In the last hundred years, our world has not seen a pandemic of this scale. The world stock market crashed earlier this year, right after the pandemic’s first deep impact.
Covid-19 has put most of the world on standstill, locking people at home, increasing unemployment, and wrecking economies.
Due to the coronavirus outbreak and friction between different powerful nations, the stock market collapsed causing a sharp rise in unemployment and mass lockdown of the workforce.
People lost a good amount of investment due to a fall in stock prices, with many selling their stocks fearing more loss.
Not sure whether to invest in this unstable and slowly recovering market? Here’s how to deal with the stock market during Covid-19 and investing during a pandemic.
Can You Invest During Covid-19?
Yes, you can invest in stocks during Covid-19. Even if the market is unstable, a bear market is perfect for buying stocks since the prices are low.
It is a golden opportunity to buy more stocks at much lower prices. Even lucrative companies that have always made mass profit are experiencing a fall in stock prices. This is the time to buy those stocks, as prices will eventually recover.
However, you must choose the companies you want to invest in, wisely. Making one wrong move can make you lose your money.
Carefully thought out investments will bring in a mass profit in the future. Follow the next few steps to ensure that your investments prosper.
Doing the research
A pandemic as far-reaching as Covid-19 will naturally impact every industry. Mass fear will continually cause more people to sell their stocks and exit the market. If you want to invest, you should do your market research thoroughly.
Not all companies will survive this injury, so you have to be super careful to comb out the ones that are of high risk. Do not depend on rumors and word of mouth, do your own investigation before settling on any company.
Some companies will make a massive profit despite the pandemic. You must find these “Golden Geese” if you want to invest successfully. To find such companies, check out the top-rated newsletters by StocksReviewed and follow the steps below during research.
Think of What Everyone Needs
There are products and services that everyone needs for basic survival. The companies that provide these are usually always in demand. For example, major food suppliers stay in business longer than others.
People will always need food, kitchen supplies, medicine, etc. Find companies that sell necessities. Before choosing you must remember that not all companies will make a profit.
Some companies have a winning advantage in the market over others or are doing more which will result in future success. Your research on these companies, their marketing strategy, and how they are operating, will give you insights on whether they will be profitable or not.
Who are Making Profits Despite the Pandemic?
Some companies have experienced more sales due to the pandemic. A prime example would be hand wash and hand sanitizer producers. People have become more hygiene conscious than ever before. Hence, the companies that produce these items are raking in the profits.
Think about all the companies that have experienced gains in the wake of Covid-19. Companies that produce personal hygiene items, cleaning supplies, delivery services, streaming websites, etc, should be at the top of your research list.
Think of unique trends that people have followed during the ‘staying home’ period, like at-home activities such as cooking, crafts, etc. Companies that have assisted people with staying indoors and made that experience ‘enjoyable’, have prospered.
Make a Shortlist
First, consider the industries you would like to invest in. Then weed through those industries and get rid of the ones that are weak or are not showing any signs of future progress.
Do not invest in companies that have not been clever with handling their business during the pandemic. You will only set yourself up for a loss if you invest in a company that is showing no promise.
Some companies have handled the slump very cleverly. These are the ones that wouldn’t just thrive now but do even better when the markets recover.
Keep an eye on the companies in the shortlist and carefully follow their progress. When the time is right, you can jump in and buy the stocks.
Making the Investment
Have Money to Spend
The market is not stable yet. The prices might fall further and you must be prepared with your money when that happens. Reserve some money so that you can act immediately when the time comes.
If you have invested in stocks earlier, keep a close eye on the market. If the situation does not look favorable, be ready to sell your stocks. Do so before the prices fall too far to avoid the loss. This will also bring in some much-needed cash for your future investments.
Investing in Promising Companies
When the prices fall, go for companies that you can trust. Trust those companies that have the best management, constantly striving to do better, and have a competitive advantage over others.
Since any investment is risky in a volatile market, invest in a company that is showing signs of growth and will bring in at least 15% profit in the future.
Try to invest in companies that a lot of people depend on. Companies in high demand can control the prices and make a profit during inflation.
Also, look for companies that provide accessible luxuries. When people experience a fall in income, they can only afford “small happiness”. Figure out which companies can provide that and invest in ones that are profitable.
Always Spread Out
Always remember to spread out your investment. Never invest all in one company or in one industry. Even if a global crisis affects every industry, it does not affect any two industries in the same manner.
As you spread out your investments, you reduce the possibility of experiencing mass loss. If one of the investments fails, chances are the other will still do well. Spreading out wisely will always help you survive in a volatile market
Pandemics are a scary time for everyone. The regular way of life changes and everyone suffers one form of loss or another. But, the world works in a way that ensures “survival of the fittest”.
If you want to survive this global stock market crisis, you have to act carefully, quickly, and cleverly. Proper research on future investments and a little logical thinking can help you land on an investment that brings in immense profit. Do it right and your investments will prosper.