I am writing this article today as I just been informed that a mandatory home office policy is applied globally as a consequence of the COVID-19 outbreak in Europe and North America.
The news of this epidemy started for me mid-January, only impacting China mainly. I did however carefully monitored the situation as China’s economic power is significant, and so is its supply chain for the rest of the world.
Complete transparency: I sold all my shares of VT and VTI the 24th of February and I plan to consider entering the market after the April earnings cycle.
China quarantined its main productive region
When China announced global lockdown of the Hubei regions and neighbouring areas, I was already alert the economic impact would be material, but if only contained to this areas for 6 to 8 weeks, the global economic impact would be negligible in a year. The key was to contained the virus to Asia and ensure European governments would take preventative measures to isolate and contain any suspicious cases.
What happened in Northern Italy?
This is where things went to s#@t. This is when I considered selling my portfolio. I live in Switzerland close to Geneva. I know how easy people move around and travel in Europe. Borders are just on a map. There was no question that the epidemy would spread to Europe but still, if drastic measures would be taken, I had hope the spread could be contained.
European Leaders are Responsible for the Mayhem
Saying the opposite is just simply lying. What did they expect? By undertaking same actions as other countries and get a different result? They must be crazy.
We have data. We have facts. The only way to stop this was to lockdown a country, like China did. You could observe positive outcomes just 4 weeks after. But by waiting 3 weeks to finally arrive at the same decision, the virus is not contained and its impact remains to be seen, but it’s scary.
Now, with Europe in lockdown, government do not understand why the population does not seem to either follow the “stay home” rules or not fully understand the concept (no, you can’t walk your dog 10km away from your place). That is simple the consequence of saying in January and February that this is just a “bad flu” and nothing has to be done.
Now We are Lockdown
My wife and I are working from home. I am betting on this to continue until end of April. I ordered a pair of
hell dumbbells to train either on the balcony or on the parking lot. I am amazed to see so many people becoming sportive and running. As much as I support being active, this is strange to see this human behavior. Where were you the last years?
What About Investing?
Two rules. If you got out early, keep cash. Stock prices have still room to go down. Economies now need a strong stimulus to fight the next 2 quarters of deep recession. Look for great stock to buy, we might have the best opportunity to invest for the next 10 years. We will discuss in another article the stocks I am looking to buy.
If you did not get out, keep what you been doing, invest regularly. You are drastically buying cheaper than a month ago and therefore discount averaging your overall position. I would even soon consider using this opportunity to max out my 3rd pillar for 2020 at a cheap price. Remember, this 3rd pillar will come to use in 20 to 30 years !
Stay Home, Stay Safe
Take care of yourself and loves ones. Don’t panic it will not help you. Don’t overstock, think of families that do not have the means to buy in bulk and need to live paycheck to paycheck.