By Kunal Sawhney, CEO at KALKINE
Investing in volatile market conditions certainly increases the risk, especially when the turbulence is caused due to unforeseen events such as the coronavirus pandemic.
Almost every business, individual and economy have experienced the hardships of Covid-19, with a large section of enterprises filing for bankruptcy protection, millions of individuals claiming the retirement benefits and every other nation piling billions of debts largely due to wide range of subsidies offered during the still-evolving course of pandemic and reduced tax receipts on account of unemployment.
Some businesses failed to sustain the ‘going concern’ for a while, following which they were forced to incorporate massive cost reduction techniques, including mass lay-offs, shutting down physical stores, offices at multiple locations, scrapping the so-called lucrative deals and offers on the product and services etc.
The Covid-like grey-swan event has unquestionably instituted a proportionately higher amount of pessimism. The situation has only worsened since the emergence of coronavirus, while the vaccination programme has provided a sigh of relief and much-needed protection against the deadly virus.
With more than 6 months of the inoculation drive across the globe, economies are trying to overpower the Covid troubles. But the investors, traders and institutional market participants still have unconditional fears of heightened volatility and choppy trading sessions.
Here we take a look at three important investing lessons that can be learnt from the Covid-19 pandemic.
1.Patience is the key
When it comes to stock market investing, you are always told to buy some patience, the practice which makes you an extraordinary investor, while the market sketches wild moves. Buying and holding onto an asset is as important as deciding what to buy.
The right amount of return, the one that you expected before putting the money into the investment vehicle, can be only realised if you are able to buy the right asset at the right time and hold it for a certain period.
Panic-driven buying and selling doesn’t serve well as you remain unsure of the right time to execute the trade. The patient investors always make money, even in the hardest of times, as they skilfully reckon the extended period of holding.
2.Emergency funds are important
You always need a contingency plan for your survival. When it comes to managing your personal finances, you deliberately need an emergency fund that can support you in unforeseen events, absorbing a definitive portion of your periodic finances and expenditures.
People who have previously invested a fixed proportion of their income towards building an emergency fund were better-equipped as compared to the individuals who were simply investing into some illiquid assets for the long-term. During the initial days of lockdown, the off-market buying and selling of assets nearly came to a standstill.
Therefore, the people who had invested in real estate businesses, properties, artefacts, precious metals and other illiquid assets experienced severe difficulties in managing personal finances following the reduced incomes from regular sources. While, on the other hand, the individuals who invested in the digital form of gold, deposited money with the bank’s saving scheme, highly-tradable stocks, and other liquid assets easily managed to meet their respective monetary requirements in the event of job losses or upended market situations.
3.You can’t overcome uncertainty
Even if you’re a market maverick and an investment wizard in your circle, locality or peer group, you can’t time the market. With the arrival of coronavirus, markets experienced an extended stretch of uncertain sessions. Following the resurgence of coronavirus cases associated with the Delta variant, the equity participants have again become highly uncertain of the upcoming developments.
During the initial days of coronavirus in March 2020, some thought that this would last for a couple of weeks or maybe a couple of months, but they were wrong. During the middle of the crisis, after the government extended partial relaxations, some anticipated that the pandemic would be over soon, but they were wrong too.
Just before the previous year’s holiday period, many expected that the cases would subside and we’ll be able to travel and meet our family and friends by the end of the year, but they also ended up wrong.
In the present calendar year, when the government of the UK laid out the exit roadmap for easing the restrictions in a phased manner, a large section of people thought they would never see the face of the hospital, especially due to no symptom related to Covid, but they also mis-judged the Covid activity.
The markets have thoroughly reacted to all potential upsides and downsides of the vaccination programme, as well as the Covid activity. Of late, the equity market continues to oscillate in a range-bound manner as countries continue to report sharp jumps in the cases linked variants.
On 23 July 2021 itself, the Public Health England (PHE) has reported a fresh count of 33,716 cases of the Delta variant since the last week, effectively taking the total number of Delta variant cases to 286,765. However, the relative number has reduced, as there is only a 13.3% rise in the cases, but the absolute numbers are increasing the burden on the healthcare administration and giving rise to the rate of hospital admissions.
Kunal Sawhney: Entrepreneur with revolutionary ideas; financial professional with wealth of knowledge in Equities, aiming to transform the delivery of equity research through tech-driven digital platforms
With his knowledge, skillset, and overarching vision, Kunal established one of the fastest growing equity market research firms across Australia in year 2014; and subsequently, in other emerging & developed markets – Kalkine – A business that is based on Digitally Powered Architecture and Extensive Data Science led Premium Research. Kunal’s entrepreneurial and commercial skills backed by the passion to establish a tech-empowered research platform, helped in building Kalkine’s global presence across diverse geographies – Australia, New Zealand, Canada, and the United Kingdom. Further, the plans for the US launch in 2021, have set the premise for attaining an all-encompassing client reach for Kalkine’s Subscription and Media Operations.
With a Master of Business Administration degree from University of Technology, Sydney; Kunal’s business acumen has enabled his brainchild, Kalkine, help clients navigate through equity related matters in a proficient and seamless manner.
Kunal is featured regularly on Forbes, Marketwatch, CNBC, Sky Business, Biz News, Daily Mail, Yahoo Finance, KCBS Radio (Audacy), Bloomberg, Sydney Morning Herald, Global Banking and Financial Review and many more.
This is a Contributed article