Investing This Viral Season

We can’t go into a conversation now without once-foreign words “Wuhan” and “coronavirus” being mentioned every other sentence. There are people clearing out supermarkets supplies (I wonder if they are earning at least 8% cashback from their hoarding) and unscrupulous merchants reselling masks. An innocuous sneeze or cough draws accusatory stares all around.

We are slipping into crisis mode and as trite as it sounds, there is opportunity in crisis, and one should be greedy when others are fearful.

The virus spreads through humans…

I personally believe that this whole situation is overblown. It’s not to say that it isn’t a serious health problem to be dealt with, but the reaction people have to it so far is way over the top.

We now know that the current virus is more contagious than SARS, but it is also significantly less deadly. Almost two weeks ago, I told my friend that we would have at most 10 unfortunate souls succumbing to the illness, 5 if we’re lucky, and I still think this is achievable based on the current situation.

…and paranoia spreads through social media

The issue now is that people aren’t really acting rationally. DORSCON Orange was raised twice before, and none of those two occasions raised as much paranoia as it did in present year 2020 with WhatsApp-enabled boomers and Twitter millennials. PM Lee himself had to take to a Facebook monologue to address the hysteria of stockpiling groceries and masks.

Investment opportunities?

Now, I’m all for reselling iPhones and concert tickets, but I draw the line at medical supplies and basic necessities.

Still, I don’t believe there’s an ethical issue in trying to profit from this climate of fear through other means.

My belief is that this “crisis” will be resolved with minimal long-lasting impact to the economy over the next few months, but it wouldn’t be long before the first death occurs. Unfortunate, but humans are a game of numbers to flu. The seasonal influenza kills 600 a year on average in Singapore and nobody bats an eyelid. A sole death from something exotic sounding like “Wuhan coronavirus 2019-nCov” and people will start losing their minds.

That is when I expect the local stock market to fall, and that’s when opportunistic investors could pick up counters on discount. Businesses are definitely affected in the short term, but if my belief is right, the whole situation would be over soon enough. I’m thinking May or June, entirely as an armchair observer with no real virology knowledge whatsoever.

The USD has already strengthened rather sharply against the SGD, and I have chosen to sell off half my USD holdings last Friday as I need the liquidity in the next two weeks for an upcoming purchase. If it appreciates further I will definitely look into taking more profit.

Continue to invest

Regardless of the circumstances, I believe that most people are better off with a constant monthly investing habit rather than trying to time the market.

The worst thing one can do now is to sell one’s investments in a panic, or on the contrary overcommit to a large speculative play that goes disastrous should the viral situation go south from here.

A more restrained approach would be invest periodically and automatically. Boring, but it’s also what most prudent people would recommend. Speculative calls like this are kinda fun, I admit, but it’ll remain a small part of my overall portfolio.

None of this constitute personal financial advice, of course, and is purely speculative. Everyone has an opinion on this and you should follow mine at your own risk.