are sixteen chief executives and three advisor Emeritus. I can understand they are all Chinese because it is a Chinese firm, but no women to lead any group. What is your opinion of company culture from this Tech Giant?


6. Most Real Estate Exchange Traded Funds (ETF) include some private prison investment. It’s not a question of right or wrong. It’s a question of how many investors understand and know the holdings of their ETF investment? The major advantage of investing in ETF is diversification and cost. The major disadvantage of investing in ETF is also cost and flexibility to diversify away from companies you do not wish to hold. Let’s face it! Most ETFs cost less than Mutual Funds but more than individual stocks. If you own an ETF such as Vanguard Real Estate (VNQ), you are also an investor in private prison investment. Not many people know that.


Source: Hoya Capital Real Estate

In conclusion, we believe investor’s portfolios will need to be re-analyzed for the changes in taxes, the rise in interest rates, and the dollar decline, which is likely to occur after the election. While some think that stock prices could pause around the election and become normalized after November 3rd, the volatility index tells us otherwise. It really could go either way.

Our portfolios are positioned defensively. To handle our emotions during a market correction, we must first understand the cause of market volatility. The future is uncertain, so all investments involve risk. In a well-diversified portfolio, the risk associated with a company's business operation and its financial leverage can be diversified away. That still leaves other risks that are relevant to the portfolio. These types of risk can be caused by interest rate movement, the uncertainty of future economic outlook, and the uncertainty associated with geopolitical policy changes. These risks are the leading causes of market volatility, and it sends the market into corrections. For example, we use both low-cost core bond funds and individual bonds to leverage the broadest exposure. We also pick individual stocks to generate long term alpha with consistency in accounting transparency.

We are also opportunist—recognizing a powerful company with upsides and imagining how it can potentially reshape the future. For any investment, risk can be measured, but it cannot be eliminated. It is normal because it is part of the total investment risk associated with an efficient and competitive free capital market. A market correction is necessary for a practical capital market. Businesses go through up and down cycles in different seasons or sales production, and markets go through routine corrections. It doesn't mean that any time a business goes through a down cycle, the owner will have to fold up the business. Very few companies drive the return of most of the market. We are interested in where a company will be in 3 years, 5 years, and 10 years from now. Not in 6 months or the next weeks. Our approach is to focus on the expectations of growth, earnings, and fiscal policy. Cutting interest rates and launching lending programs to specific industries changes the location of credit risk. Yet, we can take advantage of this slow and uneven volatility.

We value your trust and loyalty. Our investment philosophy is to understand your needs and the wealth-gathering channels you prefer. I don't believe a robot advisor can actively deliver customized wealth strategies or engage with clients' changing needs. Our services are fee-based. It is worth investing in combining human intellect and the best technology to optimize your desired results.

Please share this article to support an independent fiduciary money management firm if you find the information useful. If you are a current client of KW Wealth Management, thank you for your trust and loyalty. I look forward to speaking with you at our next quarterly conference.

We welcome any referral of a minimum investment of $250,000 for your family, friends, or colleagues who might benefit from the KW Wealth Management approach.

Stay safe and healthy!

Kimmy Wan

Founder and CEO of KW WEALTH MANAGMENT LLC ​Phone: 916-758-9218

Born and raised in China and Hong Kong. She received her education and credentials in both the United States and Hong Kong, China. Kimmy is not registered with any political party. Any views or opinions represented in this blog belong solely to the blog owner and do not represent those of people, institutions, or organizations that the owner may or may not be associated with professional or personal capacity. Any views or opinions are not intended to malign any religion, ethical group, club, organization, company, or individual. To learn more about Kimmy, please visit



Past performance is not a guarantee of future results. KW Wealth Management does not guarantee any minimum level of investment performance or any index portfolio or investment strategy success.

All investment is subject to risk, including loss of principal. Investment in bonds is subject to interest rates, credit risks, purchasing power risks, reinvestment rate risks, and inflation risks. Investment in stocks is subject to country-specific risks, currency risks, business risks, financial risks, and market risks. Investors should carefully consider the investment objectives, risks, charges, and expenses of investing in funds and ETF.

This article does not constitute a complete description of our investment services and is for informational purposes only. It is in no way a solicitation or an offer to sell securities or investment advisory services. Any statements regarding market or other financial information are obtained from our suppliers' sources, and we believe to be reliable. Still, we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness, or for any delay or interruption in the user's transmission.

KW Wealth Management (KWML) is a registered investment adviser located in Sacramento, California. KWML may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. For information pertaining to the registration status of KWML, please contact the state securities regulators for those states in which KWML maintains a registration filing. A copy of KW Wealth Management’s current written disclosure statement discussing RIA Firm Name’s business operations, services, and fees is available at the SEC’s investment adviser public information website – or from KWML upon written request. KW Wealth Management is not paid by any brokerage commissions, sales loads, 12b1 fees, or any form of compensation from any mutual fund company. The only source of compensation is from a flat fee financial planning or a fee-based investment management program. For clients engaged in financial planning service only, KWML does not have discretion or access to trade and/or monitor client’s investments between the financial planning meetings.


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