How To Invest During COVID-19

Over the past few weeks, I have been approached by several people on what to do and how to navigate the current investments landscape with so many uncertainties around us.  Obviously, I can’t advise anyone on their investments portfolio but I can share how I am navigating the landscape and what principles are guiding my decisions.

1.  I wrote a very timely article on how to prepare for a recession back in December 2019.  If you haven’t read that, I would recommend starting there.  Here is the link http://victorlofinmakin.com/2019/12/01/how-to-prepare-for-a-recession/

2.  A very important concept to know is that we would always get the future exactly wrong.  We will always attempt to work on models and projections, but one thing is constant.  We would always get the future exactly wrong, so it is advisable to be conservative, plan for the worst and invest for the long haul.

3.  Most people are waiting until things settle down, until they are sure of what’s going on.  Warren Buffett said “be fearful when others are greedy and be greedy when others are fearful”. Waiting until things settle down may cause you to miss the opportunity.  You want to transact when there is fear but negotiate and invest with extremely deep discount so that if things get worse, you are still ahead.

4.  Be bullish but cautious, be aggressive but conservative.  One thing is certain, we will make it through this tough time, this pandemic will pass eventually.  Take bold and cautious action now when others are fearful.  Cash gets bored and tends to drift when not carefully directed, do not be too heavy on cash due to the possibility of impulse spending and inflation.  Invest in assets that have a high degree of surviving the pandemic and thriving.

5.  Don’t be too leveraged.  Use borrowed capital sparingly and carefully.  Borrowed money can compound a bad situation.

6.  Don’t make investments that will cause you to lose sleep. You don’t want to gamble with what’s important to you for the marginal gain of what’s not so important to you.  Only make investments that you are comfortable with, do not overextend yourself or go “all in”

7.  Finally, there is absolutely nothing wrong with doing nothing.  Doing nothing is also a decision.  It is very reasonable to wait out the storm and come out whole if you expect a very turbulent ride.