Updated: Apr 3, 2020
When life throws us a huuuuuge curveball like COVID-19, we can either sink or swim. Most will find it easier to just sit back and wait it out, but breaking from the herd on this one can lead to some serious rewards. And while this can apply to all five of your cores, this week we’re focusing on the financial aspect.
The traditional way of looking at the stock market doesn’t apply right now. I normally recommend a balanced portfolio based on your age based on principles that have served those who’ve used it quite well over the years.
But now is different.
We are in the midst of a rare opportunity that only comes around a few times in a lifetime if you’re lucky. In the 18th century, Baron Rothschild coined the phrase "the time to buy is when there's blood in the streets." It’s not always obvious when this is, but it is now.
There was the crash of 1929 that led to the Great Depression, Black Monday in ‘87, the tech bubble bursting in 2000, and the banking collapse of 2008. We’ve now got the Corona crunch of 2020 - its claim to fame so far being that it’s the fastest the market has fallen in history. With stocks down over 30% and regular daily swings of over 10% (once unheard of), the herd is letting their emotions dictate their trading.
The uncertainty is what people fear, and we are smack dab in the middle of a ton of question marks as to how all this will play out. But here’s something I DO know for certain. We’ll eventually recover, and this is an OPPORTUNITY just like those aforementioned crashes were.
There are certain stocks and sectors of the market that are proving far more resilient than others. And while almost everything initially sold off indiscriminately in the apocalyptic frenzied panic the first month, a clearer picture is beginning to emerge of who the winners and losers will be. Not only for the short-term, but the long-run as I see fundamental shifts in the way both our lives and businesses will run moving forward.
Being quarantined has forced people and companies to adapt to working from home - and with this, new realizations and habits are forming.
Countless hours wasted commuting are saved, and people may find themselves far more productive when not stopping to chat on the way to the bathroom, or feeling like they have to “fill the day” until it’s time leave. And from the company’s perspective, there’s a huge saving on the overhead of office space, utilities, insurance, etc. It’s a huge win/win that a lot of companies haven’t taken on because they were stuck in their old habits. But corona has presented the opportunity to change all that - and my prediction is that the smart companies will take advantage and build momentum from it.
Companies that provide work from home tools such as Slack, Zoom, and Docusign are starting to emerge as clear winners of this new work structure. And there are many other stocks and sectors I’ve been following that could be huge winners in the end (see below “Action Tip”). Many of these got sold off with the rest of equities in the panic frenzy, and it’s not too late to take advantage.
Moral of the story, this is indeed a tough time, but it doesn’t have to be all doom and gloom. There’s an opportunity to plant a seed and watch it grow into a big bold beautiful sparkling butterfly if you don’t let your fear stand in the way. I’m not saying take out a second mortgage or bet the farm, but instead to start nibbling and cost dollar averaging, then getting more aggressive when you see we’re getting over the hump with this thing.
I’ve put together a list of sectors and stocks to consider. Take a look and pledge to buy a small amount of at least one stock this week that stands out as a no-brainer.Once you’re in the game, you’ll find it easier to add to your position moving forward.
Don’t have a way to trade? Use one of these simple and cost-free trading apps:
iBillionaire (good for simple ETF and sector picking so don’t have to stress about individual stocks).
*Tip Booster: Be sure to set up automatic weekly deposits from your checking account. Even $20/week compounded over time will add up over the years.