Where to Invest In the Midst of Corona Virus Scare?

The Future of Corona Virus

Corona Virus causes a disease, which is COVID-19. Around 50% of the people who had Corona Virus, didn’t get the Corona Virus Disease or COVID-19.

So as I see, there are mainly three possibilities of Corona Virus.

1. Contains and Disappear – Many viruses like SARS or Ebola were contained and ultimately disappeared.
2. Develop a Vaccine – Pharma companies testing and developing vaccines against the Corona Virus and ultimately become successful in developing one.
3. The Virus Keeps Circulating – In an extreme case, the Virus keeps circulating and remains in the environment.

Depending on which one you think is more likely an outcome in the longer term, one should invest in the market.

Warren Buffett

In the current Turmoil, Warren Buffett has started investing in an Airline company. There are news and rumors about it all over the web.

May be in India, we don’t need to be Warren Buffett and invest in an Airline company. However, this is maybe the best time, or rather once in a lifetime opportunity to buy some of the business that can survive the Corona Virus impact.

A straightforward question that will help you to invest in the market in the right stock, and it is:

Will the company do no or very little business in 2020 and still survive?

If a company without any business can sit through the next few months and yet have minimal impact when it’s back to working is the best company to invest in.

If HDFC Bank has to close all its branches now, will it be able to open up three months later and can back to business as usual?

In India, the situation is not very bad. We are only in the precautionary mode.

If your answer is YES, this is the right time to invest in these companies.

I am Buying or Rather Accumulating

I am accumulating some of the better companies in my portfolio that have corrected a lot.

Marico and Take Solutions.

Moreover, I have one new stock in my portfolio, and it is Motherson Sumi. It is one stock that I always wanted to have in my portfolio, but because of very high valuations, I couldn’t.

The company has a well-diversified product mix along with GEO-diversification. It passes most of my investment checklist but has higher than what I prefer debt to equity ratio and lower than normal OPM.

The reason I share the contract notes is not to recommend the stocks that I am buying. Many may be saying to invest in the market, but I prefer to show that I am doing to encourage you to do as well. Grab the opportunity to invest for the next decade – be it in stocks or mutual funds.

What if The Virus Keeps Circulating

The most pessimistic approach can be that the virus doesn’t disappear, nor is there a vaccine for it. So the Virus keeps circulating in the environment.

My view is, the world will not end for Corona Virus. Humans will develop immunity against the virus naturally.

So, I think the fear of the Virus will slowly reduce.

When the fear in the market subsides, the Pharma Companies can lead the rally or Insurance companies will see a gush of insurers.

We will intake more medicines than ever before and try to get insurance for it.

So if your view is, Virus is not going anywhere, Invest in the companies that are more likely to help you fight it.

Final Thoughts

In either outcome, companies like TCS, Divi’s, Asian Paints, HUL, Nestle, Marico, Page Industries, Pidilite, HDFC Bank, Abbott India will continue to do the business.

Even if the environment is not conducive for them to do the business now, the companies can be in business when things start to become normal. As things normalize, these companies will accelerate the growth trajectory and take the market share from companies that couldn’t survive the doom and gloom.

So last thing we can do is add an extra amount of SIP or some lump sum investment in mutual funds that invest heavily in these companies.