The humanitarian, social, and fiscal challenges brought by COVID-19—and those still to come—are historically severe. The economic harm to businesses and investors mounts daily. And it is difficult, within the eye of the storm, to ascertain the full extent of the damage.
Yet an early perspective suggests that as destructive as the pandemic has been to their portfolios, it could have been a lot worse. After a decade-long bull run across asset classes, many of our investors had already considered a “correction of some sort” as inevitable and had positioned their portfolios defensively. The result is that, by and large, many investors have found themselves better off than they were in the 2008–09 global financial crisis. Across the industry, there is less of a sense of panic, greater investment discipline, and more continuity than there was in 2008. That is not to say that investors will emerge unscathed from the COVID-19 pandemic.
We had advised our investors in early January (well before COVID) to defuse portfolio risks. Beyond the initial hit in the public markets, many of our investors have been continuing to wait—for the other shoe to drop. Some investors have shown more resolve than others and those who have deeper pockets ready to deploy continue to invest via SIPS.
While you may wonder and FOMO (fear of missing out) whether you missed buying the drop in March or whether markets currently reflect real-economy impacts, be assured that it is never to late to defuse risk or rejig your portfolio.
Naturally, the sectors most affected by COVID-19 have been a key area of focus not just for near-term impact but also for the uncertain future facing some of these industries such as travel. Hospitality, Autos , Banking to name a few are seeing exits Illiquid asset classes, have also been a source of concern—in particular, real-estate portfolios.
Changing strategy as a knee jerk reaction to market cycles typically hurts the performance of your portfolio. A decade ago, many investors were burned repeatedly, buy: deploying capital at the peak, selling at a discount, then sitting on the sidelines during the recovery.
So unless you are facing a full blown liquidity crisis hold on to high-quality assets even if markdowns occur and continue with the SIP even if conviction begins to slip. Time will tell you that quality blue chip names with good clean managements will always survive.
Finally, be alive to possibilities that will come in the days ahead..
About the Author
Rajiv Goel – CEO Bombay Capital Services, bum in 1968, in Mumbai, in a family of traditional textile traders studied in a local Convent school named “Campion” and completed his Commerce graduation from H R College Initially, first 5 — 6 years he was a pad of the family business following which he started taking interest in the stock markets which were still in a nascent stage in India.
Even before he completed his graduation, he started his own Sub-Oolong business in the Bombay Stock Exchange using his street smart knowledge acquired through venous sources He learnt the ground rules of the business in the era of Harshad Mehta and Ketan Parekh.
In 1995, he established a proprietary company called “Bombay Capital Services “, a financial advisory firm which advises dents on the fundamentals of small savings. These include sublets like PPF, Gold, Equity, Mutual Funds and similar asset Classes.
Based at New Marine Lines, the company has a ten minute proximity from the Churchgate and V.T stations making it convenient for the client to access. Over the past 20 years, the company caters to more than 1000 dents including HNI’s, Corporates/ Bank, Retail Investors. The company has a dedicated team and research desk which advises clients on Equities Commodities, Forex, Mutual Funds and Insurance. Presently, it has an office in Mumbai and Delhi and plan to open up branches shortly in Kolkatta and Chennai.