stock market investment strategy: Four lessons the Covid crisis teaches you about investing

Recovery from Covid-19 has been a journey of panic, patience, gratitude, and then a little more panic.

It was a tumultuous time, to say the least – more than I was worried about my family and loved ones as we heard about case after case.

While I was hacking my 21 day quarantine into too lethargic to even get up and go for a walk, my mind was in full swing!

With all of this, I couldn’t help but draw parallels between my Covid journey and the world of investing. And I realized that these two couldn’t be more similar! Let me show you how:

Lesson 1: don’t panic
Just as Covid has stormed our lives in unprecedented ways, the stock market has repeatedly shocked investors around the world.

And the first reaction is ALWAYS PANIC! When Covid met us at home, we were everywhere – procuring medication and injections, inquiring about hospital beds and oxygen bottles, blood pressure through the roof!

Do we really need all of this? Probably not. But it is human nature to assume the worst.

Isn’t that what we do in a stock market crash? A knee-jerk reaction to SELL SELL SELL! Assume the worst?

Just as the fear of running out of health provokes all kinds of reckless behavior, so the fear of running out of wealth makes us act in ways we will regret.

Sure, the Covid-19 Great Market Crash cut investor wealth in half, but the rally that followed led to new highs! Market volatility is inevitable, especially in times of crisis.

The best way to overcome BOTH health and wealth problems is to KEEP CALM and….

Lesson 2: Contact an Expert
In a state of great confusion, several treatments mentioned on the internet and countless WhatsApp redirects – the ONLY thing that came to our rescue was an expert.

The moment my close friend and doctor came on the picture, everything became clearer and more organized.

Step by step through the procedure, frequency of tests, constant monitoring, diagnosis and treatment at home – I have NEVER been better!

Your investment portfolio also needs a doctor. An expert in the capital markets, financial advisor recommends mutual funds or stocks that can add to your wealth over time.

Consulting a financial advisor can really help bring clarity to your financial plans. With tools like spreadsheets, financial target calculators, and in-depth market research in your pocket, their services can really make a difference to your finances.

However, it is important to understand early on that an expert can only give you recommendations to improve your health and wealth, but …

Lesson 3: Discipline is a must
As I felt better and the initial trauma of the disease began to fade, I became a little more relaxed. The medication had the desired effect and by day 10 I felt rejuvenated.

I started to skip a gargle here, a vitamin pill there. Until my mom caught my little mistakes (God bless her). After a thorough case-taking, I promised to follow up treatment to T until the doctor said otherwise.

And I was back on my feet in no time, with little or no aftereffects.

I cannot begin to stress the importance of discipline in the course of this disease. No remedy is unimportant. They all scientifically target specific symptoms that really help make a well-rounded recovery.

Then why not maintain the same discipline in your investments? After all, the health of your portfolio depends on it.

If your financial advisor gives you a plan, make sure you stick to it. If you planned to invest every month, do it without fail regardless of recent market activity.

Don’t try to time your entry points into the market – be the Lambi race ka ghoda! Add diversification to your portfolio so that it can withstand all market conditions.

Build a balanced, healthy portfolio that easily recovers from short-term market shocks.

And in the words of George W. Bush – “Stay the Course”.

Lesson 4: Review
The last day of my quarantine was an emotional one. When the clock struck twelve, I woke up and walked on tiptoe to the door of the room I had been locked in for the past 21 days, my heart racing with excitement. The feeling of freedom, hope and gratitude I felt was second to none!

My doctor had given strict instructions regarding follow-up exams and recalibrating the vitamin doses. She also prescribed a balanced diet and light exercise to regain my strength and immunity. I promised her I would ask about her every few months and let her know of any drastic after-effects immediately.

As new vaccines hit the market, awareness of these and changing WHO guidelines will help better fight this deadly virus.

Regular check-ups are also important for your portfolio. While it’s not healthy to deal with it on a daily basis, it’s far more dangerous to leave it all alone and with no reviews.

The world is facing tremendous changes and our portfolios must adapt to them. As innovation and technology change the way we live, our portfolios need to be updated to reflect these lifestyle changes.

Life is really your greatest teacher. It’s amazing how so much can be learned from some of the worst experiences in life.

If you go through something bad, rest assured that you will come out smarter.

(Neeti Shah is Assistant Manager, ETF & Passive Investments, DSP Investment Managers. Views are their own)

source https://dailyhealthynews.ca/stock-market-investment-strategy-four-lessons-the-covid-crisis-teaches-you-about-investing/