LIVING AND INVESTING DURING CRISIS

What’s the crisis impact on your investments? The current crisis brought us lots of challenges and opportunities. A lifetime gift to be longer with families and a question if a bigger stock crisis is in sight.

The last 3 months have been different than anything we were imagining. In my company we have crisis mgmt teams (CMT) which were regularly gathering and discussing plans and activities during potential crisis. However, nothing is even close to the reality once the coronavirus spread out globally. We have discussed long hours the measures we need to take to save the health of our colleagues, to ensure business continuity, to sustain our productivity, to help the people to sustain their mental health and so on and so forth.

Everything You Need To Know About Investing During

As a software company working from home was part of our weekly routines, so was relatively easy to have about 1000 people working from home during these pandemic times. After aligning how we can work from home – the whole family is at home and everybody is working or doing online studies, I’ve realized the benefits (the good side) from these times. I am spending 24×7 with my family – I see this as a gift which might never be possible again (soon). One of the most important things are to be able to be 24×7 with your family for a month – that means you are made to be together

Staying healthy during lockdown

Another good side of these times was my physical activities. It didn’t take me too long to realize I am having 6 hours of meetings per day and that I can combine that time with some additional activities. As those meetings are no longer needed (possible) to be in person then I came to the conclusion I can be walking (around) while attending the meetings. Talking while walking was no issue for me as I am trained to do jogging while listening to podcasts. In the beginning this might be hard to achieve but with a little practice you will see this quite doable. And last but not least, walking during the meetings prevented me from distracting myself with other stuff like email and so on, which made me a laser-sharp present on all of the meetings.

After the first days of walking while on meetings turned upside-down my concept of amount of steps per day. Since few years I am trying to walk about 10K steps per day. That’s not always possible and the last months I realized I am walking about 7K steps per day in average. All of a sudden, I started walking from the range of 5-7K steps into the 20-30K steps per day range. Yes, I would do easily 25K during a normal business day – that was mind-blowing!

So, the bottom line is to look for opportunities in every situation the life puts you in! Ask yourselves the questions “What’s great about it (current situation)?” and never stop experimenting and improving. I am now thinking to continue this practice when I go back to the office by doing some of my meetings while walking around with the colleagues.

Investments during crisis

There is one Chinese proverb (or rather a curse) – “May you live during interesting times!”. The last months are definitely “interesting times”. And what is about to come as an impact on the global economy will just continue to be very interesting. We’ve seen markets going down and catching to some extent up. All the money that was put into the economy were invested and thus the stock market is relatively ok (for now).

What will happen with the market the next months? I believe the impact on economy will be seen once the financial results from Q2 come up. We will see significant declines in revenues as many people were just buying the most important things to live through the crisis. There is almost no traveling, no entertainment, many projects were postponed, etc. And even once the lockdown is over many people will not go back to their previous level of consuming and spending. Simply their memory is still fresh and will be very careful how and what they spend as such lockdowns are slimming down our incomes, are putting pressure on our mortgages and the whole connected economy is endangered.

P2P market impact

I am forecasting a huge impact on P2P markets and platforms. Just think about it – these markets are driven by the interest of borrowers who are not (able to) leveraging banks and are borrowing from the p2p platforms. In many cases the interest on these loans are significant – could go up to 30% and more. As the overall economy will be impacted (mostly by the lowered consumptions and spending) then a big number of these p2p borrowers might face challenges repaying their loans. The latter will significantly increase the loan default rates, would put lending companies and p2p platform out of business. I am currently exiting as much as possible my p2p investments and would be waiting for the economy, to get worse first and then improve to decent levels, before I step into p2p again.

The million dollar question “to repay your debt or not?

It is true that, during the last years, one can have a mortgage at a very little interest like 1-2% and could invest the money at a much higher interest rate like 7% (for stock markets) and about 10-15% for p2p markets. Here I don’t mean to take a loan and invest it but rather if you already have a mortgage and what to do with your newly earned money – repay your debt or invest. While many people think that it is the gold rush during these times of cheap debt, I am sharing the onion of the others who believe the debt is a debt i.e. it will stay there and will be due even if times change and your investments might not perform as expected.

So, by following this I have repaid all my debt last year and (again) my family is debt free. So, the result was that during these tough times I am not feeling additional pressure of my debt and also I don’t have the pressure of the uncertain times ahead which are a consequence of the long lockdown period.

The stock market impact on my portfolio

I have an extensive portfolio which is a mix of All Weather and Golden Butterfly. This portfolio was very little (~5%) down during the last months and majorly is back up now. My investments into selling stock options however had a different result for me. As expected, my stock options got into the money and I needed to buy basically all the stocks (the options were exercised early, so I wasn’t able to roll them over soon enough). However, my strategy was not to use huge leverage, so I got the cash to buy all the stocks.

The results were that I hold good companies now and I am 18% down as I bought the shares at the options strike price. Of course, I am waiting / expecting these stocks to come back at some point and till then I am doing basically 3 things – waiting, selling call options to regain part of my loss, collecting good dividends. So, my bottom-line is mind your margins while trading and experiment with stocks you would like to hold for the long run!

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