There is an impact on the businesses in the post-COVID world. Is your portfolio well prepared to perform in the post-COVID world as well?
Investors were hit with a sharp decline in March of 2020 amidst COVID’s impact on business and there was a huge impact on the portfolio. Surprisingly there is a sharp rebound as well. However, is your portfolio well-prepared for the post-COVID impact on the business?
Surprises are surprises. They are not meant to unfold in advance.
However, as an investor, we can assume some of the very common post-COVID surprises for sure. So let me share some impact the COVID will leave on un and how that can impact the business in the next couple of years.
More importantly, we will analyze some of the common impact businesses may see in the post-COVID world.
What are Post-COVID Surprises?
As an investor, I like to assess the business as a customer more than the investors.
So when I invest, I prefer to be the customer of the business. It gives me the confidence that when business isn’t doing well, I can remain invested.
So, as a customer, we will try to guess some of the post-COVID surprises.
As the April-June quarter results are unfolding, I can see companies’ sales are deeply impacted.
However, the market is representing a completely different picture because it is not able to completely assess the impact of COVID on earnings in 2021. So investors are factoring in normalcy in 2022 and investing for the future.
Still, I think the post-COVID surprises will surely unfold something totally different and one of them being the impact of job losses and salary cuts in India.
I can sense it among the customers. Let me share a very simplistic example.
As per Indian Express:
IndiGo announced laying off 10 per cent of its workforce because of the economic crisis triggered by the Covid19 pandemic.
Similarly, there are numerous industries where there are salary cuts.
Instead of going into the details of what is an actual impact, I am sure everyone will agree there is a huge impact. So, these salary cuts mean there will be an impact on the Indian consumption theme.
People who have lost jobs or are on lower than pre-COVID salaries aren’t going to buy a new AC even if their old one is broken. They’ll prefer repairing it.
The story is similar for cars, mobiles, cinemas, restaurants, traveling, etc.
If spending is not an absolute necessity, people will generally tend to postpone it.
Is Portfolio Ready for Such Surprises?
Every investor’s view may vary. I am of the view people will delay the purchase of cars. However, others may consider it to be an absolutely essential and so won’t delay the purchase and even go further to an extent where people may prepone the purchase.
Analyze each stock in your portfolio for the post-COVID impact.
I have done the same and I think companies like Pidilite or Page Industries will see an impact where people will postpone the products unless it is an absolute necessity. However, there is a flip side to it that these companies are absolute leaders in the segment and if smaller companies are out of business, they can gain market share in the post-COVID.
The Way I like to Prepare My Portfolio
The best way I think to invest in the post-COVID world will be to invest like a dead man with my existing investments.
However, the new money that I want to invest now can sit idle for a year or so. Invest only when we know the real impact of the post-COVID world.
So if there are any huge surprises on some of the best businesses, one can invest at lower levels. I see Warren Buffett is also cash-heavy and is ready to invest as and when a major correction creeps in the market.
However, I am fully prepared to wait for a very long-time for the correction as well.
No one knows how the post-COVID world will be. We all will know in the hindsight only.
All we can do is speculate and be prepared.
How are you preparing your portfolio for the post-COVID world?