The Big Picture

As I am writing this blog - more than 3.2 million cases of COVID-19 has been reported the world over, more than 228 thousand deaths, and a little more than 1 million recovered from the COVID-19. In India the new case reported in 24hrs curve is yet to flatten.

Governments all over the world are enforcing public lockdowns to contain the spread of SARS CoV-2. In many countries people are already under the lockdown for more than a month.

The future looks bad atleast for the next 2-3 months, some financial pundits are even predicting that it will take more than 6 months for the economy to come to normal. Those tiny little invisible monsters named SARS CoV-2 are infiltrating all over the world. All the global population is experiencing the brunt of this disease. I myself am locked in my house for more than a month because of the lockdown.

But hey haven't you experience such disruptions before in your life?

I mean not just like pandemic but there are always some seemingly insurmountable problems coming our way. Think about it for a while. If I tell you mine, I have been lost in jungle without food or water or direction with friends a couple of times; I have had very high fever (103F) in the night, I didn't woke up my parents as I thought they will cause more trouble, I was feeling dizzy and trying the control the temperature by putting cold water bottle under my shirt, it looked like the night was never ending; during college suddenly I have to present a paper in an auditorium full of 300 people; joined a commando training workshop and came to know that each session was like hell, the couches there never hesitated beating or punishing us if we failed or not did the task/exercise as per instructions; the first time I met the girl I like; the first time I left my house for studies; my pet falling ill, coming home badly wounded; illness followed by death - of my beloved grandfather; death of my beloved pets; death of a good friend; break up from gf; financial losses in stock markets; cheated by trusted friend; financial scam; road accident; went after a business plan leaving everything behind and the investor at the last minute ditched me and started his own business with my plan leaving me high and dry; there are many such incidences where I felt like it's all over. I bet you must have gone through such experiences where it felt like it's over, I'm done, I quit etc.

But what do you think about it now?

What you will do about it if it happens again?

In my case I think these were the trivial things, though at that time such incidences seemed like great loss, I now know that they were great life lessons, they gave me confidence, gave me chance to do better, they helped me reach where I am today, they helped me meet people which I am with today, they made me what I am today. It taught me that everything has an end.

All these problems help us grow emotionally, hence the past problems looks trivial. We even forget many such blips in our life.

Coming back to COVID-19, as I said, this will also end. It is not like it will go on till everyone dies. Only 3-4% of the infected people (mostly who are already suffering with other illnesses) die, rest all recover from the disease. And guess what, the recovered people don't transmit the disease or develop the disease again because their immune system now knows the enemy and how to defeat it. Such recovered people will add to the herd immunity of the society and will slow the spread of the disease.

In some countries the total death rate is actually reduced because people are not dying in road accidents or riots or robberies etc. because of the lockdown. Many companies have developed ways for their employees to work from home (WFH) which would not have been done if there was no COVID-19. Companies are finding the WFH culture more cost effective, so they are going to keep it. It will also save a lot of fuel costs, pollution and office space. It is hard to get junk food, cigarettes, hard liquor etc. during lockdown so we like it or not but our body will like it.

 3-4 years in future we all will be busy with our lives and only occasionally we will recall the COVID-19, may be to tell the tales of our survival through the pandemic to our children or grandchildren.

But till now, make the best use of it, like use the free time to learn the things you always wanted, read, write, do whatever gives you happiness (without causing anyone trouble). Invest the money if the market is down in a diversified way in good companies. That will also add to your repertoire of good COVID-19 tales.

So the Big Picture doesn't sound that doom and gloom. It is just a temporary blip in the history of the mankind. I am an eternal optimist, so I see a lot of progress of the mankind in the future. As the years are passing, the rate of progress is increasing. Make good use of current opportunity at your hand.

Take care and have a nice day.

Sumit,

The POWER is when,
You use ODDS,
To get EVEN.

COVID-19 resolution

Coronavirus disease 2019 (COVID-19) is an infectious disease caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2).

-Wikipedia

The world is fighting to contain the spread of COVID-19. To stop the infection from spreading person to person countries have enforced lockdown of population, which is a curfew like condition, everyone is locked in their home, preventing person to person contact and hence arresting the spread of Novel Corona Virus.

I am also confined to my home. But this situation is giving ample time to reflect. So I thought about making a resolution just like the new year resolution. But this time it gave me a lot of time to reflect.

Ladies and gentlemen this time I am thinking about wealth.

I am thinking about this stock market crash. Most global markets have crashed around 30%. What should I do?

To get the answer of what should I do now, I have to compare it with last great stock market crash I have experienced. That was the 2008 market crash, the subprime crisis. I have seen how the market crashed, how it recovered, what I felt at that time, what I did at that time, what was the result of what I did.

It was hell of a roller coaster ride of emotions. First because of the lower circuits, and the commentary on business channels, I was mortified, I was feeling like there is no end to this fall, but my rational mind was telling that market won't go to zero. Some businesses will use this condition to their advantage. Or the business environment will come to normalcy. So I should buy the blue chip companies which were quoting at very low PE multiples (price to earning ratio). There was a battle going on in my head, my rational brain fighting against my feelings. And of course the feelings had the upper hand.

So what I did was, market was falling, so tried to hedge my position by buying the put options of the index, I made a decent profit in it. Actually this profit gave strength to my rational mind. So I bought some good quality stocks quoting at throwaway valuations. But I bought only little.

After only 3-4 months in to recession, the market started going up quickly, my purchases quickly went up 2-3 times, I was very happy. I booked the profit, thinking the companies are now quoting at expensive valuations. Moved the money in other companies.

But then if I see those companies now, even when down more than 30% from their top, they are still 5-10 times more than my purchase price of 2008-9, some are even shelling out dividends more than my then purchase price every year. Almost every company which I purchased then has eps (earning per share) more than my purchase price in 2008-9. So the bottom line is, I have lost a lot of profit. I wish I had just sat idle with my investments.

Warren Buffett has always advised to purchase only those shares of great companies at great price so that you don't have to worry if the stock market never opens again.

This advice and my experience till now combined are having a great impact on me in current situation.

So the COVID-19 resolution is buy only those businesses which you don't need to sell for atleast 3 years, no profit booking. Sell only if there is some permanent change in the profit making capacity of a business. Otherwise let the profit rise, don't worry if the valuations go expensive.

I don't really know how this will play out.

But I would definitely try.

What is your COVID-19 resolution?

Are you reflecting on your past mistakes?

Do write your thoughts..

Have a nice day..

Sumit,

The POWER is when,
You use ODDS,
To get EVEN.