COVID19- Life during and after.

COVID19- Life during and after.

By Basalt | WritingOnTrains | 11 May 2020


COVID-19.


A pandemic that has spread rapidly around the world.
No one knows what the world will be like when we emerge from this.

The best thing an investor can do is make educated guesses on what are the likely areas to invest in, and what are the areas to avoid.

Investors love a great bargain. The old saying, 'buy low, sell high'. Depressed and suffering businesses with great fundamentals look like a fantastic opportunity to buy.

The problem with that assumption, however, is the uncertainty of how would the world change post-COVID-19. Would this be a V-shaped recovery? Or a U shaped one? The consensus seems to be on the latter. Will there be a fundamental shift in how economies work?

All these unanswered questions mean that investors might not be able to rely on buying businesses that look attractive right now, because what looks like a great buy now might actually turn out to be a big loss later.

What I'll like to do is put down my thoughts on what areas to avoid for now, and what areas that look to be going up.



*This isn't financial advice.

**Edit- After going through my list, I realized writing a description for each sector is going to tax your attention. So I'm going to keep it as short as I can.



Going up


Healthcare - No brainer. Look for hospital reits, drug and medical supplies manufacturers, etc

Online Selling - Can't go out to shop? Shop online then. Amazon, Walmart, Alibaba, etc etc

Logistics/delivery - With those online purchases, look for logistics plays to benefit from the upsurge in deliveries. These companies would have to make do with decreased manpower. Look for those that already have a high level of automation in their processes.

AI and Big Data - For those who can afford it, they would turn to AI and Big data for answers. Business owners want to know how they can cope with the current and near term situation.



Going down


Construction - Can't construct anything if the labor force is impacted.

Travel/Tourism
Airlines, Cruises, Tourism are hard hit.

With covid19 set to be around for some time, airlines are suffering right now. While their planes are sitting idle, they have operational and staff costs to pay. That means a heavyweight on their bottom line.

Most countries vow to help their airlines. Some cope by converting their passenger flights to flying freight. The bottom isn't in yet. So logically speaking.. even though one can't predict the bottom, personally I wouldn't buy into airlines.

Besides, airlines aren't a good idea to invest in, in the first place. Sky-high( get it? ) operational cost to run the business. It doesn't matter if it has a high barrier to entry; all sorts of factors can drive down flight numbers. Not to mention the high environmental damage.

Remember all the drama about cruise ships with sick people on board? With such negative press, people would be hesitant to board. That means a hit to revenue.

Not a lot of tourism when everyone is supposed to stay at home. Unless you are one of those Covidiots.

Entertainment industries and venues
Flim industry, Entertainment outlets like bars and clubs aren't having an easy time now.

Hard to make movies, when everyone is stuck at home. The impact will flow down the line, from producers, directors, actors, to cinema operators.

While streaming providers like Netflix appear to stand the most to gain from this enforced stay at home period, it's safe to assume that even they will run out of entertainment options after a while.

Manufacturing - Most manufacturing sectors are going to be hard hit.

Oil and Mining - One sector I hope goes down and STAYS down.

Sports - For the sports junkies, well... you could watch reruns? Several sporting sectors are attempting to revive with precautions like playing behind closed doors. Not sure how that is going to work out. 

 



Conclusion


No one knows how long will this pandemic last. Too many unknowns for now for anyone to make a prediction. Efforts to make cures and vaccines are still in their early stages, so it's safe to say that for the foreseeable near term, governments are forced to keep everyone at home.

This is actually a great opportunity for governments to make forward-looking policies that would benefit not only the earth but our future generations.

Green energy, local micro power grids, micro-farms, and vertical farming are sectors that are long overdue for a closer look by governments.

Personally, I hope governments wouldn't adopt a 'back to business' mindset when deciding to ease restrictions. This is a chance for everyone to stop and reflect on how we can work towards a sustainable life on earth for our kids and grandkids.


Thank you for your time.

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