My take on investing in times of Corona

First a little disclaimer - I am not a financial expert and you should not take this post as investment advice.

Quite turbulent times at the stock markets all over the world. The recent record highs - even though recent - seem so far away by now. As an avid investor, I also sat down last Sunday to check-in on my investment strategy and devise the best plan going forward.

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Investing in times of Corona!

Enclosed my thoughts and plans for investing.

Question: Should I invest now?

It's a question only you can answer. I do invest yes - following my de-averaging strategy (check out my other post regarding my investment strategy). I try to invest on a regular basis and I really try to stick to it. A friend of mine was quite surprised when I told him I invested beginning of this week, asking if I don't think it will go deeper again. If you open my Flipboard app to read through business articles, 50% says it's bottoming out, the other 50% says that after a sharp decline, the market will retest their lows after a short rally ("dead cat bounce"). Truth is - I don't know which strategists are right! Same with the current, prevalent scenario discussion, whether it will be a V, a U or a L shape recovery or recession - I can't give you the right answer. But I know stocks are quite on sale at the moment and in any case, I will not pick the perfect time to invest - or as the saying goes: "nobody rings at the top or bottom of a market". So, I just adhere to my regular schedule, happy that I get more stocks for my regular investing amount. So I advice to invest yes, but spare some more bullets for later.

Question: What should I buy now?

My plan has two angles:

a) Rebalancing

I allocate a minimum amount to every position. If the position is now below this threshold because of the reduced stock price, I will buy additional shares of this stock to fill up again to the quota. This is a simple version of the financial term "rebalancing".

b) New position

I don't really have a watchlist, but I follow a few stocks that I like and think it will make a good investment. So next to the rebalancing, I also did a few investments in new positions. Out of these stocks, I gave preference to stocks from the technology sector and the health care continuum. Why - I read an interesting article from BCG stating that the top performers (i.e. with the fastest recovery) in China were generally speaking the software/tech sector and health care. Fits well with my sector preferences, so I picked up selected stocks accordingly.

On the contrary, I also know what I don't buy. Quite a few shares, in particular from the travel industry are available at rock-bottom prices - e.g. stocks from airlines, cruise operators etc. I have a friend who picked up one of these stocks - convinced to quadruple it! Nevertheless, I did not follow his recommendation - that particular company has a very weak balance sheet and a high amount of outstanding debt - exactly the profile I don't want to have exposure at the moment. I agree with my friend - these stocks (if they survive) will be worth more in a few years, but I guess it will take some time as they may have to re-pay government aid and other debt - I am quite sure I can make a similar amount of money in a shorter time span with some good, cash-rich growth titles from the tech space.

Conclusion

Plan the trade and trade the plan - the summary of my current strategy. I am in there for the long-term and therefore I stick to my investment strategy of regular investing (de-averaging) and consider it a good opportunity to buy some stocks with secular growth tailwind at prices cheaper than one month ago. Yes, it's a time to invest, if it's the time to invest, I don't know.