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Keep these three things in mind as uncertainty looms large on D-Street

Treat this crisis as an opportunity to invest in fundamentally strong stocks at lower valuations. I have seen markets handsomely rewarding those with patience and foresight to stay invested in trying times.

May 30, 2020 / 01:52 PM IST

Rahul Jain

As the Government of India initiates a volley of fiscal measures to kick start a stalled economy, we still have a long journey ahead of us, before the dust settles and things return to normal.

Investor confidence is at an all-time low and uncertainty still looms large, given constantly evolving developments surrounding the COVID-19 pandemic.

As we ready ourselves for a new post-COVID-19 normal, it’s crucial for investors to remain unfazed and calm under this uncertainty, which is here to stay for some time.

During such times of volatility and even when things are normal, it’s common human psyche to focus on things which are beyond our control, rather than what we actually can. Let me explain this in detail.

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COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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Stay positive

The Government of India needs to be applauded for the proactive efforts taken to boost the confidence of markets, investors, and all stakeholders affected by the COVID-19 pandemic.

The recent fiscal stimulus of Rs 20 lakh crore, is a welcome step in the right direction.

Aptly named as ‘Atmanirbhar Bharat Abhiyan’, this fiscal artillery in tandem with the Reserve Bank of India’s monetary measures, has propelled the country into the league of extraordinary nations.

Not only has India gone all out against COVID-19, with massive nation-wide lockdowns aimed at flattening the virus curve but has also provided the timely and much-needed impetus, to boost market sentiment and restore investor confidence.

With ramping up of COVID-19 tests and strong support for all segments of the economy, what is now needed from us, is a positive outlook.

Indian financial markets have always been resilient enough to weather such uncertainties and by staying positive, you can capitalise on prevalent opportunities presented by this crisis to recover your losses and stay in control of your finances.

Start focusing on growth

COVID-19 is essentially a health crisis that has had deep financial implications. The last couple of months have provided us with enough lessons on how to keep COVID-19 at bay and manage our lives and lifestyles accordingly.

Most significantly, it has brought us face-to-face with the need to relook and realign our investment portfolios, in line with current developments and highlighted gaps if any, for us to rectify.

The present crisis brought two important lessons to the forefront of our attention; one is the need for comprehensive health insurance, for ourselves and our families, and secondly, the prudence of disciplined savings in the form of an emergency corpus in your portfolio.

This is the time for you to find out how to take care of any medical exigencies that may arise given the COVID-19 situation and how to address your liquidity requirements, in case of a pay cut or a job loss.

Once these two core financial needs have been adequately addressed, you can focus on the realignment of your asset portfolio to compound your wealth and value of your investments. Adopt a long-term perspective, identify fundamentally strong stocks, and get rid of investments that have no growth potential or seem weak in future prospects.

Treat the crisis as an opportunity

Swimming against the tide is difficult but those who manage to do it, more often than not, end up winning.

Treat this crisis as an opportunity to invest in fundamentally strong stocks at lower valuations. This will not only help you make meaningful gains in the long run but will also help you allay your fears in case of any possibility of such black swan events, recurring in the future.

Be it the 2008 financial crisis or the dotcom bubble at the start of the millennium, I have seen markets handsomely rewarding those with patience and foresight to stay invested in trying times.

On the other hand, those who panicked and exited ended up losing more, in the long run.

In conclusion

Though COVID-19 has triggered a situation, we have not witnessed before, it is imperative for each one of us to stay positive. By adopting a calm, long-term approach, we can recoup our losses and compound our wins.

Stay in control of your expenses, your investments, and your mind. This will help you navigate through these choppy times with ease, to stay on your path of achieving financial independence.

(The author is Head-Edelweiss Wealth Management)

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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