Sometime this week, number of confirmed COVID-19 infections would reach one million and number of deaths may touch 50,000. There is no flattening in sight as virus is still spreading exponentially in many countries and big cities like New York. The governments are putting shelter-in-place, 21-day lockdowns type of policies which is crippling economies around the world. At same time governments and central banks are providing trillion(s) $$ fiscal and monetary stimulus so that their economies are kept on life-support during these forced lock-downs. It's difficult choice policy-makers have to make. If you do too much it's a problem (like migrant crisis in India due to forced 21-day lockdown). If you don't go too far, it's a problem (like spread of virus in New York City and New Orleans due to slow actions taken by leaders in those cities and states). If you take the virus lightly the way President Trump took initially, it's irresponsible. In democratic world, one cannot just implement Wuhan type quarantine in New York City. That also means we cannot expect virus spread to come under control in 6-8 weeks the way it has been done in China. And markets are reacting to the events in live by 1000 points move on DOW becoming normal. We all wish that with March month coming to end, this "March Madness" will be over. But based on the predictions by experts (Dr, Fauci predicted that USA could see 200,000 deaths), "Mayhem" is about to come in May!
So as individuals, what should we do?
- Follow the guidelines of local policy-makers of social distancing
- Keep yourself and your family safe and healthy
- Help the communities as much as you can by donating your time and money
- Stay connected with your friends and extended families using video calls
As investors, what should we do?
- Stay focused on long-term. World will come out of this eventually. We just don't know how long it will take. Could be few weeks, few months or year!
- Don't speculate and don't try to time the market. Markets can enter bear and bull markets multiple times during this crisis phase
- There are some quality companies which are available at less than their fair valuations. It is excellent opportunity to balance your portfolios if you always wanted to take positions in them. These are individual choices so have your short-list ready based on your risk profile. Take small but confident positions when you feel comfortable and then stop looking at those.
- Enjoy and balance the life!
Stay Safe and Healthy!
/Shyam
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