Truly, this pandemic is unprecedented, though it was expected to happen sooner or later, given that the last major pandemic was at least 100 years ago. What the world didn't expect, however, is the sheer effect on the economy.
Jobs were lost because of lockdowns, companies need to downsize to reduce expenses, others filed bankruptcy. The virus really makes a dent in the global economy.
As we are able to adjust to our new normal and countries are starting to ease the quarantine restrictions. We are also entering the critical stage, the possible second wave of the virus. Historical data from the CDC shows that the 1918 Spanish Flu happened in 3 waves. And it took at least 2 years before it subsides.
Given this data, we can at least predict that the global economy will still be unstable 1 to 2 years from now.
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| 1918 Spanish Flu Pandemic |
So How Can You Protect Your Investments?
- Invest/trade in Defensive or Non Cyclical Stocks.
- Invest in Cyclical Stocks that has a good Price to Earnings (P/E) Ratio and wait for the bounce.
- Invest in Money Market Instruments as these are low risks.
- Invest in Corporate/Government bonds because these are fixed instruments. Meaning, it pays a fixed amount of interest.
- Invest in Index Funds
- Invest in Commodities like Oil.
- Invest in precious metals like Gold and Silver.
- And don't forget to always stash some cold cash.
Bear in mind that among the list, only the first item can give you a quick Return on Investment (ROI) if done correctly. The rest are in the long term perspective. Why? Because economic recovery can take several years, with 1 year being the shortest and 28 years being the longest.
It is very unfortunate that this pandemic happened. However, if we view the situation in a positive light, this is also an investment opportunity. And most of all… a Lesson Learned.
"Meet the situation without tenseness yet not recklessly, your spirit settled yet unbiased."
Miyamoto Musashi
Let me know your perspective by commenting below!
