Financial Planners 22/04/2020

Should I invest when the Market’s Down?

The coronavirus outbreak has been wreaking havoc on peoples’ lives worldwide. Though the most significant impact is on health, economies have also been suffering as a result. The question you might be asking in the wake of all this: “Should I Invest?”

Markets are down everywhere. There are some gains here and there in the stock market; however, the status is generally worse off than before the virus hit. It has led some people to start investing when the market is down.

But is this a viable strategy? If you are thinking of investing, here are some things you should consider.

COVID-19 and Stock Market Trends

The losses seen in global markets the past few weeks have been quite significant. Investors are panicking because of the virus. Finance professionals, governments, and central banks, on the other hand, are scrambling to control the economic damage. The United States’ Wall Street has suffered significant losses in a short amount of time.

  • The Australian Market: Australian markets also took a big hit and losses are still expected in the coming weeks. With the rate that the stock market is going, investors should prepare for the worst.
  • Future directions: Will the stock market recover? The short answer to this is Things will eventually return to normal, and the stock market will eventually recover. However, as to when this will happen, even experts cannot say. That is the unfortunate reality since no reliable cure or vaccine to SARS-CoV-2 has been developed yet.

Considering which stocks to prioritise is essential when facing a crisis. Not all stocks suffer equally. Careful consideration of what to invest is necessary.

Consider Which Stocks will Suffer or Benefit the Most.

The value of many stocks will continue to plummet because of the pandemic. Among the most significantly-impacted stocks are the ones in the following categories:

  • Tourism: The tourism industry is one of the hardest-hit because of coronavirus. These stocks also fell as a result.
  • Export and import: Many types of exported and imported goods have also fallen in demand. The stocks for these depend, so make sure you check these trends.
  • Energy: The prices of energy stocks are closely related to global oil prices. Since oil prices have plummeted, so have energy stocks.

If you are willing to weather out the low prices and wait for your stocks to bloom, invest in these. On the other hand, while most stocks suffer because of COVID-19, this is not the case for all. Some of the stocks that might benefit are:

  • Health: Healthcare stocks could continue to grow amid the coronavirus outbreak. The healthcare sector is on the frontlines, after all.
  • Online education: Most schools have shut down because of the pandemic. As a result, online education platforms might continue to gain in value.
  • Sanitation, protection, and hygiene: People have been buying these items as a precautionary measure. Stocks could perform well.

With all these said, it is also important to consider when to buy stocks. Note that the market can still fluctuate.

Consider all the factors

The market has not become static because of the virus. The stocks’ performances still vary, so it is crucial to time your purchases properly. Looking at the trend in the past few weeks can help you decide on which to purchase. Make sure you consider all factors in order to have an informed decision.