How to protect your investments during Coronavirus pandemic
The world outside is nothing like we have experienced before. As we continue with secluded lives from our homes and the coronavirus play havoc with world economies and global markets, many investors are feeling anxious. What should I do as an investor – that is a question I hear a lot these days.
Let me try to respond to this question from another angle. Suppose you have invested in a restaurant or gym. Or you are running a hotel. Your business is totally shut. You don't know how long it will take to reopen the establishment or how long will it take for the business to be normal. What would you do?
Would you close your business or wait for the dust to settle? Most of us would wait, right?
Let us take another example. You have a piece of land or an apartment as an investment. With all that is happening, the value of it would have fallen. So, have the value of gold, silver, etc. What are we doing with those investments?
Are we selling them?
No, we are simply waiting for the chaos to settle. Right?
The point I am trying to make is if we assume that the world is going to end, there is no significance of any investments. But if we assume that the world is going to be normal again after a brief pause, then there is a reason to hang in there.
Remember these three points:
(1) Remember this too shall pass
(2) Remain calm
(3) Be a responsible citizen
If it is of any help, here are some crises that investors have faced in their journey
1984: Prime Minister of India was assassinated
1987: The stock market fell the most.
1991: India was literally bankrupt
1992: Harshad Mehta scam, the stock market tumbled more than 55%·
1997: Ketan Parikh scam shocked the market
1999: Kargil war
2000: Tech bubble burst, markets fallen by over 60%·
2001: WTC attack happened in the USA
2008: Global financial crisis hit the world hard; Markets went from 21,000 to 8,000 (62% Loss)
2020: Covid-19 crisis
As you can see, this is one of the major crises faced by Indian investors. Sure, a virus threat of this scale may be unknown. The world is united to fight the pandemic. It is only a matter of time before we regain our normal lives.
Big rallies have followed big crises. In May 2009, the Sensex rallied over 18% in just one day. Yes, your patience will get tested, confidence will shake many times, but you must believe in one fact: humans have fought many battles earlier and have not only survived them but also thrived.
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