Investing During and Post COVID 19 – How To Protect and Grow Your Portfolio

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There have been six global outbreaks of major infectious diseases since 2003. Between SARS and the outbreak of COVID-19, the world also had to deal with Swine Flu, MERS Coronavirus, Ebola, and Zika. Each outbreak created short-term stock market volatility and impacted the world differently each time.

COVID 19 is the most devastating disease in modern history. Every country around the world sits in anticipation, waiting to find out what the ‘new normal’ of the post-crisis era will look like and how we can adapt and rebuild our economies.

The recovery will be largely influenced by how the pandemic progresses and whether there is a second wave. Generally, its to be expected that the pace of recovery to be different across the world.

You might be at a standstill with your investments, not knowing what your next move should be. Should you “ride” out the storm? sell early? or is it a time to be more aggressive? regardless of what you decide to do, you should always focus on protecting your portfolio you worked so hard to build first. Here are some points on how to do just that.

Rule #1: if you are investing for the long term, sit tight and don’t panic

If your time horizon is more than five years (which it should be), any current drops will eventually just tilt slightly in your portfolio’s history. It’s difficult to think like that and expect a harder loss when we’re right in the middle of a pandemic, but it’s true. The markets will almost definitely recover. Don’t give up on your investments: if you sell now, you’ll just be locking in the losses and missing out on the eventual upswing in prices.

Rule #2: Use this pandemic as a Diversification Barometer

The aim of diversification is to reduce the risk of your investment while ensuring that financial returns are maximized. For best results, it’s recommended to optimize your diversification efforts by mixing in different strategies which your financial advisor can help you with.

But in setting up a portfolio with the next decade in mind, adding additional asset classes and geographies is key. It can be as little as adding another asset class or two or expanding beyond your country borders, but there has to be a logic when selecting emerging markets. How countries fared with Covid-19 both economically and from a public health perspective offers useful guidance.

Rule #3: Educate Yourself on How COVID-19 will Impact Industries

As an investor looking to minimise losses and increase returns, it’s always best to think about how COVID-19 will impact the economy as a whole, both nationally and globally. But also how it will impact the businesses you’re wanting to invest in. In order to do that, you need to understand the potential impact on the business’s industry.

It’s important to understand that COVID 19 has and will continue to affect industries differently. Some companies are seeing a significant increase in business, such as businesses that sell food, medical equipment, and cleaning supplies. While other companies will experience deep ongoing losses that, in worst-case scenarios, will be terminal.
Consider the travel and grocery industries, for example. Demand in one has ceased completely while demand in the other has soared.
When I look at companies to potentially invest in, I am looking for companies that won’t be affected in a terminal way. Likewise, I am looking for companies in industries I know and understand.

Keep In Mind:

• New consumer trends will emerge after the crisis
• A shift towards online shopping and a spike in e-commerce sales.
• The growing popularity of videoconferencing
• A shift towards working from home, which will have an impact on inner-city office real estate and commuter transport providers, and create a heightened sense of cybersecurity.
• Enhanced focus on innovation.

Don’t Stress About News Headlines

Although a worldwide pandemic is serious by nature, it’s important not to let day-to-day news weigh too heavily on your investing decisions. That’s because the market is unpredictable, and it doesn’t always react to current events in obvious or easily traceable ways.

Avoid Continuously Checking Your Portfolio

Checking in with your investments on a regular basis is smart, but monitoring them too often can create unnecessary stress and anxiety and could lead to bad decision making. If you are investing in the long-term, you should expect short-term volatility, especially during times of uncertainty.

Take Time to Thoroughly Review Your Goals

If you find it difficult to wind down and want to do keep active, take a moment to re-establish what you are really trying to achieve with your investments and what, if any, actions you can take to help you achieve your goals.

I’m Giles Maynard. I provide individual investment and wealth management services for private clients and companies. I have been trusted by clients, large and small to manage, protect, and preserve their wealth. How can I help you with yours?