Investing in 2023

While filing my tax return on Thursday and claiming a sizeable refund (the effect of amending the Polski Ład reform in 2H2022 which retroactively decreased the PIT rate in the first bracket from 17% to 12%) I thought how to make the best use of money, other than spending it.

The current year does not seem to be easy for holders of pecuniary assets, since preserving purchasing power of money has become a challenge. Let’s look at the most popular alternatives at hand.

With the current real interest rate of -10% in Poland, bank deposits (whose quotations fell recently) still offer a solid alternative to putting money in a drawer, but even with expected disinflation, a real return in a few months is very likely to be negative anyway.

Poles are generally wary of fancy investments and therefore those who possess sizeable surpluses often turn them into tangible assets, i.e. residential properties. Between October 2021 and October 2022 mortgage instalments rose by around 100% and repayment capacities shrunk, hence the number of new mortgages granted was falling by nearly 70% year-on-year in 3Q2022. Property transaction prices only nudge up these days, but with inflation of over 17% (the January 2023 reading), value-wise they have produced a real negative return of 15% over the recent year. If prices stabilise in nominal terms over the next quarters, in real terms they will begin to be getting cheaper and cheaper. My forecast for this asset class (I dislike the term, since I believe properties should meet people’s housing needs rather than constitute a haven for their money) is not optimistic. With factors driving their prices potentially up and down in the near future, I believe the rent yield and price appreciation might be at the level of bank deposits, with higher risk and lower liquidity.

The equity market reached its low in Poland and on most markets in early October 2022. It seems at that time stock prices already discounted all negative scenarios on the horizon, especially pertaining to problems with energy supply during the winter. I believe stocks might be a good, but if you purchase them on a temporary low. My strategy would be to wait for a correction and get some exposure to equities and if the correction gets deeper, buy more to bring down the average purchase price.

Government bonds seem to be a safe choice credit-wise, since most governments benefit from the inflation, as the real value of their debt shrinks. With the anticipated decrease in interest rates, fixed-coupon bonds might be a good mid-term investment, but mostly in terms of price appreciation, not the interest income. The yields on Polish 10Y gilts were quite volatile in recent weeks. Even in recent days the yield increased from 5.9% to 6.3%, which given the 10Y tenor must have resulted in a substantial loss in value.

For some foreign currencies are an alternative. Here it seems that Polish zloty is already weak against major currencies and little room for depreciation is imaginable. In practice the negative real interest, disturbingly low for a civilised world, might send the Polish currency even lower.

I have no idea about alternative investments, since I do not track them, but definitely must advise you not to jump into a train which has already departed. Chasing missed opportunities is one of major mistakes investors make. Stocks? You should have bought them in October 2022. Polish gilts – too. Inflation-linked bonds – you should have purchased them in 2021 at the latest. As a proud (of my skills) holder of those securities I do not believe they will continue to fetch extraordinarily good returns for more than a few quarters ahead. Or actually with the governor of the central bank who does not fulfil his duty to shield purchasing power of Zloty, those bonds might outperform bank deposits for 2 or 3 years.

Off for late-winter holiday next weekend. A coverage due on 12 March 2023.

In which I catch COVID-19

Nearly three years into the pandemic and having taken four doses of vaccine against COVID-19 (second booster on 24 October 2022) for a long time I kept escaping an infection. But if you live normally and take no other precautions that getting a jab, catching the virus is just a matter of time.

Saturday, 28 January 2023
I attend a housewarming party – over 30 people on mere 30 square metres. Mostly likely I got infected there. I am not sure, since the host claims no one reported being ill afterwards.

Thursday, 2 February 2023
I feel a bit off-colour. While attending my fitness / workout classes I get tired quite quickly, but I don’t find it disturbing.

Friday, 3 February 2023
I wake up with a fever (body temperature of +38C) which I bring down with a painkiller, then feel strangely – I have a weird headache, my stomach turns upside down, I feel dizzy. On that day a penny drops. On that day the number of confirmed infections in Poland is above 1,000 for the first time since October 2022.

Saturday, 4 February 2023
I feel quite weak, worn-down. Before leaving to my parents just in case I take a test. The outcome is positive. I repeat the test after 2 hours of not eating nor drinking and again it is positive.

Sunday, 5 February 2023
I visit a doctor, to find out my lungs are clear and my employer-paid healthcare plan does not cover testing. The doctor does not even ask if I need a sickie.

Monday, 6 February 2023
My weakness continues, I feel dizzy, but have no other symptoms. Needless to say my infection escapes official statistics.

Tuesday, 7 February 2023
I grow even weaker and work from bed most of the day. Those days I sleep 9 – 10 hours each night.

Wednesday, 8 February 2023
I think I am finally on the mend, despite testing positive in the morning. In the evening I go for a walk. I don’t get particularly tired, but feel dizzy again.

Thursday, 9 February 2023
I cannot judge whether I would have felt better, had I not worked for 11 hours. Apart from the “dizziness” which does not ease off, I recover.

Friday, 10 February 2023
Again I get tested positive. This gets slowly boring…

Saturday, 11 February 2023
Despite the ongoing infection I wear a mask, go to the shops, go the a museum for an exhibition. Nobody around cares if the virus is around, so why should I excessively care about other people. I hope to turn negative soon and to have no long-term complications after the infection.

Tribulations at work

For a while I have not shared many news from the corporate front, where the goings-on have been anything, but uneventful in recent months.

In September 2022 I was awarded a promotion. I had not held out for it, I had not strived for it, it came unbidden, although I perceive it as a well-deserved distinction. It involved a below-inflation pay rise, theoretically the same scope of duties, but in practice I am supposed to serve as consultant / advisor to less competent employees. That very change has not been a tremendous one.

In early December 2022 I learnt my manager with whom I had worked for 5 years would be promoted as of January 2023 and would be in charge of a newly created bureau. His promotion was well-earned too and I wished him all the best on the new career path, but on the other hand I regretted our paths parted for a while.

Also in December 2022 the vacancies we had had in our team and which generated additional workload were filled. Instead of hiring one senior analyst, somebody resolved to take on two absolute freshmen (graduates). I heard payroll of two junior analysts was lower than amount claimed by experienced professionals. Whether such savings pay off is debatable, since it takes much more time and effort before freshmen become value-generating staff.

In early January 2023 it transpired that the head of my department would go on a six-month sabbatical starting with the beginning of February. Actually it would not mean a great change, had it not been for a fact his responsibility for co-ordinating a multi-geography project on Poland level has been laid on me.

On 16 January 2023 my new manager had his first day at work. He is an experienced professional, open-minded, communicative, competent man and after three weeks I believe he is one of few outstanding bosses. In the meantime I have to assist him in finding his way around the new organisation, but this effort already pays off.

On the same day I became a mentor for the two freshmen, with a mission to bring them up into card-carrying credit analysts. So far my efforts go mostly down the drain. They lack basic knowledge SGH graduates should possess. This could be made up for with a bit of time and patience, but their brightness leaves a lot to be desired. They are determined to learn, but instead of comprehending causations, they attempt to memorise things, which does not bode them well as analysts. I have already shared my observations with our managers and at least they agreed after a probationary period some difficult decisions might need to be taken.

Under all the circumstances above, my workload is now a bit of excessive – my portfolio of clients is larger than of any other person in the department (and some of accounts are troublesome), I co-ordinate a project, I look after freshmen and help my boss. In return I have negotiated official overtime I register and will be paid for. In a short term, this makes sense and is equivalent to a 30% - 40% pay rise, but within a perspective of a few months I would definitely prefer not to work more than 45 hours a week and spend my off-work time in a more appealing way that doing overtime.