|Planning of investment during COVID-19|
I am expressing my opinion and I reserve the right to be wrong.
Before corona world have seen so many deadly viruses or deadly wars like swine flu, plaque, WWI, WWII etc. And each time human race prove themselves and back to the race even stronger. Although these situations affected economy very badly but one thing everyone accept that - every pandemic or bad situation support selective industries like during war, arms manufacturing companies earn most and during pandemic associated with diseases its medical and health insurance industry which earns most.
So there lies a trick. If you follow this trick while making investments then in long term your investment can produce honey for your bread.
In war situation arm industries earns most and during disease medical and insurance industry earns the most but trick lies in the durability of these type of situation. Question - how long it can sustain? its permanent or temporary? Most of the time you find answer is temporary. It can last for long duration like one year, two year, five year even more but not last forever. So that attractive earnings in these type of industries would not last forever. It dosen't mean that when bad situation get over these type industries would be thrown out of the market. But merely suggesting that after war or disease earnings of these industries will lost to significant extent. If you invested in these industries in the very beginning then you are in the position to grab attractive profits but if you entered or invested at the end of these situation then there is huge possibility that you will hurt yourself badly or your profit looks not much attractive compare to those who entered in the very beginning.
Second investment opportunity lies in industries which have suspended there operation during these situation or industries which were badly affected during this. Like present Corona pandemic motor, cement, mining industries stop their productions. Malls, theater, clubs all closed.You can easily find that stock prices of these industries were badly affected due to pressure selling. In that way there is huge possibility that some good quality stocks trade bellow their intrinsic value. Throw your net at right place and start fishing.
But there need to be very cautious while fishing. There is huge possibility that you end up catching or holding something wrong in your hand because in situations like this every stocks looks undervalued. Its better to stick with some fundamentally strong companies which contains characteristics to sustain these type of pandemic.One more thing I want to tell you that when bad situation get over then company need money to restart its business so company with large amount of surplus and low debt be your first choice.