The Covid-19 Coronavirus pandemic has seen 25% of the value of the S&P 500 wiped out in the last 30 days. People are in quarantine, people are losing their jobs and people are dying. We are living in unprecedented times and many are anxious for what the future holds.
If, like me, you are young, without health issues, and in a stable job that allows you to work from home then you are privileged. It goes without saying that the privileged amongst us must do what they can to support those who are vulnerable. Beyond this, putting social and health issues to one side for just a moment, it is permissible to consider whether there is any silver lining to the current situation. Indeed, as distasteful as it may sound, those belonging to Generation Y or Z, in particular, should reflect on whether this crisis might equally veil opportunity. I am referring to a much-needed break for young people: to be able to invest in stocks at prices below “fair value” for the first time in their lives!
Researching the right stocks to buy
Although it may seem like it, this is not the start of an apocalypse! The stock market, as it has done for decades, will bounce back, given time. Savvy investors investing in the right companies during this period will invariably cash in when things return to normal. And it is a return to normality that world leaders are desperately attempting to orchestrate, as quickly as possible!
That said, certain companies, in sectors like Travel, for example, may not recover and so due diligence on which stocks you should buy is needed more than ever. For example, researching things like a company’s level of debt is sensible, and easily done using tools like Simply Wallstreet.
Buy stocks now or wait for them to drop further?
Many investing gurus say you can’t time the market. What you can do, however, is simply watch the news, and do your research into this Coronavirus epidemic. One of the first things I have noted is that Covid-19 has spread far more aggressively than viruses that have preceded it, e.g. versus SARS, for example. Second, the response by governments across the world has been both slow and inconsistent. Countries like South Korea have been very rigorous in tackling the outbreak. By contrast, countries like the UK appear to have accepted that the majority of the British population will catch Covid-19 at some point and merely want to stagger the rate at which people will catch it.
What this says to me is that the dire economic effect of Coronavirus will be long-lasting and the stock prices should reflect this. Thus far, rate cuts from the FED and BoE have done little to curtail the impact. In conclusion, therefore, I am waiting a little longer to buy and monitoring things closely. I have created a watchlist of interesting stocks in my Freetrade account.